Property Investments Abroad - Why?

M

MarshMallow

Guest
Apologies if this is a silly question but I notice a lot of people enquire about investing in property overseas. I was just wondering why this is.

Do potential Irish investors in property abroad hope to obtain a greater return by investing overseas instead of investing in Ireland, or even the UK?

I presume they must otherwise it would be much simpler, and perhaps less risky, to invest in property in Ireland or the UK.
 
I'm not being smart or anything, but I think it's because so many people have completely lost the plot. Many people are obsessed with greed and fear they are losing out on the next big thing. I think people are underestimating the potential risks of overseas property investment. I mean, there has got to be something wrong with a country where the radio ads are for buying a second property overseas! Since when did this become a mainstream aspiration influenced by radio advertising?
 
The Banks are to blame (partly)

I know someone who went into PTSB for a oneplan cheque book to get money for a new car and some landscaping.

They were approved for €100k and "rather than waste it" they put deposits on 4 foreign properties (over a period of about 6 weeks).

They were able to raise the balance of the prices from finance arranged by the selling agent.

I wonder how it will all work out for them!
 
Re: The Banks are to blame (partly)

People expect that because European property is in general much cheaper than Irish property that it must rise at some time in the future. They must have their boom too. And everyone knows Irish property prices will never fall, so other countries must be the same! Everyone's a winner!
 
Re: The Banks are to blame (partly)

I'm sure that, as with local property investments, some people probably do the number crunching to check the viability, evaluate the risks and potential rewards and go into it with their eyes open. Unfortunately I also believe that many, possibly even a majority, don't and are just plunging in because it's the thing to do particularly in the light of the post eircom/dot com "equities are bad" syndrome. Some people will do well out of it, some - particularly those that are naive or "late" to a particular region - will lose out and it'll end in tears for them. As with eircom, some will look for somebody else to blame for their own bad decisions. :\
 
Re: The Banks are to blame (partly)

And funnily enough, the Eircom crash is used as justification for jumping into property by many. Whereas the real problem was their lack of understanding of their investment.
 
France

Is it true that when you put an offer on a property in France that you and the vendor has 2 weeks cooling off period and if neither on pulls out the agreement is binding. To me this is a more civilised way to buy a property if it is correct?
 
..

I dunno.

It seems to me that the medium to long-term prognosis for Irish prices is not encouraging. In these circumstances, it makes sense to pursue opportunities elsewhere.

That said, those investing in places like Budapest and Cyprus in the hope that they will "do an Ireland" are taking a big chance.

Instead of chasing the next big thing, I don't know why more Irish investors don't invest in the more established environments (e.g. Paris, Rome, Barcelona etc) where the prices are still cheaper than Ireland and where the returns are reasonably predictable, if unspectacular. Better I would have thought for a medium to long-term investment.

Or am I missing something.............?
 
Re: ..

It seems to me that the medium to long-term prognosis for Irish prices is not encouraging. In these circumstances, it makes sense to pursue opportunities elsewhere.
Click to expand...
No, No, No, No, No, No, No, No, No, No, No, No, No, No, No
It would only make sense to pursue opportunities elsewhere if and only if there was a better prognosis elsewhere.
What seems to be happening is that people are going elsewhere because the Irish prognosis is bad, in absolute ignorance of what the prognosis is (and what the legal situation is, and what the economic situation is, and what the property market situation is) abroad.
 
Re: ..

It seems to me that the medium to long-term prognosis for Irish prices is not encouraging. In these circumstances, it makes sense to pursue opportunities elsewhere.
Click to expand...

I dunno either if this reasoning in sound. Markets (property, equity etc) nowadays tend to follow more or less globalised trends. If the US property market is buoyant, this tends to mean that the UK & Irish markets are also buoyant, because of the large correlation between the anglophone economies. It also follows that this buoyancy will often feed into other specific markets - eg Irish & UK investors buying property in Spain or Budapest using equity or liquidity generated through a domestic boom, possibly creating another spinoff boom if the effect is sufficiently large to inflate prices.

The opposite can also hold true. Any slump in the US, UK or Irish property market could see a withdrawal of Irish & UK investors from Spain, Budapest etc. Thus a slump at home would be matched by a corresponding slump at the same time in Budapest, Spain etc. I'm not saying this will happen, but it is a possibility.

To sum up, I don't believe it is possible to properly diversify one's property portfolio away from Irish or UK property market trends if one is investing in a location or property type (at home or abroad) that is currently dominated by other Irish or UK investors.
 
re property abroad

From what I see on TV channel 4 a place in the sun the properties that are been showen is far more superior than the ones I have seen in Ireland much better value neary twice as much for your money.

That is why everyone who wants a holiday home is going abroad - Ireland does not hold a patch on the properties abroad.
 
..

Rainyday

So just to be clear, you're saying NO? ?

