A growing number of people appear to be turning away from the usual package holidays and traditional hotels when they travel abroad in favour of renting a holiday home for the duration of their stay overseas – creating new opportunities for those looking to invest in foreign property markets.
The difference between the hotel market and this emerging buy-to-let sector is the “quality” of properties, according to Olivia Mullan, head of rentals at MRI Overseas Property, who said that rented houses tend to have the odd “additional advantage” such as “luxurious finishes” and “homely comfort”.
Such exquisite touches can make short-term rents a “much more attractive” option for people travelling abroad, particularly for those holidaymakers with families, Ms Mullan claimed.
“A spacious two-bedroom apartment is an attractive alternative to a cramped hotel room, which the traditional package holiday offers,” she said.
Buy-to-let investors may be keen to capitalise upon this trend, Ms Mullan continued, adding that another advantage is that owners can use their overseas property themselves for their own holidays.
However, research conducted by the firm in partnership with YouGov revealed that 29 per cent of people who currently own property abroad choose to visit their holiday home only twice each year – a fact that could mean that many are missing out on a significant business opportunity.
“Apart from the capital growth and the greater investment that it is, it can actually provide quite a lucrative income for them as well,” Ms Mullan argued.
Earlier in the year, Savills and Holiday-Rentals.co.uk surveyed 12,000 overseas property owners and found that more than half said that investment was the primary reason for purchasing a second home abroad.
Lucian Cook, director of Savills Research, claimed that “rental potential” was also found to be one of the most important financial considerations for most second homeowners, prompting many to look to far-flung destinations beyond the likes of France and Spain to find new investment opportunities.
However, Mr Cook also noted that 49 per cent of those questioned said they had financed their property acquisitions through mortgages and so were potentially at risk from “changes in occupancy rates and achievable weekly rental levels”.
“Nonetheless capital growth has played a fundamental part in the viability of these investments,” he added.
Perhaps encouragingly, Ms Mullan suggested that property owners are now increasingly “beginning to realise” that they are in a position to view their overseas property as a business potentially offering a significant income.