Money men put faith in overseas property

 
Around a fifth of the anticipated £8.8bn paid out in City bonuses this year could be channelled into overseas property investment, a survey commissioned by the independent property sales and marketing company Pure International suggests.

Conducted by Populus, the poll found 51 per cent of a group with average salaries of £331,000 and expected average bonuses of £294,000 intended to invest in overseas property this year. A quarter of the group said their budget was £500,000 - five times the amount Association of International Property Professionals says is the average overseas property purchase price.

Eight in 10 of the group said they were either planning or considering moving abroad for tax purposes at some point in the future.

Favouring established rather than emerging markets, 28 per cent of these high earners named France as a favoured destination, 23 per cent named the US, and 21 per cent Italy. Spain as named by 19 per cent. Switzerland, at 18 per cent, and Canada, at 15 per cent, were only slightly behind.

Some 41 per cent of the group said their preferred overseas investment would be a beach property, and 31 per cent that it would be a ski property. Among the under 35s, 35 per cent would choose an urban property, more than twice the percentage of over 35s.

Almost 60 per cent of the group already owned at least one overseas property.

‘We sell two thirds of property at values of over £500,000 between December and March, a clear indication purchases are funded by bonus money’, said Pure managing director Sean Collins.

'Our sample group are set to invest 21 per cent of their bonuses in international property purchases, which is only 9 per cent less than the proportion destined for investment in domestic property (30 per cent). Based on our experience and the results of this survey I would conservatively estimate upwards of £1.5 billion of City bonus money will be invested in overseas property this year’.

Pure said in the last two months it had sold out a development of 77 units in Switzerland with an average price of £750,000 and deposit of £40,000. Many of the buyers were City based and will complete in February when they receive their bonuses.

Buyers may have just scrapped under newly imposed restrictions. Some of the best known ski resorts in Switzerland have been affected by a one year moratorium on overseas property buyers imposed to help clear a reported backlog. Ccommunes in the Valais canton, including Verbier, are all affected.

Switzerland already imposes an annual allocation on property sales to overseas buyers. Pure said UK property buyers who did not had their registration applications acknowledged before 1 January will now have to wait until next year to complete their purchases. For the time being it has stopped marketing chalets the affected areas.

• Released last month, the Association of International Property Professionals’ 2006: survey suggested that some 200,000 new overseas property purchases were made in 2006. Three quarters of those investing said they believed the property investment to be more secure than money put into a pension.

‘There are few, if any, reliable figures in this market,’ said AIPP chief executive Paul Owen.