The investors who Buy in Bulgaria, Rent in Britain

A new band of investors is toying with the property market: people who Buy Abroad, Rent in Britain. Goodbye to UK home-ownership, lured by offers from overseas.

It is the latest trend to hit the property market. Buying abroad and renting in Britain has been brought about by the rising property market in recent years; typically Barbies are young, first-time buyers who can't afford to get on to the first rung of the British property ladder, so turn to another country where prices are lower. Recent research by the insurer Hiscox shows that, priced out of the British market, 40 per cent of young people would consider buying abroad to get on to the property ladder, with 37 per cent of under-35s surveyed fearing that they will never be able to own a home here.

But today's turnaround in the market, with years of constant and considerable price growth now over for the foreseeable future, is leading to those from an older, wealthier and more property-savvy generation opting to join the Barby set as a considered lifestyle or investment decision rather than out of financial necessity.

Mark O'Sullivan, head of trading for foreign exchange broker Currencies Direct, has noticed the rise in the number of older Barbies, lured either by the potential of making more money by investing in emerging markets abroad rather than in the UK, or by the chance to enhance their quality of life by selling up, downsizing to a rental property at home and buying outright abroad.

Examples: Scott and Clair Huggins Bought in Turkey, South Africa and Bulgaria Rent in west London

Scott Huggins, the 37-year-old presenter of the BBC's property relocation programme Get a New Life and director of Intrepid Investments (www.intrepidinvestments.com), is a Barby. In late 2006, when London property prices were still rising sharply, he declared renting the way forward and sold his three-bedroom flat (for about £700,000) in Barnes, west London.

He friends thought him insane. He considers it one of the best things he has done.

"Even though prices went up by a further 25 per cent over the next six months, I did the right thing. I'm an ex-City trader and the art is to never sell at the top because you can never predict when the top will come - and then after that, it's hard to sell," says Huggins, who, with his property consultant wife Clair, 37, rents a three-bedroom, terraced house in Putney Heath, west London (worth about £450,000) for £1,575 a month.

"I can't see City bonuses continuing in the way they have for the past few years - they'll be lucky if they still have jobs - and I think there is something fundamentally wrong now about the fact that you can rent property cheaper than you can buy it," he says.

"We wanted to invest abroad and we worked out that, if we bought in London too, we would pay about £20,000 in stamp duty and legal fees and our interest-only mortgage repayments would be £2,000 a month. The only way we could make money is if prices kept leaping up - and I couldn't see how they could. We decided to rent in London and pour any money we save into investing overseas."

Huggins owns a five-bedroom villa on Turkey's Bodrum Peninsula - bought in 2004 for £150,000, now worth about £250,000, as a holiday home whose rental income covers costs.

Then he has his purely investment-minded buys, including three one-bedroom apartments in Durban, South Africa, which cost £10,000 each.

"That's where the idea for Intrepid Investments came from - markets where no one has any money at the moment, and which British investors don't know much about. I rent the flats out to the local community, and they have tripled in value in four years." Huggins also owns a four-acre plot in Veliko Turnovo, central Bulgaria, which he may develop. "It cost £5,000, which works out at 70p per square metre - cheaper than carpet," he says.

He is now looking at buy-to-let apartments starting at about £20,000 in east Berlin, a city whose property prices are just on the turn after 12 years of decline.

"I'm a big fan of the philosophy that you should never sell if you don't have to," says Huggins. "Always ask yourself if the expense of selling is necessary."

Desinations for lifestyle and investment:

The would-be Barby has a range of options that span the globe, says Mark O'Sullivan of Currencies Direct.

"Those looking for relatively quick returns should look at markets such as the Lithuanian capital of Vilnius, where rental demand from local business people, is good and you have a good chance of making a profit from your property before it has even completed," he says.

"But for those wanting investment potential and personal usage, Canada is a popular choice. Its property market is set to open up this year with low-cost flights to regional airports, high demand for good-quality rental properties in oil towns and there is an endless range of outdoors activities, from golf to skiing, which appeal to buyers seeking some personal enjoyment of their property."

Canada A popular retirement destination for British buyers, but also showing good investment potential this year with new low-cost airlines, property booms in oil-rich towns such as Calgary and good year-round rental potential in new developments such as Three Sisters Mountain Village in Canmore, Alberta, with apartments from £253,000, or the Humber Valley Resort, with prices from £181,000 (both through Newfound Property International, www.newfoundproperty.com, 020 7470 2430

France With Spain's market looking decidedly shaky, France is emerging as the preferred investment destination that also offers huge lifestyle appeal. Languedoc, where prices are still about a third cheaper than neighbouring Provence, is seeing interesting new leaseback projects that offer guaranteed rental and some personal usage, such as Residence des Remparts in the walled town of Carcassonne (www.vefuk.com, tel. 020 515 8660), and new developments that encourage links with the local wine-growing community such as Les Jardins de St Benoit with apartments from £134,000 (www.premierresorts.co.uk, 020 8940 9406).

Egypt One of the emerging investment destinations in 2008, new developments cropping up on the Red Sea coast around Hurghada. El Gouna, a new resort near Hughada, offers Mediterranean-style appeal at about a quarter of European prices. Apartments at Ancient Sands cost from £75,000 (www.ancientsandsresort.com, 020 7235 0422).

Brazil A booming economy, fantastic beaches, great climate and local demand is seeing Brazil's property market take off in the north-east around Natal, where Latin American's biggest airport opens in 2009. See Pipa Paradise, 80km south of Natal, with beachfront apartments from £55,000 (www.experience-brazil.co.uk, 020 7321 5858)

Cape Verde Desert-like Sal, with direct flights from the UK, is set to become a major resort in the next few years and prices have doubled in the past two or three years, while other islands such as Santiago - with the vast, eco-friendly Sambala Resort - offer a property market in its infancy. Cape V (www.capev.co.uk, tel. 0800 915 9227) sells beachfront apartments at Dunas Beach on Sal from £70,000 and Sambala houses from £130,000.

Source: telegraph.co.uk