Top European property provides excellent investment potential

A select portfolio of rental properties in three European capital cities is proving an attractive investment for County Roscommon investors.  Rooskey-based McHugh and Associates specialise in compiling property portfolios which will prove attractive and lucrative for Irish investors and their expertise greatly eases the process of acquiring property abroad. A new package is now on offer from McHugh and Associates, comprising Germany’s capital Berlin, Prague, the capital of Czech Republic and the Portuguese capital Lisbon. According to Siobhán McHugh, ‘The undervalued German property market is finally beginning to bounce back and there is no better time to invest than the present. The Czech Republic is now reaping the rewards of EU entry and, finally, Portugal is one of the few countries in the world that despite outside influences always manages to enjoy a year on year capital appreciation.’ This investment offer has already been run by the company in the South of Ireland and proved a great success. It was limited to 52 investors and was sold out in a matter of days. ‘This launch is now aimed at the West of Ireland. Both Siobhan and John are quick to point out that this is not a fund; it is an investment vehicle whereby first time buyers abroad, or indeed subsequent buyers, can reap the rewards of high loan to value finance, get themselves well established on the property ladder, and use a local based company to help in the management of their portfolio.  This second release is limited to 34 investors. There are no hidden charges, no arrangement fees or no management charges from McHugh & Associates. The four apartments (one in Berlin, one in Lisbon and two in Prague) are in the investor’s own individual names, and the mortgage is obtained in the investor’s names also. It is then down to the investors themselves to make an informed decision as to when to realise their profits. None of the properties are dependent on each other and a decision to sell on each one is completely independent of the others, although they would recommend that the properties are held for a minimum of five years to realise maximum gains. ‘The portfolio is a mixed bag, Berlin is strong and steady, Lisbon is low risk, offering potential to maximise rental income through short term rents or have a steady income to cover costs through long term lets. Prague while perceived by the public to be higher risk is actually a very strong economy. They are currently experiencing full employment and are busy with a recruitment drive in Poland and Lithuania to recruit people to fill their job vacancies. Property has undoubtedly been the cornerstone of wealth-accumulation for many Irish people. Currently in Britain and Europe, Irish investors are among the biggest and best-loved gamblers in the property casino. More than ever before, success in this sector requires professional investment management. Siobhan McHugh (ACMA) is an experienced property professional who has been active in the international property investment market for over ten years, both as an investor herself, and as a consultant to private investors in Ireland and the UK. Siobhan’s accountancy background is invaluable when sourcing financially viable investment options for clients. John G Kelly (Agri Bus) has been marketing overseas investment property for a number of years. The last 12 months has been spent mainly in the German, Portuguese, Czech and Bulgarian economies. He has an in-depth knowledge of portfolio planning for Off Farm Investment. So, who is the offer aimed at? ‘A lot of our investors to date have been farmers or middle income households that may have inherited assets or have equity in rental properties that they want to utilise.’ The company already has a number of County Roscommon clients on its books in relation to previous offers. Previous completed funds by the group for 2007 include a residential fund on the outskirts of Berlin and a mixed commercial/residential fund in Berlin City Centre. How your investment works Put simply, an investor decides to invest €100,000. This investment is then spread across the four apartments to cover the shortfall in the loan value provided by the banks. In the case of all mortgage applications, a simple application is processed and none of the money is drawn down until all mortgages have been approved. The management companies in each country then take over the rental of the properties and will give as much or as little management information to the individual as required. After two years it is envisaged that the apartments will have risen sufficiently to return the €100,000 to each investor and that they will be able to continue to watch their portfolio rise in value without the commitment of their own money. At all times McHugh & Associates will be available for free advice on the appraisal of their investments with regard to their present situations. What’s on offer? City Centre Apartments In Berlin the apartments are all currently rented to local families with children, the rental income from these apartments is sufficient to cover the German bank loan. The loan on the apartment is Lisbon will be covered for two years by a local management company which has been in the business for the last 20 years. This two-year contract will be renewed after the two years on the same terms if the investor so wishes. There is also a personal usage available of up to 21 days over the two-year period with this management company. The Prague investment is an off plan purchase with a likely build out of 24 months. After this time the complete annual costs on the apartments are covered for a further two years. This gives the investor the comfort of knowing that if they are buying now solely for the capital appreciation they don’t have to worry about the monthly ins and outs of collecting rents and paying mortgages. All buildings have been valued by local banks and are being sold at these prices. They are not the prices that the developers would like to receive for their products. John points out that with a modest investment of €100,000, you can have over €1,000,000 worth of property working for you, with all the rewards of capital appreciation available to you at any time that you wish to cash it in. Berlin While property prices all across Europe have experienced strong growth in the last decade, doubling and even tripling in some cases, Germany has seen property values in sharp decline, falling by up to 60 percent since 1994. As a result, prices of residential property in Germany – and in particular Berlin and East German cities – are considerably lower than in any other EU country. After ten years of economic stagnation, the German economy is growing again. Unemployment is down to ten percent and business confidence is at a 15-year high. The property in Berlin is in the leafy suburb of Buckow, an area which is very popular with families who want to have a higher quality of living. The property is on a corner with a large green surround and there are a number of private play areas for children within the grounds. The building was refurbished in 1997 and is fully tenanted. The building is valued at €3.740,000. Apartments are priced at €110,000 and a loan of €69,000 is available per apartment. The building has 34 residential units. Portugal Overseas property investors regard Portugal as a prime location with a strong property market and high rental yields. Despite slower growth rates than in previous years, Portugal has held onto its appeal as a tourist and second home or retirement destination and its safe and solid economic climate continue to draw investors looking for stable medium to long term gains. Portugal is still undergoing economic reforms since EU membership and growth is a relatively slow process. Some investors who are seeking a solid and reliable bet within the medium to long term are enjoying healthy returns on investment of around ten percent per annum, meanwhile cashing in on rental yields from their buy-to-let investments in key areas. Rota das Indias is a development of 78 apartments built on the site of the Expo ’98 project just outside the bustling port of Lisbon.  The building started in May 2006 and completion date is this month. Fully furnished two and three bedroom apartments are available, with prices starting at €360,000. Prague Of the emerging democracies in central and eastern Europe, the Czech Republic has one of the most developed industrialised economies. It is one of the most stable and prosperous of the post-Communist states. IT boasts a well-educated population and a well-developed infrastructure. The inflation rate was 2.4 percent in May 2007 and unemployment is 6.1 percent in April and falling. The Czech Republic, and especially the capital city Prague, is one of the most promising locations for real estate investment in the world. Many indications show that the strength of the market will continue in the coming years. Kosire Apartments is an exclusive development of 68 apartments spread over three annexes. It is located in an up-and-coming area, just minutes walk from the newly opened Andel shopping and entertainment complex. The apartments are just a ten-minute walk from Prague’s picturesque and historic city centre. The development is due to be completed in 2008/2009 and the rental yield is anticipated at eight percent. The price per apartment is €285,000. About McHugh & Associates Established in 2000 with offices in Roscommon and Waterford, the company specialises in tax planning and investment strategies for individual, business and syndicated groups. It builds commercial and residential portfolios of property from Ireland, UK, Europe and Africa. The packages include a mix of low, medium and high risk transactions, depending on the individual’s requirement. For further information please contact McHugh & Associates Accountants, Tax Advisors and Property Consultants, Knockhall, Rooskey, Co. Roscommon, telephone (071) 96 38388 or fax (071) 96 38389. Telephone Siobhan McHugh on (086) 8376092 or email smchugh@cnal.net. Alternatively, contact John Kelly on (087) 6597572 or email jkelly@cnal.net.