SIPP investors can invest in the following as part of a SIPP, UK Equities (including Investment Trusts AIM Shares & ETFs,) Gilts, Bonds, regulated Unit Trusts, & OEICs, Shares in recognised overseas Stock Markets (NYSE, NASDAQ, CAC to name but a few), and Commercial Property.

You will see no holiday homes or residential property on that list, yet most of us have heard about the huge successes of overseas property in Cape Verde, Turkey and the Cayman Islands, which have sold out almost completely to SIPP investors in recent years.

What you will see if you look into these properties is that they are resort properties or hotel room investments aka apart-hotels, being sold to investors but under the rental management of a commercial resort. This type of investment opportunity is not only allowable under a SIPP, but they are mostly perfect for SIPP investment.

Obviously SIPP investors are looking to make the biggest returns possible for their old age, but they are also keen not to be left with less than they put in or close to nothing as well. Thus, most will have some exposure to the high-risk high-reward game of stocks and shares, but have a bigger exposure to the relative safety of property, which usually always appreciates in value over the long term, and when researched properly has a sound exit strategy.

So SIPP investors want a safe investment, with safe but good returns and a reliable exit strategy. Resort and hotel property deals almost always fit this profile.

Resort/hotel properties come under the management of a professional hotel or resort brand (investors should look for brands that are well established and capable of letting the number of units being built all year round), this means that they are a serviced hands-free investment perfect for a SIPP fund. But even better is that the professional rental management makes good yields very likely from rental income, and also a good chance of capital appreciation.

In fact, many such properties will guarantee the rental yield, and/or guarantee to buy to unit back after a given period for a given profit. An example of a perfect deal for a SIPP property investment is a 5 year guaranteed rental yield of maybe 5-6 percent, and a guaranteed buy back of 125% after the five years. What would make that even better would be for the buy-back to be optional, and for the investor to be able to try and sell for more on the open market before deciding.

One example of a near perfect SIPP allowed property investment is the land plots for sale in Cayman Islands under the Dolphin Estates brand on Brac. The developer guarantees a 20% return on investment over 4 years. This can either be taken annually as a rental guarantee, or at the end of the term as a buy back at 120% of the asking price, or last but not least sell the plot on the open market after 4 years, and still take the 20% from the developer allowing you to make an even bigger return.

Another is the Melia resort properties in Cape Verde. Cape Verde is protected from overdevelopment by the government, and because there is very little land suitable to build on. This will ensure that Cape Verde properties hold their value, and with the Melia brand managing rentals this means a good overall return on investment is all but guaranteed on these deals.

There are dozens of mainstream tourism and property hotspots including Bodrum, and dozens more off the beaten track. Belek and Alanya are sort of in between that, mainstream popularity but still, better known by select groups and more discerning travellers. Here are three Turkey property greats…

Belek

Belek is the golfing capital of Turkey, and since 2009 has become known as the next Algarve (references may have been made before this but it caught on in 2009). Home to eleven of Turkey’s 18 golf courses, Belek is a small town by international standards, but its growing golf industry mean it is home to some of the finest hotels, restaurants, bars and shops in all of Turkey. Brits feel at home in Belek.

Until recently there was no freehold property in Belek, but recent law changes have seen a couple of freehold opportunities springing up. Because of this demand for privately let properties is already outstripping capacity, especially of really good units. Of course the best thing about Belek is the fact that most people are primarily buying a holiday home, with rentals as a secondary consideration, when buying like this you can’t lose in Belek.

Bodrum

Bodrum property is definitely not middle of anything. Bodrum is one of the hottest tourist destinations in Turkey. According to aviation data collection site Anna.Aero (possibly the largest repository of aviation data in the world) traffic through Bodrum international airport grew 11% in 2010 compared to 2009. According to the website’s data for 2011, traffic through Bodrum international is growing at 13% year on year, based on the average of monthly figures for the first half of the year — the biggest growth was 28.8% in April.

We all know that rising tourism is boon for a property market like Bodrum, because property buyers will look to make money from rentals to holiday makers, and more holiday makers means higher occupancy, and higher rental yields.

Further evidence of the success of destinations like Bodrum comes from Rightmove, the UK’s largest overseas property portal. According to the portal’s monthly overseas data, searches for property in Mugla province are among the fastest growing in the world, to be precise it was the 7th fastest growing top trending region in June.

