Spring Property Survey: Bargains abound for overseas investment: Foreign climes are beginning to look financially attractive again. David Lawson reports

LAST YEAR holidaymakers could wander up one of a thousand Spanish or Italian driveways and browbeat the desperate owner into slashing as much as 50 per cent off the asking price. Now they would be lucky to escape with merely a rude gesture.

The days of cutting prices by half are over, according to David King, of Hamptons International. But this is only because sellers have taken their courage in both hands and done the pruning themselves. Now all it needs is buyers to take advantage of the cuts.

'But at least we are getting people on to inspection flights, and that's a good sign,' says Mr King.

Developers led the way by slashing up to 40 per cent off prices on the Costa del Sol, perhaps the most popular British playground, says Steve Emmett, of the overseas specialists Brian A. French.

He has hard evidence that this is finally paying off. Half the 14 apartments in a scheme near Mijas were snapped up by UK buyers until the recession struck and the rest sat empty for three years. But they have all gone for between pounds 60,000 and pounds 100,000 in the last six months.

Myriam Benisty did not have a single British name on her list of buyers for the Marina Puente Romano until a year ago. Now there are more than half-a-dozen in the plush Marbella complex, and two or three more hopefuls turn up each day. That is not because of any panic measures, however, as prices were kept in a range between pounds 153,000 and pounds 558,000 for two and three-bed apartments and penthouses. Revived interest springs from economic revival in the UK and local environmental improvements. 'The Costa del Sol has had a bad few years. It was overbuilt, overpriced and the coast road was a death-trap,' she says. Now that has been cured.

Elsewhere, however, more confidence in the UK economy is the prime factor drawing potential buyers. Mr Emmett picks out areas like Portugal's Algarve coast as the centre of attention. Prices here never ran completely out of control, particularly away from the coast, so there was less need for cuts.

'We have four-bed traditional farmhouses in a quarter-acre of land inland for pounds 20,000,' he says. A more spacious villa with a pool averages around pounds 120,000, although on the more expensive western side of Faro, Hamptons has a glorious two- storey villa in the Monchique for pounds 480,000 and another with two pools and five bedrooms for pounds 875,000 near Portimao.

Prices in Italy held surprisingly steady through the years of UK recession when buying dried up. The general election result is raising a few uncertainties, but Italy is used to political earthquakes, which it has always survived. In fact, the lira strengthened after a vote which could put power in the hands of complete novices, although it would have to rise much further to erode price advantages over parts of the western Mediterranean.

Tuscany is still the most expensive region in Italy, mainly because it is the most established target for UK buyers. Restored farmhouses can cost around pounds 100,000 and unconverted property is hard to fund. But there is still the odd bargain if you look hard enough. Mr Emmett points to three houses near Fabriann priced at pounds 14,500.

Umbria had a hoard of cheaper property before the recession but as buyers look further afield this region is threatening to become another Tuscany. On the border between the two areas near Lake Trasimeno, however, Mr Emmett has just sold a two-bed village house for pounds 18,300 and has a three-storey version nearby for pounds 23,000.

All these prices must be considered in the light of extra conversion costs - a point that sometimes slips the mind of UK buyers, particularly when they fall in love with rural France. 'It is courting disaster to go in with the idea of doing up a farmhouse and selling at a profit,' says Mr King. The best approach is merely to try to recover your costs.

'In any case, other people may not like your conversion. Buyers from other countries will certainly have their own fashions, and these may not match British designs.'

Many buyers found this to their cost, struggling to get their money back home during the recession. Now the UK economy has stabilised but the French are still suffering, which means prices are 20 per cent down on their peak. In many cases this wipes out the disadvantages of sterling devaluation since the EMS debacle.

French specialist Alistair Williamson recommends looking at the Vaunage, north of Nimes and Montpelier, for up-market village homes between pounds 140,000 and pounds 170,000. Down the scale, at Mirepoix, in the Pyrenees foothills, a renovated village house goes for around pounds 45,000.

Frank Rutherford favours the Tarn, east of Toulouse, where a similar outlay nets a three-bed farmhouse in an acre of land.

Contacts: Brian A. French 071 284 0114/0423 867047; Marina Puente Romano 081 754 8696; Hamptons 071 493 8222.

(Photograph omitted)