Overseas Property Investment: Loads of Land for 2009

As property prices in most countries around the world have fallen sharply, so too have land prices, in some cases land has fallen even more sharply. In some parts of India land plots have fallen by as much as 23% in 6 months, according to Indian real estate compant, Maa properties; in a recent press release the company wrote:

"But remote areas are seeing a crash of 20-35 per cent. For example, a plot in Sushant Lok Phase II today sells at about Rs 23,000 per sq yard compared to Rs 30,000 only six months ago, a fall of 23 per cent."

Yet no one doubts that there will be another global property boom, with everyone investing now doing so with mid-long term capital gains in mind. If you get a sizeable plot of land in a location where developers will want to build "exclusive off plan apartments", when the next boom comes, the potential for profit is limited by almost only the imagination.

For example, you can currently buy a 87,302 sqm plot of land in Bulgaria near the town Lovech, bordering Slivek Village in the land of s.Gorno Pavlikene for £311,249. A plot of that size could be developed into an out of town super mall, industrial estate with saleable factory space or several resort developments and apartment complexes.

When Bulgaria's economy is growing again, a developer will pay closer to £2million to buy that land for development. Even if affordable housing for locals is built they will make millions of Euros in profit from a plot that size.

Another example is a £16,000 square meter plot of prime beach-front land on the gulf of Thailand island of Koh Phangan, which is ready for development, i.e. roads, electricity and water connected, for £140,000.

Koh Phangan is almost a virgin island, but its two big brothers, Phuket and Koh Samui saw luxury villa prices grow by 50% per year in 2006 and 2007. Therefore a massive plot like that will be highly sought after during the next boom, when villas in Koh Samui will be selling for upwards of £250k.

A developer will pay at least £500,000 for such a plot, because even if they build only 20 luxury villas of 200sqm leaving ample room for gardens, pools and resort-style facilities, at a build cost of £360 per sqm, that is a cost of 1.94 million. Luxury villas on a tropical beach will easily fetch £250k when times are good, multiplied by 20 that is £5million, a profit of 3,060.000 (£3million and £60,000).

And that is a conservative estimate, the £360 per sqm build cost is based on what I know a developer was charging clients to build on purchased land plots on a Canadian development during the boom. They would be much less in Thailand.

What's more the person selling that land hasn't even dropped their price because of the credit crunch, it is possible that an offer of £80-£90k would buy it.