Good Buys in Euro-land? You Betcha

Date: 09/07/2007

My mind was on Europe last week, as I attended the first couple of days of IL's Live and Prosper in Europe conference in Barcelona. Many Americans are steering clear of European markets right now, thanks to U.S. market woes and a super-strong euro. However, it's worth noting that the European real estate market doesn't follow the U.S. real estate market as closely as the relative stock markets tend to do. And arguments are made daily for why the euro is going to grow a lot stronger.

I say, in fact, those arguments notwithstanding, Europe can make a lot of sense right now, both for a real estate play and a second home in the Old Country.
Particular real estate markets in Europe are appreciating quickly right now--for example, Romania and Poland. Croatia still offers opportunity for both the investor and the second-home buyer. Even France, Spain, and Italy hide bargains for the retiree looking for a quaint home in the countryside…if you know where to look.

Every country featured at last week's conference in Barcelona, in fact, is home to attractive property buys right now. Specifically, in every European country Maria Savage and her Euro-crew included on the program it is possible today to purchase a nice home in livable condition for less than 100,000 euro ($135,000).

No, you aren't going to find buys like that in key locations like Paris, Barcelona, Provence, or Tuscany. But my point is this: If you're in the market for a civilized, cultured retirement, you can find something that qualifies not only as affordable, but even as a very good deal in countries Americans are generally writing off as too expensive right now.

Some locations discussed last week in Barcelona as Europe's best buys are, by all accounts, remote. Looking for them on a map is like trying to place western Washington State or the Texas Panhandle. However, the quality of life in these remote regions of Europe can be hard to beat. Most small towns across Europe hold often centuries-old annual festivals and celebrations, meaning that, from whatever "remote" point you choose to settle, you're likely to have dozens of these kinds of opportunities within an hour's drive. Visit vineyards, craftsmen's workshops, cheese makers… Soak up the history in the shadows of ancient stone houses and cathedrals…

Of course, don't expect your property value to explode in any of these locations…unless, say, a low-cost airline decides to add service to a small nearby airport (which is happening more often nowadays than you might realize). But if you are buying a retirement or a second home, don't worry about real estate appreciation. Worry more about appreciating your real estate.

If property appreciation is a priority for you (as it is for me), then stick to the major cities in this part of the world. Real estate in Paris, for example, has appreciated on average close to 10% a year for the last 15 year or more. Now, historic averages can be a dangerous thing. But I see Paris as above and beyond typical market indicators. There is nowhere to build more in central Paris (as in other European capital cities). Yet the numbers of people who want to live in these cosmopolitan hubs continue to increase.

No, these key European city markets aren't bargains. Paris apartments can trade hands today for as much as 18,000 euro ($24,500) a square meter. In other words, a 540-square-foot apartment (that's not a typo…it's 50 square meters, which is a common apartment size in this city) could cost you 1 million euro ($1.4 million). On the other hand, at the low end of the Paris scale, you can find livable apartments in nice enough neighborhoods for as little as 4,000 euro ($5,500) to 5,000 euro ($6,800) a square meter. In this case, though, you're still looking at a couple of hundred thousand euro to buy a one-bedroom place.

Look farther east, and you can get more property for your Greenback. In Bucharest and Krakow, for example, where prices have appreciated rapidly over the last few years, you still can find apartments for 1,500 euro ($2,000) a square meter. One property agent in Poland reports that property values rose 30% last year in Warsaw and Krakow. Probably that rate of appreciation will not continue, but, as buyers move in from other European countries and as rapidly growing economies create jobs and salary increases, property prices should continue upward.

Europe has a lot to offer despite the current woeful state of the dollar. Whether you are looking for a retirement home or an investment, the opportunities are there.

Lief Simon
For International Living