Long gone are the days when a seaside cottage on the Isle of Wight or a shooting estate in Scotland could satisfy the property dreams of a successful entrepreneur. Modern-day moguls are seeking ever more exotic locations in the sun, especially as cheaper air flights have opened up an increasing number of affordable and alluring areas in which to base your second, third or fourth home.

Hot spots everywhere
If you’re looking for a decent real estate investment, research by estate agent Knight Frank into global property trends shows that California is the place to buy a flat. There you will be able to take advantage of the weak dollar and rising prices, driven by ‘robust population growth’ and ‘a shortage of affordable land’.

Europe remains a popular choice for a second home with UK jetsetters though, with most attention focused on Italy, France, Spain and Portugal. Although higher-risk, Knight Frank believes Eastern Europe should continue to see a surge in prices. ‘High quality schemes are typically fully sold off-plan,’ the firm points out.

Naomi Greatbanks, head of FPD Savills’ international residential network, makes special mention of the Croatian coast around Dubrovnik. ‘It’s a beautiful coastline with sandy beaches and hundreds of islands. And its development is being well controlled.’

Further afield in Asia, hot spots include Shanghai in China, as well as perennial favourites Hong Kong and Singapore whilst the Indian market remains hampered by archaic planning rules. The coasts of Thailand and Malaysia are increasingly being developed with Western purchasers in mind. New Zealand is also popular, as is Cape Town in South Africa.

Careful research pays off
However, before plotting your escape you need to sort out what your priorities are as well as considering any practical issues.

Are you buying somewhere to live permanently, a bolthole for the occasional visit, a residence for tax purposes or an investment to rent out? Do you know about local property law and tax arrangements, the ins-and-outs of purchasing and looking after property overseas?

Have you considered how accessible or private the area is and the costs of getting to the place and how much it costs to live there when you eventually do? What about foreign exchange rate risks if you’re buying in a local currency?

All these factors should be taken into consideration before you take the plunge but perhaps the easiest way of going about this is to find an expert to help you out.

James Price of Knight Frank recommends clients ‘do their own research’ before approaching his firm.

‘Be careful of falling in love with an area where you are on holiday and finding yourself saying, “isn’t this a nice place to live?”,’ he urges prospective buyers.

‘You also need to work out the financial implications of your decision. First of all you need to look at the local tax laws and whether your status will change by living there, as well as whether property in the country you are looking at is liable for capital gains tax (CGT) or not – some is and some isn’t,’ he cautions.

Get a good lawyer on board
Another major difference from UK property law is that in most European countries you have to pay a substantial non-refundable deposit of ten per cent or more upfront at an earlier stage in the legal process than in the UK.

Equally importantly, he says, ‘You need to consider the practical aspects of the spot, so that you actually get as much enjoyment out of it as you can. For instance, are you near the airport? Is this a second home or your main residence? If it’s the latter then you might need to look at local schooling.’

FPD Savills’ Greatbanks agrees that ‘communications are key: not just in terms of getting to your property but also when you’re there.’ She says this is particularly so if you want to rent out the house for income. ‘You need to ensure it’s near facilities, such as shops, restaurants and the beach, so that families will be attracted to hire the property.’

Italian romance
Knight Frank’s Price specialises in Italian properties. ‘In Italy, overseas buyers are often after a property to restore. Be fully aware of the renovation costs before you go down this route,’ he says.

Another specific issue to consider in Italy is that there is no longer any CGT to pay after owning a property for five years. ‘Also be aware that the agent’s fees are frequently charged to the purchaser rather than the vendor as in the UK,’ says Price. ‘You need to factor that in.’

However, advantages are that all property is freehold in Italy, rather than a variety of leasehold, which is common in the UK. Most importantly, Price recommends clients employ ‘an English-speaking lawyer with a respected local firm’ to smooth the transaction – a point Greatbanks concurs with wholeheartedly. ‘It’s a false economy not to employ a good lawyer.’

Speaking of the current Italian market, Price says, ‘Tuscany remains core with Umbria becoming increasingly popular. In addition, on the other side of Italy the Adriatic coast from La Marche all the way down to Puglia is attracting more interest.’

He also says that, whilst rural properties are perennially sought after, in-town developments are becoming more popular. ‘People seem to want more serviced accommodation in cities. For example, we have recently sold a number of flats in Florence which people are using as a base to explore the surrounding countryside. The advantage is that these units are easier to look after than rural properties. After all you don’t need the hassle of looking after a second home.’

Dreaming of luxury purchases
Looking further afield, there is a great deal of interest in the Caribbean, with entrepreneurs taking advantage of the weak dollar to buy more property with their strong pounds.

‘Good exchange rates always help a market,’ says Price. For instance, the weak rand has fuelled sales in Cape Town, South Africa.

If you are looking to invest in real estate overseas then this could be a factor to consider but Price says most clients’ principal purpose is to buy a property to enjoy. ‘Prices vary greatly and are very subjective. After all, one house in an area might have a view but the other could be looking out over a bog at the back!’

Greatbanks says investing on a ‘buy-to-let’ basis overseas is increasingly popular as the London market has become overheated. However, she concludes that much of her time is spent dealing with dreamers – ‘even those with a lot of money’ – who dither over ‘nice places in the sun’ that they fancy owning. ‘After all, people can afford to dream a little as this is a luxury purchase rather than your main home to live in,’ she points out.