With the US dollar worth less than 50 pence, now would seem the ideal time to
capitalise on its weakness. Yet, despite the perennial attractions of
Florida, in particular, America itself is currently not the safest place to
invest for those looking for a holiday home abroad. The country’s housing
market has been looking wobbly for months, with average prices across the
country falling 3.2% in the second quarter of this year, the fastest decline
since Standard & Poor’s nation-wide index was established 20 years ago –
and that was before last month’s turmoil on the global financial markets hit
confidence further.
Yet the USA is not the only place where your pound will go further: a number
of the world’s other currencies are also linked to the dollar. This means
that, over the past few months, as the greenback has slipped back against
sterling, so, too, have their currencies – providing a handy discount for
British buyers.
Primarily, this means countries in America’s own back yard, including the
eight Caribbean nations that use the Eastern Caribbean Dollar (XCD). Further
south, the Mexican peso, although not formally linked to the dollar, has
drifted down with it over the past year. But it is not just countries in the
western hemisphere. Further afield, the UAE dirham, used in Dubai, an
increasingly popular destination for British buyers in recent years, is also
pegged to the dollar.
THE CARIBBEAN
Antigua, Barbuda, Grenada and St Lucia are among the countries that use the
XCD, which has been fixed at 2.7 to the dollar for more than three decades.
The currencies of the Bahamas, the Cayman Islands and Belize also maintain
parity with the US unit, while the British Virgin Islands makes things
easier by using the dollar itself.
St Lucia has become one of the more established destinations for British
buyers over the past few years. Prices have risen, but are still about 65%
lower than in neighbouring Barbados. Savills estate agency, for example, is
selling villas in sought-after Cap Estate, on the northernmost point of the
island, for $690,000 to $850,000 (£345,000 to £425,000), but it is possible
to find homes for less than £250,000.
In fact, you can spend even less than that. Mike Purvis, a retired engineer
from Dorset, and his wife, Anne, a health-service manager, paid £30,000 last
September for a plot of land on St Lucia. The couple, both in their late
fifties, are building a three-bedroom, two-bathroom house that should be
ready next February. “We initially tried to buy in Antigua, but it has got
expensive, so we looked at St Lucia,” Anne says.
They had expected the building work to come in at about £95,000, but the
currency markets are working in their favour. “The cost is going down
because the pound is getting stronger,” she says.
New flights are planned from America and Europe – there are currently six
direct flights a week from the UK, taking about nine hours. The
redevelopment of the capital, Castries, will add thousands of new hotel
rooms, while six new golf courses are planned around nearby Rodney Bay. And,
although St Lucia took a hit from Hurricane Dean last month, this was a
relatively rare event – the island sits some way south of the main hurricane
path, and the previous time it was affected was back in 1980.
Belize, a British colony for more than 100 years before independence in 1981
and the only official English-speaking country in Central America, is
another thriving Caribbean destination. It offers pristine beaches, unspoilt
forests and the second-largest barrier reef in the world.
Property prices have already risen significantly as a result of a five-year
boom – although this has been partially offset by the fall in the Belize
dollar, pegged at 50 US cents. By Caribbean standards, however, property is
relatively cheap here, with beachfront homes available for less than
£250,000. In the exclusive Caye Winds resort, on Ambergris Caye, near the
town of San Pedro, villas are available for £720,000 (www.cayewinds.com).
CENTRAL AMERICA
Panama, the sliver of Central America that connects Costa Rica to Colombia, is
experiencing an unprecedented property boom, driven in part by the country’s
growing popularity among Americans as a retirement spot. Mick Jagger and
Bruce Willis have both purchased property here. Formally, the country has
its own currency, the balboa, but since it is pegged one to one to the
dollar, it makes little difference.
The economy is healthy: GDP grew by 8% last year and is expected to keep
growing fast, as the government invests at least £2.2 billion in expanding
the Panama Canal. For those looking for a holiday home, the attractions are
obvious: miles and miles of coastline (Caribbean on one side, Pacific on the
other) more than 1,000 islands, hugely varied wildlife and a tropical
maritime climate.
Prices in the capital, Panama City, are already high: a penthouse in the
exclusive Punta Pacifica district of Panama City, where Donald Trump is
building the 65-storey Trump Ocean Club, costs about £250,000, while
two-bedroom flats start at about £125,000. Outside the capital, prices are
more reasonable: two-bedroom villas in the Rincon Beach Estates development,
on the Pacific coast, start at £75,000 (www.panamarealtor.com).
There are no direct flights from Britain to Panama; the journey takes about
15 hours via New York.
Bargains in Mexico could be harder to find, but the country remains a hugely
attractive destination for property investors. Thanks to the introduction of
title insurance, it is safer to buy here than it used to be.
Prices are higher in resort towns such as Cancun, Riviera Maya, Cabo San Lucas
and San Felipe: you can buy a three-bedroom flat in a new development in
Cancun for £140,000, while in Rosarito, Baja California, a new three-bedroom
house costs £175,000. A four-bedroom villa with a pool in Cabo San Lucas
costs less than £700,000; a similar property in Puerto Vallarta is £600,000
(for details of both, visit www.coldwellbankermex.com).