Alanya

Alanya property is less known about in the mainstream than the likes of Antalya, Istanbul or even Belek, but those in the know, know that it is one of Turkey’s top spots. In the summer millions of people come from all over the world to enjoy the food, culture, atmosphere, not to mention the sun, sea and sand. It is also home to Turkey’s largest population of British expats.

Alanya’s one failing until recently was its lack of an airport, which is arguably the reason why it never reached mainstream popularity. Expats needn’t care about the 90 minute journey to and from Antalya airport, and Alanya attracts primarily those who plan to holiday for at least 2 weeks.

Now though, that is all set to change as the long-awaited Gazipasa airport welcomed its first international flight several months ago. The airport is a long way from being as well serviced as Antalya, but when runway expansion works are complete airport operators expect its coverage to widen rapidly. This is expected to trigger a new property boom in the city and surrounding areas.

A lot more people are likely to choose to buy property here that will provide holiday accommodation for themselves and which can be rented out for much of the season.

Choosing a buy to let property in Turkey, or a holiday investment property is quite different from choosing property just for your own use. There are a number of things that need to be taken into consideration such as location, and the number of people that a property can sleep.

Any property that is being bought for rental purposes has to make enough money to cover mortgage and maintenance costs and is probably expected to appreciate in value especially in the long term.

The location is probably the most important thing, as it needs to be relatively close to an airport with good connections to the rest of Europe. It should also have good amenities such as shops and restaurants, and it’s advantageous to be near attractions. It’s best to check that the shops and restaurants stay open all year round as some towns still have seasonal opening only.

One of the top choices for Britons is the resort of Fethiye. It’s just a 20 minutes drive from Dalaman and beautiful government protected Olu Deniz. The international airport at Dalaman has numerous budget flights from the UK. Fethiye has hot dry summers and short, warm, rainy winters, and summer temperatures average between 30°C and 40°C, while temperatures in the winter are usually above 10°C.

The season here remains warm all year round as temperatures never drop below 16°C. Buying an investment property in Fethiye is likely to give annual rental yields of between 6% and 8%.

Another place with a look is Altinkum which is a rapidly developing resort where property prices are still much lower than the rest of Turkey. This resort has the advantage of having the largest marina on the Aegean which opened just a couple of years ago.

The marina has a lot of shops and restaurants, a multiscreen cinema and over 1000 moorings. Rental yields are currently between 5% and 6% but are expected to rise, while the low property prices should enable greater capital appreciation.

Turkish property is very popular with foreign property buyers from around the world. It was popular before the international downturn, but has arguably become even more popular in its aftermath. Reasons cited for this belief are the massive economic growth of Turkey (11% year on year in first 6 months of 2010), its stable banking sector and relatively high liquidity and its stable fiscal performance.

This makes Turkey stand out in Europe as an investment destination. The well respected publication Global Property Guide recently published a report titled Turkey: Europe’s Best Residential Property Investment? This was accompanied by an article titled Turkey: a Housing Boom Ready to Roll?

Both detailed how Turkey property, currently among the lowest priced in the world is undervalued and presenting good investment opportunities.

While foreigners purchasing property in Turkey maybe becoming more popular, knowledge of how to go about doing so is not getting any more widespread. Every foreign purchase must be approved by the military, and there are other procedures unique to Turkey, which create the impression of excessive red tape and a difficult purchase process.

Choosing the Right Property

The first step in buying a property is choosing what property to buy.

As with any property purchase, at home and abroad, choosing the right property in Turkey depends on what you want from the purchase.

Investment

Pure investors will tend to favour major cities. In Turkey this is primarily Istanbul. While Istanbul isn’t the capital, it is the cultural centre of Turkey. While holiday home buyers also choose Istanbul, it is predominantly investors looking to capitalise on the growing affluence, and migration into Istanbul, by renting out their property on a residential basis for a high yield. According to Global Property Guide the average rental yield in Istanbul is between 6 and 8 percent.

Holiday Homes

If you are looking for a holiday home, the choices are near-limitless, and again, further subdivided by exactly what you are looking for from the property.

Turkey is known for its year round warm climate, and great beaches on the Mediterranean and Aegean coastlines, but what less is known is that Turkey also offers high quality ski resorts as well.

In fact, in Antalya at the start of spring it is possible to ski in the morning in the mountains, and sunbathe on the beach in the afternoon.

