PROPERTY PREDICTIONS FOR 2005

2005 promises to be another active year for international residential markets with the factors driving buyer demand remaining and new markets opening up for buyers in emerging locations, according to a new report by Knight Frank. The International Residential Property Review details the key markets where demand and interest from overseas buyers is greatest. Key objective of the Review is to build up data over the years, so that the reader may glean an accurate view and measured perspective of the growth or otherwise of different markets. According to Knight Frank, ownership of second homes abroad by GB households has increased by an average of at least 10% per annum over the past 10 years - a rate that the agent believes is sustainable over the coming decade. As new destinations are opened up, for example the recent EU entrants and those that aspire to entry in the near future, so new opportunities will present themselves. One indication of the scale of future buyer demand can be gleaned from tourist statistics. Using Great Britain as an example, the number of British overseas tourist visits totalled 17.5 million in 1980 - by 2003 this figure had more than tripled to reach 61.4 million. Those same tourists spent £2,738 million in 1980 and £28,893 million in 2003 - more than a 10-fold increase. Clearly not all tourists will buy overseas property, however according to UK government data, some 2.8 million people emigrated from the UK in the decade to 2002, the majority of them to countries within Europe.

Existing second home owners will also remain an important source of new demand either by upgrading property requirements in the same location or by moving to new markets.

On the development side, there is likely to be an increase in hotel-related residential schemes with major brands such Four Seasons, Starwood and Marriott increasingly recognising the opportunity to capitalise on the rising demand for residential property with service in holiday locations around the globe. The quality of construction and technical specification are also improving to match buyer expectations. Markets are responding to the influx of foreign buyers by improving local infrastructure provision.

Finally, although preferred locations for European second home purchasers are traditionally Spain and France as the more mature markets have become increasingly popular and expensive, buyers have sought new locations offering greater value for money and which are less developed.

The growth in the availability and destinations of international air flights has facilitated buyers’ ability to look further afield in areas such as USA (in particular, Florida), and the Caribbean. Other non-European countries, such as South Africa, Canada and Australia, for example, account for nearly one fifth of overseas second homes owned by UK households.

Central Europe has become more popular in recent years, with Croatia and Bulgaria joining Hungary, Poland and the Czech Republic as target locations. More recently, new developments in other locations such as Dubai and Morocco have attracted strong international interest.

To read the full report, log on to www.knightfrank.co.uk and search under the research reports section.