Property boom is on its way according to new study

The next decade is going to bring a boom in second home ownership according to a well respected new study.

Growth in foreign investment overseas will reach new heights, claims the 2008 Annual Wealth Report, produced by global property company Knight Frank and Citi Private Bank. Over the medium and long term, super prime and prime markets will outperform as wealth accumulates around the world, it says.

The key to taking advantage is to take care investing over the next 18 months, according to Liam Bailey, Knight Frank residential research director.

'There will be a big slowdown in purchase volumes in 2008 and 2009,' he said. 'But from 2010 forward markets will expand rapidly. The trick is not getting your fingers burnt over the next 18 months.

The study highlights 10 markets as prime areas for future growth: Portugal's Silver Coast, Singapore, Bahia, Brazil, Morocco, the Seychelles, Croatia, the Italian Riviera, Grenada, Mauritius and the USA.

'Croatia is a great example of a location where there has been a conscious decision to protect and enhance the landscape and avoid over development. This will prove to be a very savvy policy in a few years time,' said Bailey.

The study was surprised by the resiliance of the market in Asia. 'I did not expect to see such strong growth for the second year running in the big city markets in India, Russia and so forth. However these markets are turning. There is evidence of significant over supply and speculation in prices coming through,' commented Bailey.

He dismissed the idea that the numbers of investors will dwindle. 'The current High Net Worth Individuals will have their fill. But the issue is the demand from the next group of HNWIs, and to be fair, it is not HNWIs buying the bulk of products in Bulgaria and Spain.'

The most significant shift in buying patterns has been the desire to escape mass affluence. 'The more that wealth grows across the economy the more people will end up trying to escape the crowd,' added Bailey.

But there is no gain without pain. 'The credit crunch is far worse than its impact in the final quarter of 2007 suggested it might be. We expect many more countries to see negative house price growth over 2008 and into 2009, in particular the UK, Ireland, Spain, France, Netherlands, US, Australia,' he added.