BEWARE the “Borat effect”: Sacha Baron Cohen’s spoof reporter has angered Kazakhstan, but he may have done more damage to the reputation of Romania, where the film’s opening and closing scenes, purporting to show Borat in his impoverished village, were shot. Corruption, poverty and potholed roads are a reality in Romania and in Bulgaria, both of which are due to join the EU on New Year’s Day. The Prince of Wales has bought a house in Transylvania, complete with outside lavatory, but UK buyers — particularly in Bulgaria — are beginning to find out that cheap isn’t always cheerful. As a result, developers and agents in 2007 will concentrate on southeast Europe’s few rural star turns, starting with Romania’s Prahova Valley, which has plenty of tourists in winter (for skiing) and summer (hiking) and handy access to Bucharest.

It also has a booming agricultural economy based partly on wine, an increasing amount of which is exported to the UK. In the pretty town of Sinaia, every second house is being modernised, and most have been given at least a perfunctory dash of paint. According to The Diplomat, a Romanian English-language magazine, demand for property is now outstripping supply (the going price for a four-bed detached house is about £100,000).

Fortune will favour the Far East: Low-cost flights from the UK to Hong Kong have helped to take amateur buy-to-let investors into a part of the world previously dominated by the professionals, and this trend will continue in 2007.

Hong Kong has very low taxes and a buoyant rental market. Singapore, meanwhile, offers unbeatable transparency and legal security with no capital gains tax, and tax on rental income is set at a modest 10 per cent. With its huge modern port and first-world infrastructure, it has become the preferred location for international business in South-East Asia.

“Off-plan buy-to-lets are an extremely attractive option in Singapore,” says Paul O’Driscoll, of Investors in Asia. “In addition, middle-class Asians typically save around a third of their incomes, so their economies are supported by a real feeling of increased wealth.”

Third World trailblazers will run out of steam: The high- water mark for second homes in the developing world was 2006. Cape Verde and Venezuela’s Margarita Island, both of which have begun to be advertised at UK overseas property fairs, fall into this category. Brazil should fare a little better, despite an overvalued currency.

The problem for these new kids on the block is twofold. First, mortgages for properties in the Third World need to be secured in the UK against your assets in this country. With rising interest rates, caution will be the watchword. Second, stories of investors getting their fingers burnt will start to do the dinner-table rounds — the precise opposite of the word-of-mouth recommendations that have fuelled British buying over the past 12 months in Slovenia and Croatia, for example.

Margarita Island in particular looks a poor bet: the Venezuelan Government’s zeal for expropriating private property, coupled with corruption and dreadful public services, will put off all but the bravest investor — all of which I say with a heavy heart, as my wife is Venezuelan.

France will bounce back: If sterling keeps its strength against the euro in 2007, UK buyers should return to France. After a rise of 120 per cent over the past ten years, French property prices have slowed almost to a halt. But France has the particular advantage of diversity in type of property, with a market that includes smaller units than those generally on sale in the UK: studio flats in Alpine resorts such as Megève (where 95 per cent of properties are second homes) and Chamonix will give you good value for money in 2007, but the fate of sterling will be the crucial factor.

British buyers in Spain will be able to drive a hard bargain: Had you bought an apartment in Madrid or Barcelona ten or even five years ago, selling today would net you a huge profit. But the smart money in Spain is beginning to move out of property. It was revealing that earlier this year the Seville-based El Monte savings bank made heavy cuts to its property portfolio in favour of other investments.

More properties on the Costa Blanca and Costa del Sol will come on the market in 2007, because many Britons who retired there in the 1980s will return to the UK for health reasons.

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