Monday, 21 November 2011

Top 10 property Safe Havens Abroad

The euro is in crisis. Stock markets are in freefall. Two prime ministers have been sacked. Italian debt is at record levels, and Spain faces an early election tomorrow. Across the pond, America’s annual budget deficit is measured in trillions.

One by one the traditional destinations for British house-hunters are becoming badlands. Rather than stay in the quagmire, it’s time for buyers to seek new pastures. There are always safe havens if you look hard enough.

Even when buying outside the eurozone and the United States, the best tactic is still to purchase more expensive homes in prime locations. This means you will see the best the country has to offer, and your investment stands a better chance of securing good returns.
Even at the top end, though, you have to be selective. Here is our guide to where, what and why to buy overseas to minimise your risk.

1  Canada

The US housing market is in intensive care. One-in-four homes is in negative equity and mortgage foreclosures are rising. But across the border in Canada, the story is very different. The Canada Mortgage and Housing Corporation predicts sales and prices will rise by up to five per cent next year.

Brits tend to prefer Eastern Canada, because it is only five to seven hours’ flight from the UK, and has plentiful leisure and ski resorts around Newfoundland and Quebec.

The country has a French-style buying process. A notary carries out conveyancing, and transaction costs are often 15 per cent of the price. You pay 25 per cent capital gains tax when you sell but, unlike the rest of North America, Canada is still seeing capital gains.
Because space is plentiful, the choice is vast. There are ski chalets in Mont Tremblant, Quebec, for as little as £200,000, while timber lodges in parts of the Rockies can be even less. Websites such as sportfishcanada.ca list private sales of cabins at modest prices. More flamboyant buyers may prefer Nova Scotia’s spectacular coastline.

Insider tip Offers are normally made in writing, accompanied by a deposit, so can be hard to withdraw.

2  Hong Kong
Crowded, flooded by neon lights over street markets and overlooked by sumptuous tower blocks for expats in the hills.

The local housing market is booming, because it is no longer reliant just on foreign buyers. Chinese mainland purchasers now account for a third of all deals. One-bedroom flats go from £200,000 upwards but even so, demand for homes outstrips supply by 20 per cent, according to the Hong Kong Housing Authority.

Similarly, Savills says house prices have risen 11 per cent in the past year and about 80 per cent since mid-2005. Yet experts insist this is sustainable.

“Given the continual support from mainland buyers and the limited supply of homes – especially high-end ones – we expect prices and rents to grow steadily,” says Knight Frank’s HK representative, Colin Fitzgerland.

Insider tip Best-value areas are Southside, The Peak, Discovery Bay and Kowloon.

3  Switzerland

Knight Frank says 12 per cent of buyers here are from the UK, with Russia, Germany, France and Asia close behind. They come for three reasons: to improve their skiing, for their tax status and for stable house prices. Though there were falls of 15 per cent in French-speaking parts of Switzerland in 2008, prices have been stable since.

But only some locations, such as Vaud and Valais, permit overseas purchasers and prices can be high.

“Montreux, on Lake Geneva in Vaud canton, continues to defy the market conditions of its neighbours,” says Alexander Koch de Gooreynd of Knight Frank. “It’s one of the few lakeside locations in Switzerland with permission for foreigners to buy as a secondary residence.” It also hosts a world-famous annual jazz festival.

Insider tip Each canton has different rules regarding maximum sizes of homes foreign purchasers can buy, so do your research.

4  Mauritius

Long a favourite with holidaymakers, this island is now open to foreign buyers for the first time thanks to a new scheme to encourage investment.

Most people would be happy enjoying the watersports, unspoilt beaches and charming villages that dot this Indian Ocean idyll, but now there are financial perks too.

If you pay £310,000 or more for a villa or apartment in a designated coastal zone, you will also have the right to become a Mauritian resident, and enjoy low levels of personal and business tax.

“The political situation is strong,” says Maribeth Davies of Hamptons International. “And the economy has grown at an average of 4 per cent a year for the past eight years.”
One new designated scheme is Azuri, a beachfront complex with 169 homes for foreigners and 100 for wealthy locals. Properties come with parking, boat moorings, golf membership and access to swimming pools.

Insider tip Island transport is slow, so buy near Port Louis, the capital of Mauritius.

5  Gibraltar

Little wonder Spain wants to govern Gibraltar. This tiny British colony, still reminiscent of a sunny Sixties Saturday in Surrey, is a haven of stability compared to its mainland neighbour. Better yet, the Rock has no VAT, no capital gains or inheritance tax and relatively low income tax.

