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Eastern Europe may be cheap, but some investors still travel further afield.

By Graham Norwood.
20 October 2004

Buying a holiday home seemed simple when it was just a case of deciding which part of the Lake District or West Country you liked the most. But with house prices in tourist areas far above the national average and the time taken to traverse British motorways rivalling that of flying to the sun, a foreign hideaway has never seemed more attractive. If you can't stand joining 450,000 Britons with holiday homes in Spain, should you choose a new European market where property is cheap or a dearer, distant, established one?

A cursory look at the scores of websites promoting apartments in new hot spots like Bulgaria and Croatia show that there are startlingly low entry costs. These markets make no bones about wanting foreign (and mainly British) buyers. One development on Bulgaria's Black Sea coast is even called Summer Dreams On Sunny Beach. Studio apartments start at £23,105 and the largest, most expensive penthouse comes in below £92,000. An annual rent guarantee of 6 per cent is offered for the first two years from their completion next summer (0800 011 2750; www.bulgariandreams.com). "It's a long-term project which is why prices are low and we help out with rental until the market becomes established," says a Bulgarian Dreams spokesman.

Like much of the Black Sea area it is becoming better known. Nearby Bourgas airport saw a 32.2 per cent rise in tourist traffic during summer 2004, with over 247,000 Britons passing through despite it having only charter flights to and from this country.

Croatian prices are slightly dearer but still small compared with the UK's. Typical is a new 60-apartment luxury development at Medulin, overlooking the Adriatic, where prices start at £55,800 (08707 282827; www.avatar-croatia.com).

But overseas property consultants say these new markets have major downsides. "These places are cheap for a reason. Often there may be beautiful views of the sea from developments but simply nothing behind them - no towns, no restaurants, no shops, no golf courses," says James Barnes of New Found Property International (020-8605 9520; www.newfoundproperty.com).

Barnes also warns people seeing cheap purchases as good investments to think twice. Developers in eastern Europe and Dubai complete tens of thousands of new homes every year, so at any one time there are vast number of properties on sale. "If you've paid £23,000 for a flat, that's fine, but ask what if anything is going to make it worth £50,000 in three or four years. It's not going to be a shortage of supply," he says.

He is also sceptical about long-term prospects. "Post-Franco Spain 30 years ago offered more by way of infrastructure, promise and international appeal than post-Communist eastern Europe does today."

Then there is travel. Budget airlines made much of western Europe accessible, but few go further east except to capital cities. A holiday home located in a distant area serviced by new flights without a proven track record will be hard to get to - and falling in value - if an airline discontinues a service.

Ironically, destinations such as the Caribbean or Florida may be a hefty distance away but enjoy longer-standing airline links and a greater variety of homes on sale than the new markets that are invariably dominated by identical apartments.

"In Florida, you can let out a property for 30 weeks of the year and that makes it fully self-sufficient. That isn't possible even in Spain. It's certainly not possible in eastern Europe where the summer season is very short and in some areas winter temperatures hit 30 degrees below freezing," says Charlotte Billington of Ultra-Villas, a Chelmsford-based property consultancy that sells properties in the US and Spain (0845 1305464; www.ultravillas.co.uk).

"Holiday buyers should think of the lifestyle. Florida's infrastructure is extraordinary and within an hour you can get to coast, country, city or some of the world's most famous tourist attractions. Hardcore investors can get steady, strong appreciation. It may not be as high as eastern European resorts claim on their cheap properties, but a 100 per cent gain on a £15,000 flat is still only £15,000. That's peanuts," Billington insists.

Detached villas, usually with pools, are still more common than condominiums in most areas of Florida and are therefore a bonus for families.

Three-bedroom townhouses built especially for the second-home market at Regal Palms in inland Florida cost from £111,400 (www.orlandovillas.co.uk; 01782 639724). Mindful of this year's flurry of hurricanes and typhoons, the authorities are making developers upgrade the build quality of coastal second homes, and existing owners can get full weather cover insurance for about $1,000 (£560) per home per year.

In the Caribbean, prices are dearer but recent deals by several island governments to permit more development means this region of the world is no longer aimed at only the super-rich.

Four-bedroom and four-bathroom villas in Freeport, Grand Bahama, are on sale for £327,000 (www.holidayhome.co.uk; 0114 258 3974) and local agents on the island say Europeans are clubbing together to buy one home between two or three families who then share out the use of the property and the proceeds from rental income.

They may entail long flights and occasional extreme weather but far-flung destinations are for the first time a realistic option for a large proportion of British holiday home buyers. And they will probably still work out cheaper than that chocolate box cottage in the UK.

The Independent- 20/10/2004