Be careful in buying in Turkey and Bulgaria

ioscorpio

Copied from https://www.themovechannel.com

09 June 2005
EU ‘no’ vote set to affect property markets


Property investor company Assetz has warned that property markets in Bulgaria and Turkey could be hit hard by the resounding ‘No’ votes in last week’s French and Dutch referendums.

Both Bulgaria and Turkey are popular with British and Irish investors, who were expecting to benefit from ‘windfall’ house price rises when the countries joined the EU in 2007. But last week’s votes by the Dutch and French people are clearly a warning that the existing EU members are unhappy with what they perceive as excessive growth of the Union.

As a result, countries not yet in the EU could be left out in the cold, with the gate to membership perhaps beginning to close with severe potential consequences for their economies and property markets, says Assetz.

Turkey was supposed to start negotiations for EU membership in October 2005, but it now appears to be in great danger of not getting off the ground with several EU members positioning their weight against the country joining. In addition Bulgaria and Romania have signed a treaty to join in 2007, but unless it is ratified by all 25 EU member states it cannot go ahead. So far it has only been ratified by two candidate countries.

Stuart Law, Managing Director of Assetz comments: "Bulgaria is presently suffering from corruption and widespread production thefts and Turkey still has significant human rights issues amongst a host of other problems which need to be dealt with to the satisfaction of all the EU nations. Otherwise membership could be off the cards."

"This would be likely to have a severe affect on the property markets in both countries, which are already perceived as a little ‘wild-west’. Bulgaria in particular, which has benefited from strong early gains in house prices, would risk being sent into free-fall."

"Investors should be careful not to put all their eggs into one basket, especially property where the resale-market could potentially fizzle out overnight leaving them high and dry. We think that the three highest risk property investment areas are now Turkey, Northern Cyprus and Bulgaria."

"Investors in search of capital gains at lower risk should look to countries like Southern Cyprus, which is now a full EU member and well on its way to membership of the Euro too in 2007/08. Prices are rising strongly and although early gains have already been had, the peak in prices is still some way off."

grebbo

I wouldn't advise buying anywhere on the basis of it joining the EU as property gains would be minimal.

Buy somewhere that has an attraction. Eg Outstanding beaches, ski resorts etc.

Buying in an emerging market will always be a risk but high risk can equate to a high return.

If anyone's contemplating buying overseas then its imperative that you check out the company you're buying from: Go to their UK offices, find out how long they've been trading for etc and then go to the country you're thinking of buying and do your research.