As well as financial services, shipping and tourism, its economy is geared to telecoms and internet gaming. The latter is a growing sector, that now accounts for 11 per cent of gross domestic product.

Buying in Gibraltar is easy, but there are eccentricities. You pay a 2 per cent deposit when you exchange contracts. Many homes are flats, so you should budget for service charges too.

Some older houses are freehold, but most homes are leasehold.

Do not expect open space. Gibraltar’s tiny size and 30,000 permanent residents put it among the world’s most crowded locations.

Insider tip Gibraltar has complicated stamp duty rules, varying from zero to 5.5 per cent of the purchase price.

6  South Africa

This is a country like no other. Beyond its cities lies endless countryside with vast open plains, unspoilt villages and a burgeoning wine culture. All in the glow of a wonderful year-round climate. The country is also a natural destination for Britons. Cape Town is only two hours ahead of London, and everyone speaks English.

To make it even more attractive, house prices are low by global standards. One-bedroom apartments in Cape Town can cost just £60,000 and a three-bedroom house is £200,000.

What’s more, local agents say South Africa’s economy has avoided European and North American volatility.

“It’s seen as a safe haven due to exchange control regulations. Cape Town and its environs are the most popular areas for Britons,” explains Lanice Steward of South African estate agency Anne Porter Associates.

Insider tip Crime remains high, but most Britons buy in gated estates with private security systems.

7  Barbados

Barbados retains an aura of prestige and a reputation as a safe haven. This is because its legal and political systems are similar to Britain’s. There are daily international flights from the UK, Canada and the US, so tourism and rental rates are high for holiday homeowners wanting to earn a living from their investment.

Overseas buyers are welcome, and there is no capital gains tax. Mortgage availability, even for foreigners, remains good.

John Morphet owns the Royal Westmoreland resort, where British sports stars including Wayne Rooney, Joe Calzaghe and Rio Ferdinand have villas. He says: “There’s been some discounting of property, up to 25 per cent, but on the west coast this hasn’t really been the case. The market for individual beachfront villas and constructed properties on gated communities has remained strong. Purchasers are more risk-averse, so prefer to buy somewhere built rather than off-plan.”

Prices are not cheap. Two-bedroom homes can cost £400,000 or more on the west coast, but properties are truly spectacular.

Insider tip Some homes take years to sell. If you hear that a property has been on the market for a while, bargain hard.

8  St Lucia

This Caribbean island has long been popular with Britons, even though its roads are poor and some areas can be crowded with owners and cruise ship visitors. There are rugged mountains, rainforests and coral reefs. Barbados, but with lower prices. Many Britons buy by setting up a company (an estate agent will help you), which eases tax payments.

Most popular is the north-west area of the island, especially close to Rodney Bay, where more than 20 developments are underway. It’s hectic, but it means the infrastructure is improving thanks to the arrival of swish hotels and better transport links. In any case, there are plenty of quieter areas too.

Insider tip Castries, the capital, is the most popular location for cruise-ship tourists and is therefore the most crowded part of the island.

9  Kenya

Emerging holiday home locations are few and far between, but Kenya is seeing “consistent growth,” according to Bob Woodhams of Knight Frank, despite the financial crisis and fears of terrorism. There is a 40-plus week tourist season in parts of the country, making this an attractive buy for those wanting rental income.

Most land is government-owned, so foreigners buy on pre-built resorts, many of which have a mix of beachfront and interior wildlife.

Respected British estate agency brands such as Aylesford (aylesford.com) are becoming more common and will guide you through the buying process.
Insider tip Most homes in resorts have small gardens, but owners have use of vast, private and secure estates.

10  The Cayman Islands

The Caymans are home to more than 200 banks and expats from 100 countries. They also boast the world’s 14th highest GDP per capita, and the highest standard of living in the Caribbean. The country has the confidence of many from around the globe.

Little Cayman (10 miles by one mile, population 150) and Cayman Brac (11 miles by two miles, population 1,800) are relatively untouched. Grand Cayman is bigger and blingier, attracting tax haven lovers as well as those who want sandy beaches and sun.
Flights are plentiful, and it’s easy to hop over to neighbouring Jamaica and Cuba.

Some apartments, like those at the Riviera Grand Cayman scheme at South Sound, cost just £110,000 (century21cayman.com), but foreigners are charged six per cent stamp duty. Yet there is no other property tax.

Insider tip Many foreigners buy land and build their own homes, but imported construction materials attract up to 22 per cent tax.


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