Where Best To Invest In Europe

01.08.15

For budding property moguls and portfolio investors, emerging capitals are shaping up as attractive propositions. But where’s best to invest? Serena Templeton takes a tour of three of new Europe’s hottest urban prospects. 

With over eight former Eastern bloc countries having joined the EU party since 2004, real estate ambition is simmering on every emerging capital street corner. But while lucrative returns can be made, they won’t come without a scrupulous assessment of a location’s risk-reward profile. “City investments require a hard-headed assessment of the local housing market,” says Ray Withers of Property Frontiers, “even more so when it comes to undervalued markets. “Location influencers like transport links, amenities and quality of infrastructure all come into play, as does the perennial issue of weighing up local supply and demand. Emerging city regeneration zones where housing, employment transport and community are coming together in the right mix are a good starting point but always ask yourself-will a unit easily rent out with a satisfactory yield and can it be re-sold to an owner occupier? Look for a city that has the ‘X factor’ that little extra that lets you know that property ownership in the region really does make sound investment sense and a property gem could well be within your grasp.”

Istanbul

Turkey’s cultural capital delight, offers both a change and a rest, bringing a little faraway exoticism within easy weekend reach, while ticking the essential ‘tourist hit’ boxes for historical treats. “No-frills air lift has put the city firmly on the map,” says local agent Cindy Uriona, “with tourist numbers rising by around 20 per cent per annum.” Real estate is also proving an important economic development tool, with growing demand from the domestic market for new build, providing a ready-made exit strategy for overseas investors. “Buyers can enjoy high rental yields in an active market,” says Uriona. “Yields are up by 15-20 per cent per annum in recent years, while the introduction of new mortgage laws in 2008 and the prospect of lower interest rises will bring a further boost to the market.”

Turkey’s growing population of 14m also makes Istanbul the largest and busiest property market-with around 50 per cent of foreign investor purchases in the last four years made there. “’A’ class residential projects are more in evidence,” confirms Uriona, “with capital growth predictions in the next 3-5 years of 15-20 per cent.” Investors will need a budget of around £70,000 for a one-bed apartment, considerably more – upwards of £200,000 for a detached home, prime locations including the districts of Levant, Akatlar and Etiler, with Maslak, Besiktas and Ulus offering value-added views of the Bosphorus. “Rentals are buoyant,” adds Uriona, “a two-bed apartment netting around £700 per month.” One of Istanbul’s most elegant districts, the former fishing bay of Bebek is a good choice for spacious family homes, with panoramic city views and plenty of greenery. Mondinion is marketing a stunning three-story villa over 2,700sqm with sea-views. The eight-bedroom property has a large mature garden, swimming pool, garage and comes with planning permission to build a second villa on adjacent land. The asking price is £12m.

A contemporary alternative with ASM Property Investment – Green Towers is located in the central Beylikduzu district just 15 minutes from the airport. Phase Three of the project comprises stylish studio, one and two-bedroom apartments, with communal pool and leisure facilities, has just launched. Prices start from just £27,980 for a studio apartment.

Budapest

One of the Hapsburg jewels of Middle Europe, Budapest is two cities wrapped into one, its gothic architecture, swathe of boulevards and resurgent restaurant scene making it one of Europe’s most popular city-break getaways. Panoramically divided by the Danube, the Hungarian’s capital two halves make for an interesting mix. “Buda with its green hills is a beautiful suburbia,” says property consultant Robert Jacobs. “Pest is the lively side of the city with so much history, culture and nightlife.”

Boasting one of the highest level of home ownership in Europe (over 70 per cent), property prices in the capital have wavered over the past eighteen months, prices per sqm averaging between £650 and £1,000. Covering a total of 23 districts, districts 5, where most of the international hotels are located and 7, dominate the prestige end, property prices coming in around £2,000 sqm, with a one-bed apartment renting for around £400 a month. “District 5 is attractive,” adds Jacobs, “particularly around the Danube River embankment and Vorosmarty Square.