I agree that the conditions of any new market would need to be considerably more favourable than those of the domestic market and that if the the "paddy pounds" move to these markets en masse, it's not necessarily a good thing.

My point is that if an investor believes that property here is overpriced and/or offers a poor return in rental income, it's reasonable to consider other markets where this is not the case.

In these circumstances, it would seem like a good idea to steer clear of the herd and instead enter a long established markets where trends have been established over decades, not months. The rewards might be considerably more modest but subject to less volatility than some of the "newer" locations.
 
..

Very good article in the Sunday Indo yesterday by Brendan Keenan - at a recent overseas property expo (entry fee €12 and there was a q outside before they opened up the 1st day!!!!), he overheard a woman trying to purchase an investment property in Budapest. The vendor started giving her details on the property and the buyer said she did'nt care, she just wanted to sign on the dotted line and hand over the cash. The vendor seemed surprised and asked her if she was even interested in whether the apt. had an easterly or westerly aspect - and the buyer said straight out - NO.

Scary scary stuff.....
 
Igloos

I've got some igloos for sale if anyone's interested. Though you better be quick. Here today, gone tomorrow. Better weather, and all that...
 
exaggeration

Delboy, I was at that property exhibition too, but it looked nothing like the one Brendan Keenan was talking about. There were three registration booths with three bored-looking women at them, and nobody that I could see going into the exhibition. There were plenty of people milling around outside, but from their chat, most of them seemed to be exhibitors out for a fag break. Not wanting to pay e12 to talk to a bunch of estate agents, I just got a catalogue and left. If I'd known I was going to see hordes of burly tattoed men and hysterical women throwing money at hapless exhibitors, I might have coughed up the e12, but I suspect I would have been disappointed.
 
ahem

So Penny Foolish you weren't actually at the property exhibition that Brendan Keenan wrote about.

You were outside the exhibition without ever being so bold as to progress to its inside. And, while you do present a very piquant description of activities on the exhibition's outside, it would have been more satisfactory if shortly thereafter you had presented a similar descritption of activities on the exhibition's inside.

In the same way that a film reviewer has, as an absolute requirement of their job, the task of entering the cinema and watching the film, you, in attempting a review of this exhibition, have a pretty overwhelming duty to actually progress beyond the entrance to the place.

No matter how boring or ridiculous the idea might seem, in attempting a contradiction of Mr. Keenan, you have a duty at some point to complete your preliminary remarks about the scene outside, the approach to the building, the weather, the gossip amongst those milling around the exterior hall, the tension you felt on paying over (or not paying over) the twelve euro entrance fee and to eventually progress to the main business: a discussion of the exhibition 'as exhibition'.

This is what Brendan Keenan did that you have failed to match. He ACTUALLY ATTENDED THE EXHIBITION.

thank you for your time

Macnick
 
How Constructive

How constructive Macnick.

Rather than harp on about the merits of being/not being at the expo, I can add the following:

1) I was at the exhibition
2) It wasn't quite as described by Brendan Keenan, but not too far off - and I attended on the last day of the expo, when it would have quietened off a bit. There weren't too many people going in and out, but plenty of people were inside, and plenty looked to be doing business.

As a first time buyer (to be), I have been looking at Budapest for some time (since before the time of the radio ads and the mass marketing expos). What is interesting is the following :
a) over the past 2+ years, I make it that prices have increased by 20-25% or more, (based on a general perception of prices). This is based on "What would 50k get you?", which has now become "What would 70k get you?". Resales - second hand apartments, seem to have held relatively steady in price, leading to a perception of overpricing on the new apartments by the foreign estate agents. A recent Sunday Business Post article suggested a 20-30% premium being charged to foreign investors by <<companies similar to those who would have attended the aforementioned property expo>>.

[broken link removed]




b) As a first time buyer, not convinced of the value of buying Irish, I was hoping to put what has now become a substantial deposit for an Irish property into a foreign property. The Budapest market has just been that step ahead of me, meaning that I cannot afford the full purchase price without taking out a mortgage on the foreign property.

However, I am having extreme difficulty generating any interest from a lender for a mortgage which is not guaranteed on an existing property in Ireland. Although the amounts involved here are low - about 30k loan, with 40% loan-to-value ratio, nobody is interested. Has anyone any insights into what this means to the market? My own thoughts are that this is reflective of the risk that the financial institutions view these investments with. Is there something that the radio-listener and expo-attender is missing here?
 
NI

"over the past 2+ years, I make it that prices have increased by 20-25% or more"

Property prices have probably increased by something similar in Northern Ireland over the last two years. So why not head for NI? Much simpler, and cheaper to travel to.
 
Lending for Property Abroad

johnotoole,

I suspect the main reason they won't lend for property abroad is that they would have problems repossessing in the event of a default on the loan.

Incidentally, have you :

(a) Asked them why they won't lend
(b) Tried some brokers
 
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