Property prices soar in Olympic host cities

Long term property investors are set to make Olympic returns in China as those who bought in the East in the last few years benefit from this summer's games. However professional investors have already cashed in and moved on from China and are looking to the next emerging market reveals the latest HiFX Global Property Hotspots.

According to the currency experts' report, interest in emerging markets such as Brazil and Panama is increasing whilst enquiries for traditional destinations such as Spain and Italy are waning. The distribution of enquiries points towards professional investors rather than holiday home buyers in this climate.

Mark Bodega, Director at HiFX, explains: "Professional investors are always looking for the ‘next big thing' to try and tap into undeveloped markets. In the last few years this was China as savvy buyers looked to capitalize on the development in the lead up to the Beijing Olympics."

According to HiFX, enquiries for property purchases in Beijing increased 112% in 2004 (from a base of almost zero) 60% in 2005, 21% in 2006 and 11% in 2007. However, in the first six months of 2008 enquiries are down at 3%.

Bodega continues: "The decline in enquiries as the Games approach suggests that those buying in China were professional investors who were quick out of the blocks. However the growth in Beijing's property prices peaked in October 2007 at 15.1% and has been steadily slowing to 12.4% in May 2008 in line with national property statistics. Therefore professional investors are now looking elsewhere."

Historically, property prices in all of the last four Olympic host cities have outperformed their national markets. Before the Barcelona Olympics property prices rose 49% more in the city than in the rest of Spain.

However HiFX advises that those looking to make money out of these developments should focus on the advance regeneration brought by hosting the games rather than trying to capitalise on the event itself.

Figures from the Halifax point out that in the Sydney suburb of Homebush Bay (a former industrial area) house prices were up 70% in the five year run-up to the 2000 Olympic Games, compared with a 50% rise across Sydney as a whole.

However HiFX cautions investors to remember, "The Olympics won't insulate local property from wider market influences. The Barcelona games in 1992 led to the complete redevelopment of the city's waterfront. Yet despite an estimated $16.6 billion of investment generated by the Olympics, the city still suffered from the economic downturn suffered by the rest of Europe in the early 1990s."

Bodega concludes: "The fact is that making money in these areas is more about regeneration than the Olympics themselves. South Sydney, another area undergoing regeneration but far from the Olympic stadium, saw prices rising significantly faster than in the Olympic corridor in the run up to their Games."

As well as emerging markets fuelled by interest from investors, the Hotspots report also reveals a steady increase in interest in the US. This is attributable to the weakening dollar which means British buyers' pounds go a lot further in America than they do in Europe, where the strong euro is pricing many holiday home buyers out of the market.