Is ‘Fly-to-let’ a good buy, or pie in the sky?

As well as the more traditional ways of monitoring the housing market, a quick glance at the weekend property sections can give a good impression of what is happening. As the Western property market has started to crumble, articles for increasingly distant buy-to-let destinations have appeared in the weekend papers as property pundits struggle to find sensible investment opportunities.

"Chasing profits to the ends of the earth," was The Sunday Times's headline for Peter Conradi's article suggesting several far-flung investments. "As recently as a decade ago, who would have thought of buying a flat in Tallinn, Sofia, or Prague?... Few people had even been to the Czech Republic, let alone contemplated investing their hard-earned cash there," says Conradi. But prices are now falling through the floor "anyone who bought a new-build off-plan in Tallinn, the Estonian capital, in 2006, will find it worth 10%-15% less once it is completed this year", admits Conradi.

Add to that the pound's falling value against the euro and I'm sure more than a few investors are now regretting their decision. But rather than seeing the losses that European property investors are currently sitting on as an object lesson, property investment firms and several journalists are simply moving on and suggesting increasingly bizarre fly-to-let' investment opportunities.

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How about a nice holiday rental in Colombia? "For decades, the name has been synonymous with kidnapping, cartels and cocaine, so why entrust your savings to a property there? One good reason is its little-known sophistication," says Fiona Dunlop in The Sunday Times. In fairness, the coastal town of Cartagena previously best-known as the destination of Kathleen Turner's character in the film Romancing the Stone is slowly becoming a holiday destination, with Cond Nast describing it as, "an oasis of calm in the midst of Colombia's troubles".

But that's just it while Cartagena may make a nice holiday destination, "more than four decades of armed conflict have put much of Colombia out of bounds", warns James Bedding in The Daily Telegraph. Colombia's drug wars and social unrest make it a highly risky property investment spot. And on a practical level, there are no direct flights to Colombia and prices aren't all that cheap a two-bedroom flat in Caragena will cost "upwards of £175,000". says Dunlop. All in all, it's an investment to avoid.

But don't worry, there are plenty more places to choose from. How about Mongolia? "The capital has a unique property market, and one that should appeal to any sophisticated property investor," says Emma Holifield in The Sunday Times. But she would say that she's a marketing executive for Property Frontiers, a company selling flats in the capital, Ulan Bator.

Now, there are some reasons to buy in Ulan Bator. Mongolia is rich in copper, gold and oil. As a result, several of the big mining companies are moving in meaning there are a lot of executives who need homes. But the risks outweigh the opportunities. "Corruption, for instance, is widespread," says Anthony Kim from the Heritage Foundation in the Financial Times. Add to this the fact that there is a degree of legal and political uncertainty over property rights, and Mongolia's investment opportunities are simply too risky especially with prices starting from around £85,000 for a two-bedroom, off-plan apartment.

Maybe Cambodia is more suitable. According to Claire Brown of Claire Brown Realty, the capital, Phnom Penh, is "like Bangkok or Kuala Lumpur eight or so years ago". This is an enormous stretch. Eight years ago Bangkok was and still is one of Asia's major financial centres and the initial destination of a vast proportion of the continent's tourists. By contrast, Phnom Penn is a rundown city with very few, if any, major corporations having bases there and tourists quickly passing through on their way to the temples of Ankhor Wat. Tourism is expected to grow over the next decade as visitors turn away from Thailand's crowded beaches and discover Cambodia's unspoilt beauty. But the country's industry is struggling.

"Impoverished Cambodia depends heavily on its garment industry, which accounts for 96% of exports and 13% of GDP," says Amy Kazmin in the FT. The problem is the industry is reliant on US consumers who are currently tightening their belts exports dropped by 22% in the last quarter of 2007. Bearing this in mind, "the rising middle class of Cambodians who want funky, high-end loft-style living" whom Brown mentions will probably be tightening their belts too if they still exist at all. Then add to this reports of land ownership arguments as Cambodians try to sort out the mess left behind after decades of civil war. So with both tourists and affluent locals thin on the ground, it's hard to think who would rent a buy-to-let property in Cambodia.

The other big issue is the resale market. Property investment firms will no doubt continue to tip outlandish countries as the next big thing. But with UK house prices falling and buy-to-let investors suffering both here and in Europe, most people won't have the money or the stomach for fly-to-let' investments for some time to come. And that, in turn, could make eventually cashing in on your investment' rather difficult.