Investment in overseas property not deterred by climate change

30 July 2008 / by Rachael Stiles
The rising cost of air travel due to soaring oil prices and green taxes is not enough to deter two thirds of people who own a second home abroad as this is having no impact on their decision to own property abroad.

According to research carried out by Savills and Holiday-Rentals.co.uk, there are currently 425,000 overseas properties owned by people who live in the UK, a total value of £58billion of UK owned property abroad.

"Whilst the issue of climate change is an important concern for the majority of second home owners it is not seen as a barrier to travel." said Jacqui Daly, director of Savills Research. "In fact there has been a notable increase in the number of British second home owners buying property further a-field, with locations such as Dubai, the Far East and the Caribbean increasingly emerging as destinations of choice."

A significant difference in price between UK and overseas property remains a key driver in demand for foreign property, either for investment or leisure purposes. The majority of UK buyers remain optimistic over the long term, estimating that they have about £225,000 to fund their next overseas property purchase.

"Investing in overseas property, both for leisure and investment purposes remains a key aspiration for many Britons." added Greg Grant, managing director of Holiday-Rentals.co.uk.

Accounting for 67 per cent of all purchases, leisure is the most common reason for Brits buying a second home abroad, while those buying it specifically as an investment account for just 17 per cent of all purchases.

For those looking for a foreign home away from home, location was stated as being the most important factor to consider when buying abroad, which, the report says, largely explains why purchasing growth in countries such as Spain, where capital growth has slowed considerably, has continued to be strong.

"Taking regular holidays is also a top consumer spending priority, despite environmental concerns and the credit crunch." said Mr Grant. "As a result, we expect to see continued growth in the holiday home rentals market, both in terms of supply and demand."

Meanwhile, investors concentrate their buying efforts in areas that are catered by low cost airlines and where there is good renting potential, often marketing the city break market by buying in New York, Paris and Barcelona, and recently breaking out into the emerging markets of Prague and Budapest.

Mr Grant added: "As more owners become aware that there is strong demand for holiday lets and that it is relatively simple to self-manage rentals, privately owned holiday accommodation will become an increasingly important sector of the travel market. In these tighter times, savvy owners will realise that a month’s rental can, if timed well, pay for much of a year’s running costs on a property."

© Fair Investment Company Ltd