The Spring Assetz Property Investment Tracker shows Bulgaria has moved into prime position at the top of the table, with Cyprus in close second and France third.

Conversely, investors in both South Africa and Florida should beware of rising interest rates and plummeting returns.

Detailed research from Assetz, the UK’s leading property investment specialist brings together all the key investment criteria for UK buy-to-let and overseas property hotspots, to form the only comprehensive and authoritative investment tracker.

Assetz main announcements:

• Bulgaria – With yields shooting to 12% and capital gains staying high at 36%, the total return on cash has been a very healthy 116% for the last year
• Turkey – Despite mortgages not currently being allowed, prices are still rising well.  But investors should prepare for a rule change in 2006 permitting borrowing that will ignite the market further 
• South Africa/USA – With interest rates rising in both these countries, Assetz warns that some investors must be prepared to make a loss, particularly with new build in the USA

Bulgaria leads the pack

The Tracker reveals that in the first quarter of 2006 Bulgaria has stormed past Cyprus to the top of the table, offering a staggering 116% return on cash invested.  Deposit levels of 30% are easily accessible to most investors due to the relatively cheap property, with a typical two-bedroom apartment costing in the region of £80,000. Bulgaria is now establishing a stable resale market and proving it has staying power as an investment destination.  Although the level of house price growth is expected to tail off slightly during the remainder of 2006, Assetz predicts that overall market growth will remain high, alongside excellent yields of 12% in quality areas such as the ski resorts of Bansko and Bovorets.

Cyprus is not far behind and offers a lower-risk opportunity for investors. Low deposit levels of just 15% are possible now and Swiss Franc mortgages are available with rates of just 3.25%, making borrowing more affordable. Capital growth is likely to remain stable at around 15% which, combined with rental yields of 8%, results in a total of 84% return on cash invested.

Turkey, a new addition to the Tracker, will present a new overseas opportunity for investors who are awaiting a change in legislation to allow mortgages for foreign investors, expected later this year. Although gains are still strong, with 27% capital growth and 8% yield, the change of rules concerning borrowing will have a dramatic effect on the housing market, potentially pushing up prices in key areas as much as 50% in one year.

Growth in South Africa has slowed from 24.6% to 15.8% and is likely to continue falling. Mortgage rates, already 8.5% are rising, prompting serious concern over the stability of the market. Yields have fallen from 10% to as low as 5% in 2005, so rental income will fail to make a profit for many investors.

• Graph 1: Total Returns on Cash Invested

Stuart Law, Managing Director of Assetz comments:

"Overseas markets are still offering excellent opportunities for investors, with Bulgaria and Cyprus now overtaking some of the more established destinations in terms of total return on cash invested.

"However, investors should remember that high return is often associated with higher risk. Established locations such as France are still holding up extremely well against the competition, offering a total 68% return on cash invested with an excellent holiday rentals market. With the low deposits requirement of just 15% in France, the total return on cash is still exceptional at 68%.

"Cheap Bulgarian ski destinations are certainly in as much demand as quality resorts in the France Alps. However, for sunny destinations combined with quality investment returns I prefer the South of France and Southern Cyprus to the coastal resorts in Bulgaria.

"Property in America is in a very tense state at present with conflicting statistics showing resilient existing home sales but collapsing new build sales volumes. The jury is still out on how safe it is to be investing in the States right now."