Six Years On From the Overseas Buying Boom

Back in 2005 and 2006, Britons were clued to their TV sets watching re-runs of "A Place in the Sun" and dreaming of owning a holiday home or investing in merging markets. And many took the plunge, investing their hard earned savings, or sometimes re-mortgaging their family home, to make the dream a reality.

But Spain, France and Florida had become old hat and people were searching for more exotic locations, countries where the property was cheap and large returns were being promised in short time frames. Property magazines and newspapers were full of reports on how you could invest in a city centre apartment or a rural village house in places and countries, many British had never even heard of, let alone could find on a map. And with the pound to Euro rate much stronger, no inkling of the recession about to hit a couple of years later and with large amounts of equity in their homes or money to burn in the banks, many jumped in with both feet.

People were being encouraged to invest in cities in countries poised to enter the European Union and expected to shortly adopt the Euro. Places like Sofia in Bulgaria, Prague in the Czech republic and Budapest in Hungary and Bucharest in Romania. All eastern European locations, some still struggling to throw off the grips of the communist era. America's economy was growing and so investing in out of the way locations was cheap and offered an easy return. Massive impressive developments were planned in Dubai and luxury sea-side apartments were all the rage.

And in 2006 and 2007 Britons flocked to places like Bulgaria and Dubai to purchase one, two, three or more apartments or rural houses. Everything looked rosy, the market was strong, you were getting 1.45 Euros to the pound, but six or seven years later it is a different story. Property prices crashed as the recession hit the UK, investors stopped visiting and ploughing their money into these countries. The developers needed a steady stream of new money to complete projects already started and fund bank loans on land and development costs. Building stopped, developments ceased and many construction sites were abandoned, leaving millions of Britons owning little more than a share of a hole in the ground or a few walls. The fly-by-night agencies that had sprung up in the hundreds to service the British desperate to be parted from their cash, fled or folded. Developers who could not complete apartments for their investors just disappeared with millions in an off-shore account, leaving many thousands out of pocket and with no hope of ever getting their holiday apartment completed or title transferred to them.

Now there are numerous Brits desperate to sell their dream holiday home. For many the dream has become a nightmare as they cannot afford the mortgage repayments on their home in the UK and have a property in a country they seldom visit, if ever, worth very little. And these are the lucky ones. Many saw nothing for all the money they handed over to agents and developers.

Dubai saw a 50% drop in property prices between 2008 and 2011 and had to have a $10 billion bailout from neighbouring Abu Dhabi. Prices have started to climb again and for those that can hold out it is not all doom and gloom. Building has restarted and it is now a fairly active market again but prices are still 35% below what they were in 2006.

Bulgaria was one of the worst countries hit by the boom and burst scenario. It was billed as "THE" place to buy in 2006 with many of the UK's leading agents pushing apartments in the ski resorts like Bansko and Pamporovo and selling holiday apartments in sea-side resorts like Sunny Beach and Golden Sands. At the height of the boom billboards across the resorts boasted of buying an apartment for the price of a car and doubling your money in a year. In reality many developments were built without proper permissions, by developers of dubious reputations. Local agencies and British keen to ride the wave jumped on board, touting rural village houses for sale for a few thousand, apartments in the coastal resorts for guaranteed rentals. When the recession hit the UK and Ireland in 2008, it had a knock on effect in Bulgaria. The investors stopped coming. People could not afford the next instalments on their developments. Developers saw their money stream dry up and could not deliver on promises and contracts and so skipped the country, often taking millions of investors money with them. Half built apartment blocks cover vast areas of the coast. Rural houses bought by the British have never been visited since and are now worth next to nothing. Back in 2006 a large one bed apartment in the ski resort of Bansko would set you back 60,000 Euros. Now you can get the same for less than 20,000 Euros. And as the UK struggled through years of economic downturn, many Brits just wanted out and have been practically giving their apartments and houses away. Now the market is fuelled almost entirely by Russian investors.

Rachel Gawith is a freelance writer and website marketer. She has first hand knowledge of the overseas investor market living in Bulgaria for the last few years. She is currently writing and marketing for What House? property website.