Choices Choices Choices

Choosing property in Turkey can be confusing, because many of the top towns are those named after the provinces in which they are located. The most popular provinces (according to figures from 2006) are: Antalya, where foreigners bought 5566 lots in 2006, Aydin (3998), Mugla (3035), Istanbul (1463) and Izmir (722). Of these Antalya, Kemer, Belek, Kas, Kalkan, Side, Alanya, Bodrum, Fethiye, Dalaman, Marmaris and Altinkum are arguably the most popular towns.

All the above have the aforementioned traits of a warm climate year round, and great beaches, as well as a variety of shops, restaurants, and activities as part of their growing tourist infrastructure.

People have to decide whether they want to have action packed adventure or party holidays, in which case they can choose property in Antalya, Alanya Dalaman or Bodrum. Or a quiet relaxing holiday, in which case they choose Kas, Kalkan or Side.

Those who want a golf holiday home have an easy choice; Belek is Turkey’s golf region, which has been covered in the press as the next Algarve. It has 12 of Turkey’s 16 golf courses.

The other factor in the choice is accessibility. Antalya and Dalaman both have their own well served airports, which is a huge benefit to them and the towns in close proximity. For example Fethiye is 20 minutes from Dalaman, and also from the beautiful beach and blue lagoon of Olu Deniz, thus it is easily accessible and offers 3 resorts’ worth of activities, beaches, shops and restaurants.

Young buyers, who are still working and want an active or family holiday in their week or two weeks per year, will most likely choose somewhere within 30 minutes of an airport and 20 minutes of a beach (Fethiye, Antalya, Dalaman, Bodrum), while those later in life looking to spend more time away in peace and quiet will choose Kas and Kalkan, which are an hour and a half away from the nearest airport.

Alanya was previously 90 minutes from the nearest airport (Antalya airport), but the Antalya Gazipasa airport, a few minutes away from Alanya opened last year. According to sources at TAV, the company that manages the airport, runway expansions to allow international carriers will be completed this year.

A Foreigner’s Guide to Buying Property in Turkey

Reserve and Seek Military Approval

In 2003 Turkey opened up parts of its property market to foreign purchases, and removed provincial restrictions in 2005. This allowed citizens of most EU countries (except Cyprus, Belgium, Slovakia and the Czech Republic), as well as those from Canada, the US and several countries in Asia, Latin America and Africa, to buy property pretty freely in Turkey, with some exceptions:

• Foreigners must obtain special permission for purchases over 30 hectares
• Article 87 of the villages act prevents foreigners from buying in municipal zones with populations of less than 2000
• The Military Prohibited and Security Areas Act prevents foreigners from buying in designated zones classed as military zones or zones vital to national security.

The second step in buying Turkish property is to reserve the property you have chosen. This is done by paying an agreed deposit and signing a reservation agreement. It is a good idea at this point to open a Turkish bank account for the transference of funds.

As was mentioned, all property purchases in Turkey must be approved by the military. You and the seller fill in, sign and send an application form to the regional TAPU (TAPU is Turkish title deeds) office, along with translated passport photocopy and passport details of the seller. This is then forwarded to the Military Head office in Izmir. Provided that the property is not in one of the areas named above (a village or military zone) this is pretty much a formality, but can take up to 6 or 8 weeks for approval to be received.

Once Approval is Received

Once approval has been received you should register at the local tax office and, along with your translator, sign the freehold ownership documents at the local Land Registry office, this allows ownership to be transferred faster as per a new law passed in 2007.

These are then sent back to the authorities, ownership of the property is transferred to the buyer and a new TAPU (title deeds) is issued to the local land registry, which then notifies all parties in the sale. You will then, once again accompanied by your translator, attend the Land Registry office, where you and the seller will witness (or parties acting on yours and/or their behalf), the new deeds being entered into the register.

On average this process tends to take 4 months from start to finish, but most developers will allow buyers to take possession of new properties during this process, provided approval has been granted, and a significant portion of the payments made.

This guide is published in association with New Home in Turkey, an Antalya based real estate agent offering property in Turkey from 25,000 euros.

The news is conflicting. On one hand we hear that rents are down, and on the other we hear that apartment prices in the prime areas have risen 8%, following a rise in villa prices also recently reported.

Another recent report by Japanese investment bank Normura, tells of a Dubai in 2011 filled with apartment and office tower blocks with no one in them. The report from Normura said so many offices and apartments are due to come on market in the next two years, that unless the current population decline is reversed and 150,000 jobs can be created, then they are going to lie empty. The latest report from Nomura estimates that around 25% of Dubai’s office space is currently empty with around 5% in Abu Dhabi.

