by Katerina Nikolas

Created on: August 07, 2010

Retiring to a place in the sun has long been the dream of many, particularly the British, who are familiar with vacationing in Europe. The most popular retirement destination is Spain, followed by France and Italy, and it is estimated that one fifth of all British now living abroad are retired.

Many of those who retired to sunnier climes are now considering returning to Britain, yet this need not be a deterrent to others. Many are considering returning primarily due to the exchange rate causing the value of their pensions to drop. A recurrent pattern across Europe is that many British who sold their properties in the UK and bought a dream place in the sun now see these new properties lose value at the same time as their pension income has devalued. Problems arise when too much of the equity from the UK house sale has been invested into a foreign property.

Those considering retiring to Europe now may well see more value for their money if they look at other European countries where property prices are still relatively low, or even consider renting as an alternative to buying. Spain still remains the most popular choice for many due to its easy connections to the UK and the favourable climate. The large ex pat community also appeals to many who don’t want to feel isolated in a foreign country and there are large swathes of the Costas which house many foreigners. Those considering retiring to Spain now may well be able to take advantage of purchasing either distressed or repossessed properties which can represent a good buy.

Many are now looking further afield where the value of their pound will stretch further. Property in countries like Albania and Bulgaria are much cheaper and the coastal areas less heavily developed. The downside of this is that the infrastructure of the countries is also less developed but investment is underway. Albania may make a good investment choice, but for those actually wanting to retire to their new home in the sun Bulgaria has some very inexpensive properties. Old houses with renovation potential offer excellent choice and can be purchased for a fraction of the price of similar style properties in France and Italy. The cost of living is very inexpensive in comparison to many other European countries so the average British pension would stretch much further.

Greece and her islands have seen an increase in foreign retirement buyers and although the cost of living has risen many properties still represent a good buy. The key thing again is to only invest if enough of a financial cushion is left to live on after purchasing a property. Renting a property in Greece for retirement is a viable option as there is no risk then of tying all ones funds up in a property. Whilst Spanish developers concentrated on off plan properties there are a number of small developers in Greece who simply built on spec, and now brand new properties sit with no buyers and can be purchased and finished to the new buyer’s specifications.

Retiring to Europe has been a sorry move for some but an excellent one for others. The cautionary note is to not invest all of the proceeds from a UK house sale into a foreign property, leaving only pension income to live on.

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