Don’t follow the pack advises property expert

A leading property author is warning that it is becoming too easy for would be investors to be swept away by reports of 'hot spots' in real estate markets.

Tim Hill, author of Buying Property in Poland, says it is better to blaize a trail than follow the herd. 'It is easy to be excited about news of massive growth in a city and head straight there to get a piece of the action,' he says. 'But by the time the media are reporting on this growth the rapid profits have already been made.'

He advises would be property investors to work out why the rapid growth happened and to look for trends that indicate it's about to happen elsewhere. 'Popular cities and locations are still good and safe investments but if you rely on others to lead you'll always be paying more and taking longer to realise capital growth,' he adds.

For those with property portfolios Hill advises specialising if you are new to the market. 'The worst thing you can do is react to the next 'big thing' and mix up your portfolio just because somebody else said you should. A healthy portfolio will contain a mixture of properties eventually, so don't rush', he advises.

And he urges investors to visit a market and not just rely on what they read. 'The only way to accurately evaluate your investment is to get out there, look at what's really happening now and consider the overall growth potential.'

Poland is a typical example according to Hill. In the mid 1990s trail blazers found their way there and started purchasing real estate and the market gathered pace. Within 12 years some owners benefited from nearly 100% capital gains on their apartments in the old town in Krakow. Now prices there have stagnated.

Internationally it is still cheap there, but the rest of Poland is now catching up. With the Polish economy growing faster than its German neighbour large numbers of investors are still drawn to Warsaw. At the start of 2007 there were 151 new developments under construction – a drop in the ocean for a city set to double in size over the next decade. Other leading cities include Gdansk, Poznan and Lublin.