This comes after similar warnings of population reduction from several other big names from recent weeks:

• Jones Lang LaSalle says Dubai’s population could decline 10% this year
• Egyptian based bank EFG Hermes says that the UAE population as a whole could contract by 5.5%
• The vacancy rate is expected to rise over the next two years as projects that are already under construction reach completion, and rents are expected to fall a further 10%.

To counteract these reports come the announced 3rd quarter profits of $178m from Dubai’s biggest developer Emaar properties. On Wednesday land sales in Dubai totalled 189.65 million Dirhams (31,680approx.).

Also on a positive note a new report by the Standard Chartered Bank in Dubai commented on how there is massive growth in the development of Small and Medium sized enterprises in Dubai, and they are contributing growing amounts to Dubai’s GDP. According to the report these new businesses are vital to Dubai’s survival because they bring it away from markets that it is too heavily reliant on like oil and micro-carbons.

There is also a report today of a 19.5% increase in traffic through Dubai international airport, and many reports of literally dozens of real estate funds entering Dubai to buy distressed properties.

So, what does all this add up to for the property market? Well, everyone knows I have never been the biggest fan of the Dubai property market and that isn’t about to change anytime soon.

The news on SME’s driving employment is good for Dubai’s long term future, but in the short term you just can’t argue with the hard figures: there is far more residential and commercial stock than people looking to rent or buy residential or commercial units, and this is only going to worsen with stock increasing as the population decreases.

As for the funds: sure they will take a lot of the stock off the market but they will ultimately be looking to make a profit. Their determining what the market does with their decisions on when to hold, and how many units to release at a given time is not good news for buyers. Therefore the funds are not good news for the market either in the short term.

If you want my opinion: — and you obviously do if you have taken the time to read this far on my blog — it will take at least 2-3 years and probably at least 5 for enough of the small and medium sized businesses of today to become big enough to really impact on the market. We will be looking to at least 2015 before the memories of Dubai’s dark side are sufficiently subsided for there to be any real interest from private overseas buyers.

By 2015 the oversupply problem should be manageable, and rents should start to see some steady increases again. It is up to you whether you want to buy now and wait that long — and probably a fair bit longer — for any real return on your investment.

Don’t get me wrong, Dubai is great for businesses; facilities and infrastructure wise, and you can get some great office space very cheaply and getting cheaper. But as I deal in residential I am saying 2015 before it is worth buying anything residential in Dubai.

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This trend is so great that we felt it needed to be addressed; exactly what qualifies as a cheap property in Spain? The answer can be applied to other countries and other buyers as readers see fit.

Firstly, one must remember that a property being repossessed is the end of a process. The time this process takes is usually one of the least pleasant times in the former owner’s life. It is likely that the former owners would have suffered from some form of depression during this time, and/or at the very least deep anxiety and apprehension about the future.

When a person feels like that, going about the business of an average day becomes difficult, let alone the upkeep of a property.

There is also the fact that the people being repossessed now are in large part those who have overstretched themselves to buy a home on 100% finance and/or at many multiples of their salary.

Bearing these facts in mind it is likely that a proportion of repossessed and distressed sale properties will need substantial work to bring them up to standard.

Another thing that people fail to consider is that the banks offer the best repossessed properties — i.e. a foreigner that had defaulted on the loan of a luxury property that had hardly been used — to their staff and their family members. This means that the proportion of poor quality properties among distressed property sales in Spain is increased further still.

Finally, there is the fact that Spanish property, for the most part was grossly overvalued during the boom years, by as much as 40% according to some analysts. This means that when you see a property at a discount of 20% or 30% off its peak price for a quick sale, the property may only just be realistically priced, not cheap and not a bargain.

So, what is a cheap property in Spain? The answer is: the same as a cheap property anywhere; a property that you bought for a good price, and that when it is up to a liveable standard, is valued at more than it ended up costing you.

Therefore, to buy a property that is cheap, one must do a lot of research into the area and also go and see the property to assess its quality vs. its price.

Thus, repossessed and distressed properties that are selling so quick that you don’t have time to go and see them first, are not necessarily cheap. It is a Russian roulette; you may well buy a property that proves to have been cheap for what you get, but you may end up with a complete nightmare.

It is up to you whether or not you want to take the gamble — there are some at such low prices that they have to be worth a punt. In closing: repossessed and distressed property sales ads tend to pressurise people into snap buying, when in reality you should always go and see a property before you buy it.

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