Like district 6, it’s an area that’s going to continue showing solid growth, with a strong rental market in tow, two-bed apartments netting in the region of £500 to £700 per month.” Up and coming alternatives include 9, 14 and 16, a two-bed apartment starting for as little as £50,000. Nestling against the banks of the Danube, Gateway Properties is marketing River View, a stylish boutique development of turnkey apartments with open-plan interiors and wrap-around balconies. On-site amenities include a gym, swimming pool and spa. Entry-level prices start from £92,500. An alternative period residence conversion in the so-called ‘Golden Triangle’ of the 6th is a stunning one-bedroom first-floor apartment with high ceilings, parquet flooring, mosaic tiled bathroom. The asking price is £93,104. Elizabeth Norman from London bought her two-bed apartment in District 9 in 2006 for £70,000. “I plumped for Budapest because it’s a good urban centre for exploring other places, particularly Vienna and Bratislava. It’s also culturally advanced, with the opera, concert halls and spa attractions.” As to future yields: “9 is the overflow district for District 5 and is starting to acquire a similar café culture feel. Prices per sqm have gone up by £350 to £1,000 in the last three years, although I’ve no plans to sell on just yet.”

Berlin

Few cities have enjoyed such an impressive renaissance as Germany’s steadfast capital. Before the wall crumbled in 1989, East Berlin was a cluster of ugly state-owned prefabs and subsidised housing was the norm. Since unification, the democratic domino effect has rippled its way across the city, with visitors flocking to check out the history and culture for themselves. “Germany singularly failed to join in the global housing boom of the last ten years,” confirms Andreas Steinbauer of Peach Property Group. “But that’s all changing now-a lot of the housing stock is in developer hands, with a government backed building boom in full swing.”

Sought after properties agents advise, are not necessarily the spanking new flats, but more the refurbished period residences. “Prices are based on floor space rather than the number of rooms,” adds local agent Norbert Klink, “and everything inside is incorporated including hallways. Flats can be snapped up in one of the city’s prime residential sub-districts like Wilmersdorf and Dahlem for £150,000, a little bit more in a prestige central location.” North of Alexander Platz, one of the most fashionable areas is Prenzlauerberg, a leafy suburb of late 19th century buildings. Increasingly popular with well-heeled young families, prices start around £130,000 for a studio.

Confidence in the luxury market has also taken off, with the launch of prestige developments like Yoo Berlin - Close by meanwhile in the park-rimmed Mitte district, home to Germany’s Parliament, and key tourist attractions such as the Brandenburg Gate and Museum Island, sales of the latest statement residential development, Yoo Berlin, are picking up momentum with 40% of stock already snapped up by foreign buyers since its November launch. Located adjacent to the vintage Berliner Ensemble theatre and overlooking the Spree River that wends its way leisurely downtown, the project’s Am Zirkus 1 is a golden postcode address. The site of celebrated theatre and film director Max Reinhardt’s ‘Grosses Schauspielhaus’ Theatre, where Marlene Dietrich and other glamorous international stars took their curtain calls in the 1920s, the development is also just a short hop from newly-opened private members’ club, Soho House, and the designer shopping drag of Friedrichstrasse.

A joint venture between innovative global design company yoo, founded by John Hitchcox, and Swiss luxury real estate developer Peach Property Group Ltd, this iconic 10-storey glass-and-steel pyramid complex is due for completion in early 2013. Boasting 87 spacious condominiums with customised interiors by maverick French design guru, Philippe Starck, additional serviced amenities for residents’ exclusive use include a Concierge Lobby, Wellness Spa with swimming pool, Atrium Lounge and a private bar-café. A separate section of the residence will also see the development and design of a new boutique hotel with 311 rooms, office space and commercial units which together total over 5,000 sqm.

Apartments and penthouses (ranging from 65 square meters to 310 square meters) are high on clean line minimalism from the airy, atrium dining areas and floor-to-ceiling picture windows to the fluted light fixtures and cantilevered basin and bath tubs. Split-level penthouses sport wrap around terraces and cosy entertainment ‘zones’ with a host of clever storage features including pull-out tandem larders and walk-in wardrobes. While most buyers to date have incorporated elements of Starck’s edgy style repertoire, the show flat displays his meticulous design discipline to full effect from the backdrop neutral palettes and monochrome animal print carpets to the oversized boudoir furnishings, Swarovski chandeliers and Venetian glass mirrors.

Most interest to date has come from clients in the financial sector and those attracted by des-res city living, but the apartments will also suit businesses interested in corporate lets. Prices range from £340,000 to £2.5m, with annual maintenance charges averaging £5,000 per annum including heating, water and rates.

Adds Steinbauer: “Starck believes that Berlin will tackle the 21st century on its own terms. He’s spot on. First-time visitors get the measure of the place pretty quickly. No doubt its capacity for reinvention will keep them coming back for more.”

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