Overseas property investment a good option

Research recently carried out by property specialist, Obelisk International confirms that overseas property investment is providing solid returns, in comparison to the continuing news of increased UK house prices, failing pension systems and short property funds.

Obelisk International has seen a huge increase in first time buyers investing in overseas property in order to get on the first rung of the property ladder, and an increasing number of investors are using this type of investment to fill a pension shortfall.

Kevin Prior, sales and marketing director at Obelisk International, says: "Property in the emerging markets is earning the best returns and, with good advice from experienced brokers, investments can provide lucrative results.

"Inflated house prices in the UK have led to some financiers believing a crash in the housing market, coupled with a large number of first time buyers - who are taking out huge loans to meet these costs and therefore landing themselves into the negative equity trap - further adds to concerns."

According to Abbey National, the average loan has doubled in the last four years, with homeowners struggling to meet these payments. In a report by the online mortgage company, MForm, two million homeowners are said to be having payment problems and analysts are warning of a slowdown in the market which could lead to further issues in terms of negative equity.

Mr Prior says: "Fears of an impending pension crisis in the UK have followed on from reports that many older people have not started saving towards retirement. According to figures published by Edward Jones, an alarming number of people in the UK have not begun to save for the future - let alone their retirement years."

Andrew James, a retirement planning manager, comments: "The most worrying aspect is the high proportion of middle aged people who have made no provision for their retirement. They are the ones who will find it most difficult to make adequate provision - simply because time is running out."

Money coming out of the Real Estate Investment Trusts (REITS) has doubled since the first half of 2007, with investors fearing a collapse in this market. Statistics from the Association of Real Estate Funds show that property fund redemptions have nearly doubled amid fears of a failing market, a decrease in confidence and changes to the pricing policies, all of which have seen a marked reduction in holdings.

Property research has also shown that 50% of independent financial advisers (IFAs) believe that overseas property investment provides stronger returns with over 30% of IFA’s experiencing an increase in the sector within the last year.

Mr Prior concludes: "This is why, amongst many other reasons, Obelisk International is seeing increasing numbers of clients looking to make a safer investment with their money. Investors are realising the advantages of overseas real estate and the increased financial power it can bring. For example, an off-plan investment in up and coming areas essentially presents the control of a tangible asset worth much more than the initial capital outlay.

"Overseas real estate is considered a safer asset with investors tending to behave more calmly than their counterparts on, for example, the stock market. The real estate arena is also less subject to the effects of panic selling than stocks and shares. Investors can benefit greatly from foreign currency and foreign mortgage rates, as these products allow borrowers to take advantage of the low interest rates and favourable exchange rates when purchasing real estate abroad."