Use your annual bonus to build an overseas property portfolio

It’s that time of year again when many, especially in the finance sector, will receive a little something extra from their employers in the form of an annual bonus. Over the past few years these city bonuses have been used by individuals to move up the property ladder and purchase a luxury pad in London or a second home in the country however as the demand for higher end property rises, supply cannot keep up and people are starting to consider investing in property elsewhere, in particular overseas.

The amount being paid out in annual bonuses continues to rise. If the trend of 13% increase per year continues (£16.5 billion 2004/2005 to £19 billion 2005/2006 – ONS data) it is expected that in the next few months (Dec 06 – April 07) over £21.5 billion will be paid out, over half to those within the financial intermediation sector. But where is best to invest?

Chris Howard, MD of property investment specialist 4:Property comments, “Due to the poor performance of traditional investments such as stocks, bond, shares and pensions I would recommend investing in property overseas. The emerging markets of Eastern Europe have shown substantial capital growth over the past few years and with EU accession on the horizon for Bulgaria and Romania in January 2007 this is set to continue."

Chris goes on to advise: "A strong investment portfolio should be diverse. It is not wise to place all you eggs in one basket and therefore having a range of property investments will minimise risk.” But with the average annual bonus payment of £25,000 per person in the City how can this be done?"

One option is to invest in a “hands off” property project. These projects, such as those offered in Bulgaria, Croatia, Montenegro and Romania through 4:Property, are passive investments whereby investors act as joint venture partners funding residential developments. The individual investors and 4:Property share in the developer’s profits in a range of different high margin investments in active markets. This allows the investor to create a portfolio of property investments in active markets which complement their current portfolio.

Investments in the 4:Property Projects begin at £10,000 for an interest in developments of 1-3 year duration dependent on the project. Each project is researched in great detail and utilises 4:Property’s local contacts and investment experience to source a variety of locations including commercial centres and capital city sites, ski and tourist areas. Returns are expected at 20% - 50% per annum, far greater than the current 9% price inflation of London properties (according to the Department of Communities & local Government) and well above leaving funds ‘safely’ in the bank (so the bank can fund developments to boost its own returns).

“With the advent of globalisation the world is our back yard. We are all more mobile and much more familiar with the wider Europe. Investors should no longer be restricted to traditional products or those within their local area. Take advantage of new opportunities and maximise the potential of your annual bonus this year to benefit future years“ comments Chris Howard.

As with all investments 4:Property encourage those interested to seek advice from an IFA but for more information on the 4:Property Projects, visit 4you.uk.com.