Buying a place in the sun is the new buy to let.  The dumb money has left the UK market in droves, booked a highly polluting flight to a country with cheap land and hot sun – and then bought a piece of it.  The logic is inescapable.  Prices are flat in the UK, whilst rampaging ahead in many other locations round the world.  Flights remain ludicrously cheap, as an obscure international agreement after World War Two prevents any taxes being applied to aviation fuel.  So why not take advantage of this property goldrush and jet off to the sun?

There are pitfalls, of course, but for the passive investor these don’t outweigh the benefits.  Letting can be an unmanageable headache, build quality dire, builders fly-by-night etc. etc. etc.  But the bottom line is – if you do a bit of basic research and don’t believe the hype, you can pick up a pearl of an investment.  Not only that, you can take regular family jollies there – at the taxpayer’s expense!  But more on that later.

Named after the TV programme, the ‘A Place in the Sun’ show was held at the Excel Centre. It’s a bit like a Property Investor Show Lite.  If you can’t cope with full-on investment, then buying a place in the sun is not a bad choice.  You just have to sit back and hope it goes up in value.  It’s the amateur investor’s way of increasing their exposure to the property market.  With even a bare minimum of knowledge and research you should be able to spot a destination with rising prices.  Simply look for an area with:

  • Falling interest rates
  • Improving mortgage market
  • Improving transport links, especially air
  • Improving, rather than just expanding, tourism facilities
  • Lasting value – ie something that can’t be spoiled by next generation development, such as beachfront.
  • Resilient demand – mixing families, golfers, retirees etc.
  • Improving political situation and strengthening international links

There was a huge range of such locations at the show.  All you had to do was sort the wheat from the chaff, then find a reliable firm that could offer a deal that suited your wallet and preferred level of involvement.

The show was reasonably quiet on the day I went, but I’m guessing attendance picked up at the weekend, as the show’s definitely aimed at the amateur market.  As far as diversity goes, it was pretty good. It’s got everything from the familiar Spanish Costas to the more exotic destinations in Europe, Turkey, Africa, and beyond. There was also a range of random stall holders doing fun things like exotic foods.  Furthermore, the programme of seminars was a lot more interesting to the non-professional investor than the property investor show.

The show hits the spot it aims at – it’s play with perks, not work. One of my personal highlights was an 8,000-pound golf-simulating machine. I have never been a big golf fan because I don’t like wandering around on windswept golf courses, getting humiliated and trying to pretend I am having fun, but I have to say the computer simulation was a fantastic product. You can drive properly at full pelt in the safety of your garage.  Why pay a huge premium for frontline golf when you can just pay eight grand to have the same thing in your lounge!

The seminar forum was pretty good, perhaps not up to the standard of the property investor show but definitely well worth attending.  I went to a seminar on buying in Turkey and there was some excellent information about where to go, where to invest, which regions are hotspots and which regions are full of unsold but completed property.  The seminar programme covered all the destinations that are big for investment spend, such as Spain, USA, Turkey, Bulgaria etc, but there were also sessions on places further off the beaten track such as Croatia, New Zealand, and Australia.  The Turkey session I went to was particularly high quality, and right up to the minute.

I learned a lot about many of the locations on offer that day.  For example, I have never seen a map of the whole of Dubai before – but it really is absolutely amazing. (ed see http://realestate.theemiratesnetwork.com/developments/dubai/palm_islands.php  for images)  For those who’ve not heard what’s happening in Dubai, a huge new coastline is being created by building fancy-shaped new islands and peninsulas in the Gulf.  On the left of the map you’ve got The Palm, Jebel Ali – the second palm to be constructed. Then you’ve got the older Palm Jumeirah – already a hugely successful investment location.  This is followed by the World Islands, (just awesome) and then the Palm Deira at the very end.  It’s the recreation of a city – and its absolutely amazing. It is quite remarkable to see this vision popping out of the desert coast – turning a country with a short, straight beach line into something totally different.  It’s a project that makes building the Pyramids look like doing a refurb on a one bed flat in Slough. Whether Dubai is actually going to be nice when it’s finished is another matter. I fear it might turn into a soulless commercial nightmare – but it depends what you like.  It also depends on who inhabits it, and what peripheral development takes place. The Dubai project is stupendous in its scope, scale, and audacity. A huge amount of investment has been provided by the Dubai Government, backed up by money from Saudi.  Needless to say, it’s expensive to create several small cities in the sea.  If you haven’t seen The Palms on a map of Dubai, go online and check it out. Nothing like this has ever been done before in human history.  As long as the government remains stable and pro-western, al Qaeda don’t blow it up, and the punters keep buying the units as fast as the developers throw them up, then this could be a truly remarkable investment project, offering many years of growth.  Lots of people have already made fat profits.  But this, as we are so often warned, is no guarantee of future performance.  And therein lies the risk.

Just before I wrap up, I want to tell you about the tax dodge that lets you and your family take subsidised holidays, courtesy of the British taxpayer.  It’s simple, really.  You make sure all your family owns a stake in the property.  Inspection trips will then be deductible against tax – provided they are justifiable in the cause of checking, marketing, maintaining and improving the property.  If your company also carries out other activities that earn a profit (like letting) there will be a tax liability that will reduce if you take holidays in this way, as it effectively reduces the profits.  You can therefore pay for the holiday with untaxed income.  If you’re exposed to a marginal forty percent tax rate on the profits, your £1,000 holiday should cost you £1,667 in untaxed income.  But under this system, the kindly Chancellor will let you effectively go on holiday for free two times out of five.  So why be prudent with your profits – the taxman will reward you handsomely for spanking them on jollies to the sun!