European Hotspots & International Investing Tips

Though the majority of our readers live in the United States, there are numerous other real estate markets of interest to both real estate investors and those who are simply fascinated by real estate (this includes me). International real estate has intrigued me for quite some time — especially after backpacking throughout Western Europe in the summer of 2005 and seeing how undeveloped some areas are; not to mention how beautiful the countryside is. While I’m still young and don’t have the money now, international investing is certainly in my future. What better way to learn about the topic than from someone who writes about European real estate for a living? Through the Carnival of Real Estate, I’ve traded several e-mails with Adam Nubricks, who heads up the Nubricks.com blog focusing on overseas property for sale (primarily in Europe). Since I figured there are probably Zillow Blog readers who are at least a bit curious about the prospects of investing abroad, below is a Q&A we conducted with Adam.

Q: You operate the Nubricks.com blog – what’s your focus and what got you started?

I started in the international real estate industry back in 2001, working on the Costa del Sol in Spain. After working on a company website for several months with a boss who failed to grasp the true potential that I could see the web held for property marketing, my partner and I decided to set up our own website.  The site marketed Spanish property, which at the time was the investment location of choice for many buyers looking abroad. Over the past 5 years this has expanded to a marketing platform for new developments as the market for property abroad has become truly global. Our latest endeavour, using the news-friendly blog format is Nubricks.com, which keeps property investors on track with factors affecting the progress of a growing army of foreign property markets worldwide. It is also a launch pad for new developments and a reference point for the latest overseas property for sale. One of our most successful features to date has been our reputable podcast series. With over 15,000 downloads, the Overseas Property Podcast Series has become a valuable source of local and expert opinion.  We have interviewed, among others, the Sunday Times Property Editor, a self made property investor and of course Amy Bohuntinsky at Zillow who recorded her thoughts on the future of US real estate industry back in December 2006.

Q: Where are Europe’s hotspots right now?

With so many destinations offering investment potential and each with their individual merits, it is hard to know where to begin. There are some hotspots worth checking out. Firstly, Northern Portugal, or the Silver Coast as some call it, has received a great deal of attention in the past few months. It sits on the Atlantic Coast of Western Portugal, above the Algarve, a Mecca for tourists from all parts of Europe and is building a reputation for golf resort excellence. Property in Northern Portugal is significantly cheaper than on the Algarve and it offers a more unspoilt coastline and less real estate development. Predominantly a holiday home market, it is important to remember that the peak season is for only 3 months, with a golf season in the spring/fall and low season the rest of the year.

Investors are also currently flocking to the capital cities of many Central European countries, buying up downtown real estate to rent out to contract-based Blue Chip company executives. This supplies the owner with a steady rental income, whilst potentially benefiting from longer term capital growth. Check out these flourishing capital cities:

Munich or Berlin in Germany
Budapest in Hungary
Bucharest in Romania
Prague in Czech Republic
Sofia in Bulgaria
Bratislava in Slovakia

Finally, with the likes of Easyjet and Ryanair improving accessibility throughout Europe, buyers are seeking more bang for their buck in countries where you can often enjoy leisure pursuits at a fraction of the cost of time-honoured destination favourites. Slovenia, a small former Yugoslav republic nestled between Austria, Hungary, Croatia and the top of Italy, is a largely mountainous country with a sliver of coastline which, more importantly for property speculators, is fast becoming the domain of adventure thrill seekers. It is an up and coming ski destination, has vast swathes of unspoilt natural countryside and a great capital city on tap in Lubjilana, all within 2-3 hours drive of one another. Having just adopted the Euro, real estate buyers are poised to take advantage of this emerging markets appeal and snap up properties for relatively inexpensive prices.

Q: What are the top three things for international investors to consider when thinking about buying properties internationally (and more specifically – in Europe)?

As with any real estate purchase, the value of your investment can go up or down. When thinking about buying real estate in a foreign country it is important to do the following, as a minimum:

1) Do your research - You wouldn’t buy your family home without having done all the necessary checks to satisfy that you are buying the right place, so why do so many people leave their brain on the plane when attempting to replicate the process elsewhere? Many buyers don’t conduct proper due diligence and find themselves stuck with a property that can’t be rented or resold profitably and mounting mortgage repayments and bills. The web works as an ideal platform to conduct this type of research and with so many blogs, forums and other channels constantly improving information quantity and quality. There is no excuse for not doing your research given you can find out so much more specific market information online than even a year ago; Zillow.com is a testament to that.

So having done your research, you should have decided on your target clientele and what property you will need to buy to satisfy their needs. Talk to local rental agents who should be able to give you rough figures on what you can expect to achieve and approx season lengths, using this data you can calculate whether this will be a profitable investment at the end of the day. Now you just have to tackle the actual buying process…

2) Never accept representation from a lawyer who is recommended to you by the agent/developer selling you the property, it is important to get independent legal advice, better to be safe than sorry.

3) Something many real estate investors overlook is planning their real estate strategy; make sure you have a marketing plan and an exit strategy.

Q: Are there a couple good online resources you would recommend to international investors just starting out?

Finding good informative resources online is a case of sorting the wheat from the chaff as they say. For overseas property, the following are two great sites to start you search:

www.themovechannel.com – This is one of the largest in our industry full of information and searchable property database. There are a lot of links and whilst hard to navigate at first is full of useful content.

www.globalpropertyguide.com – A financial perspective on global property markets. Again very informative, I particularly like their article on “How to spot a housing market bubble”.

www.channel4.com/4homes/ – The home of the programme which highlighted the UK fascination with owning property abroad, it has some great property related guides and can give you a great insight into the experiences of house hunters seeking property in locations similar to yourself.

Q: Real estate blogging has started to explode recently in the states – are you seeing a similar increase in international real estate blogging?

I would have to say that no, blogging in Europe whilst it has taken off, hasn’t exploded quite the same way as the states. International real estate blogging is dominated by a handful of blogs, mainly affiliated to large corporations, whilst others tend to just report other people’s news. Blogging inherently involves daily time and effort to turn it into a successful venture and my guess is that it puts people off. I believe that many of the companies operating in our industr are slow to grasp new technology and its business potential, unlike the US.  In addition,overseas real estate in particular is a very reactive rather than proactive marketplace. Companies tend to copy the major players without really understanding whether it adds value to their own individual circumstances. As such, I find many blogs that have been started, have been neglected after a few weeks. To me, this clearly shows the site jumped on the blogging band wagon but failed to think about how it would benefit their customer proposition. The lack of international real estate blogs is frustrating, more in the sense of having no community to share and contrast opinions against, making what we do very single faceted, but on a positive note the space is less cluttered.

I hope those interested in international markets (especially the European markets) learned something as I did. Thanks for the insights Adam!