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Property is the investment vehicle of choice not only among South Africans, but worldwide.
The UK's Sunday Times and Sunday Telegraph have responded to the burgeoning interest by publishing guides on how to buy a property in France, Italy and Spain. So where exactly are the British and Europeans putting their real estate money?
UK property magazine Estates Gazette says rocketing property prices in the UK (especially London) since the late 1990s, combined with equity market volatility, have led many to consider buy-to-let properties as an alternative pension plan.
Estates Gazette says the serious money is now looking east - to Eastern Europe and China. The mainstream and specialist property press alike have been besieged by advertisements and editorial saying Prague is "the new Leeds" for investors.
This comes after capital values and yields dropped recently in Notting Hill, one of Britain's favourite investment areas.
Estates Gazette says the shift eastwards has been driven by three factors :
In May the EU expanded to include Estonia, Latvia, Lithuania, Slovenia, Slovakia, Hungary, Poland and the Czech Republic - "all proclaiming optimistic economic assessments. .. and consequent upward pressure on residential property values".
Many UK sales and letting agents have recently had more dealings with Eastern European buyers in the UK.
Buy-to-let in large UK cities is regarded by many business analysts as a poor investment. Hamptons International says falling yields in London may make it nearly impossible for would-be landlords to get 85% investment mortgages.
The publication quotes Richard Donnell, head of residential research at FPD Savills, saying that Eastern Europe is ripe for the picking. "The story is the same in Warsaw, Prague, Budapest and so on. They're joining the European Union, businesses are beginning to relocate there. .. and the quality and quantity of property will rise."
Advertising agency director Alistair Reynette-James is cited as being typical of the individual investor looking eastwards. He owns seven flats in London. His latest acquisition is an off-plan flat for £60 000 in central Prague.
"It's probably going to be one of my safest investments. You buy a flat in Chelsea for £300 000, find the market has dived overnight and it's worth £250 000. In Prague, property costs are much lower so the risks are less," he comments.
"Prices have risen from 10% to 15% in Prague every year until 2000. If they do the same between now and when the development is finished, the option is open for me to sell my apartment without having rented it out and still make a big profit."
Residential property is the biggest asset class by far - reaching close to $50-trillion globally at the end of 2002.
This compares with the next two biggest asset classes - equities and government bonds, which each topped $20-tr illion in global terms, according to economic research from Absa's Jacques du Toit.
Absa says that in South Africa the ratio of mortgage debt to household disposable income is relatively low compared with other countries. South African property has delivered 10-year returns in dollar terms of 6.07% and five-year returns of 8.53%.
Only bonds have given a better overall return - 8.07% over 10 years and 14.2% in five.
The country's largest mortgage lender expects home prices to keep rising for another two years, resulting in an unprecedented six-year period of continual real growth.
THE NEW HORIZON OF REAL ESTATE
What Estates Gazette has to say about the latest hotspots, as sourced by London investment firm Letterstone:
Shanghai: The next big thing. Unlike much of Eastern Europe, Shanghai has a sophisticated residential market with price indices and long-term involvement by Western property agents. Shanghai's property market rose by more than 27% in 2003 compared with China's overall property market (5.1%).
Czech Republic (mainly Prague): Rental yields sharpening potential for moderate-to- strong capital growth over the medium term.
Estonia (mainly Tallinn): The centre has seen large capital increases since 2002. Investors are looking to suburban areas.
Hungary (Budapest): An early location for Western investors so significant price rises are already taking place.
Latvia (Riga): Lack of supply has sent top-end prices soaring; there is some conversion of commercial to residential.
Lithuania (Vilnius): Limited investment potential until economy grows further.
Poland: Unemployment declining slowly; potential for sharp exchange-rate fluctuations; some investment interest outside of Warsaw.
Slovakia (Bratislava): Rental yields high compared with much of Eastern Europe; new-build shortage; commuting distance to Vienna.
Slovenia (Ljubljana): Very low level of interest from UK investors, but a strong national economy.
Bulgaria: Overseas purchasers concentrating on burgeoning second-home market at Black Sea resorts.
Croatia: Strong investment from non-UK western Europeans in Dubrovnik and Hvar Island.
Romania: Bucharest could follow Prague's example. source: SundayTimes, South Africa
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