Popular destinations such as Mallorca in Spain, the Cote d'Azur in France, Barbados and Switzerland are experiencing strong interest, and in some cases sales, from overseas buyers.
In Mallorca over the last 12 months prices have increased by 15.8%, outperforming the prime central London boroughs of Kensington and Chelsea and Westminster, according to the research from Chestertons.
In France house prices have dropped across the country and there is a growing optimism that 2014 will prove to be a turning point for the wider property market, whereby the higher end of the market has proved robust to the testing economic climate, says the latest research report from the property firm.
Much was made last year of President Hollande's proposed 75% wealth tax on high earning French residents, but at the end of 2013 the tax was approved with certain alterations. The tax is applicable to companies and organisations paying salaries above €1 million, not on individuals and households as this would have significantly increased the number of people eligible for the tax.
In order to attract more high net worth buyers to the country banks in France have started to lower their rates on mortgages in recent months. Mortgage financing on high end property is becoming essential in France in order to offset wealth tax and in the Cote D'Azur mortgage purchases dominate the market, accounting for more than 90% of luxury transactions each year.
The wide ranging impacts of the economic recession on Spain's economy and housing market have been well documented over the last four years, however, the problems have been almost entirely constrained to the mainland.
The report points out that the strength of the Mallorca market is underlined by figure from the Registradores of Spain showing that in 2012 some 24.95% of residential sales in Spain were in the Balearic Islands, an 8.12% increase on the year before.
Further evidence of the strength of the property market in Mallorca comes from the National Institute of Statistics (NIS) which revealed that prices in Mallorca increased by 4.8% in the third quarter of 2013 on an annual basis, outperforming every other part of the country.
House prices are likely to be driven by foreign buyer activity this year which, incidentally, has doubled since 2008. That year figures from the Spanish Association of Notaires recorded 1,642 foreign buyers in the Balearic Islands, principally in Mallorca.
House price data from property portal Kyero shows that in the first quarter of 2014 the average price in Mallorca for a four bedroom property stood at €862,000, up 5.37% on a yearly basis and 1.89% since the start of 2008. The average price of a five bedroom property in the first quarter of this year was €1,627,000.
Over the last 12 months prices have increased by 15.8%, outperforming the prime central London boroughs of Kensington and Chelsea and Westminster, and by 39.2% since 2008.
As was the case in most countries around the world property prices in Barbados suffered following the onset of the global economic downturn in 2008, but prices in the prime parishes of St James and St Peter have since recovered well.
‘Confidence has certainly returned to the market and properties within the more established parts of the island have been selling well, buoyed by investment from overseas, and although prices look set to remain relatively unchanged this year, they will start to increase in 2015 and 2016,’ says the report.
The new special entry permit laws, introduced in 2012, have proved to be a very attractive offer to retirees and high net worth individuals looking to buy a property in Barbados without residing on the island all year round. In January 2014, the number of tourists visiting Barbados was up 3.8% on the same month in 2013 as the number of British tourists increased from 16,585 to 18,134.
Another factor for the positive sentiment towards the Barbados property market is the current strength of the Pound against the US Dollar. For a Brit buying a $1 million property in Barbados the strength of the Pound in comparison with last year equates to a saving of $37,000.
The report also says that new developments are adding to the optimism. For example, at Royal Westmoreland an added 210 acres of land on the perimeter of the 500 acre site has been bought which will lead to over 200 villas and apartments on the 750 acre site, and construction of a new Four Seasons resort is expected to commence this year consisting of a beachfront hotel and luxury villas.
In Switzerland the property market has also been heating up and fears that it is heading towards bubble territory are steadily increasing. The UBS Swiss Real Estate Bubble Index rose to 1.23 points in the final quarter of last year, up from 1.20 points in the third quarter of the year. A reading above 2.00 indicates a housing bubble.
‘Fears of a bubble are being fuelled by a shortage of supply and an unquenchable demand for property in the prime skiing areas of Verbier and St Moritz. On top of this since August 2011 the Swiss National Bank has held interest rates at or around 0% and, as a result, this has allowed more buyers, both domestic and foreign, to take out a mortgage,’ the report adds.