If you venture off the beaten track, to smaller, sleepier towns, there are
bargains to be found. For example, £140,000 will buy a four-bedroom house in
San Miguel de Allende. Puerto Escon-dido, a former fishing town on the
southern coast of Mexico, is increasingly popular with American and European
investors; but, despite substantial price increases over the past few years,
it is still possible to find large, oceanfront homes for less than £250,000.
THE MIDDLE EAST
It may not appeal to all tastes, but if you are looking for a mixture of
Disneyland and the Arabian Nights, then Dubai, almost seven hours’ flight
from Britain, should fit the bill. The country’s property market has
exploded since 2002, when foreigners were given permission to buy.
Prices have shot up, although the days of “flipping” – buying a property
off-plan, then selling it on before it has been completed – have long since
gone. The dirham (AED) – in use in Dubai and other parts of the United Arab
Emirates – has been fixed at 3.6725 against the dollar for more than two
decades, which means that, for those with pounds to spend, property has been
getting cheaper recently. The fall has been particularly beneficial for
those who have bought off-plan and, typically, pay in regular instalments
until completion.
In June, for example, Eugene Murphy, 52, a platform-rig manager for a
Norwegian oil company, spent £140,100 on a one-bedroom off-plan flat on the
27th floor of the Bay Central building, at Dubai Marina, which is due for
completion in December 2009. “I’ve only ever worked over there, but I’ve always
classified it as a place for R&R,” he says. “It’s a fantastic country.”
The fall in the value of the dollar has helped: Murphy, who is buying the
property in a series of instalments over the next two years, has bought
dollars forward to lock himself into the advantageous exchange rate.
Prices in Dubai vary considerably, reflecting the diversity of properties on
offer. It is possible to buy a one-bedroom flat in a development such as
International City, for example, for as little as £30,000. Typically,
two-bedroom flats in the city go for between £75,000 and £100,000.
Prices are substantially higher, however, in the most sought-after
developments – on the Palms, for example, the three largest artificial
islands in the world, which are being built off the coast. A six-bedroom,
7,000 sq ft villa on the Palm Jumeirah, for example, costs £3.2m. Better
Homes, a Dubai-based agency with an office in Britain (0845 373 4356, www.bhomes.com),
has a wide range of properties on offer.
If Dubai is rather too bling for your taste, several of the other emirates,
including Abu Dhabi, Ras al-Khaimah and Ajman, have begun marketing property
to foreigners, with prices starting at as little as £25,000.
AUSTRALIA
Although the Australian dollar is not linked to its American namesake, it was
particularly badly hit by last month’s turbulence in the financial markets,
with the pound rising from A$2.31 to A$2.46 in two weeks.
The swing proved fortuitous for Patrick Curbishley, 64, and his wife, Ros, 61,
who is retired. The couple are emigrating next year and recently bought a
four-bedroom house in a suburb of Perth, in Western Australia. “We were
sensitive to the fact that in recent weeks, some of the Far Eastern stock
exchanges had become increasingly volatile, and that was affecting the rate
of sterling to the Australian dollar,” says Patrick, who works in human
resources. For that reason, they worked closely with HiFX, one of a growing
number of specialist foreign-exchange firms, which helped them to buy
Australian dollars a week ahead of the day they were due to settle on their
property, gaining them an advantageous exchange rate.
Patrick estimates that carrying out the transaction in this way saved him
about £27,000 – especially since the Australian dollar has since bounced
back up about 5% against the pound. “With the currency markets in such a
volatile state, anyone planning to move or buy property abroad needs to be
aware that the cost of the property might be more than they have budgeted
for,” says Mark Bodega, marketing director of HiFX.
SOUTH AFRICA
With the rand at a three-year low against the pound, South Africa is also an
attractive destination for British property-buyers at the moment. In May,
Miles Marshall, 37, sold his four-bedroom house in Fulham, southwest London,
for more than £1m so that he could move to Cape Town. He bought a small
townhouse for 3m rand – £205,000– and a property on the coast that he is
rebuilding, which will end up costing him about £580,000.
“I felt it was a good time to get out of the UK,” says Marshall. “Some people
might say it’s risky, but you’ve got to take the risk to get the gains. But
buyers should watch out for currency fluctuations, he warns. “The South
African rand is a volatile currency and could be vulnerable to big swings in
either direction.”
Although the fall in the rand has softened the blow for British buyers, house
prices in South Africa have been rising rapidly since 2000: you can expect
to pay more than £100,000 for a family home, particularly in the most
sought-after areas. At Hout Bay, in Cape Town, a two-bedroom flat costs
£82,000, while a three-bedroom house in Ballito, KwaZulu-Natal, costs about
£135,000.
South Africa also offers a number of fractional ownership schemes targeted at
foreign buyers. IFA Hotels & Resorts, for example, is selling two- and
four-bedroom properties at Fairmont Heritage Place, in Zimbali, on the
Dolphin Coast, KwaZulu-Natal (www.zimbali.co.za).
Prices start at £54,000 for a one-thirteenth share in a property, which
entitles the owner to three weeks’ usage a year. Unlike timeshare, fractions
entitle those who buy to a proportionate share in capital gains. Direct
flights from London to Cape Town take just under 12 hours.
To
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click here
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