Research published today by Savills International and HomeAway.co.uk shows that France has replaced Spain as the favourite destination for second home owners to invest. Its perception of stability, limited house price decline and ease of access help make it a safe bet for UK buyers.

Traditional prime property hotspots which attract wealthy, lifestyle buyers have been more resilient to the downturn. They include selected areas of southern France, the Alps, Portugal’s Algarve region, Italy and high-end locations in Spanish islands such as Mallorca. Cash-rich, high-spend buyers have maintained the robust property values achieved in top holiday home destinations today.

When choosing where to invest, UK buyers are most influenced by factors such as proximity to restaurants and bars, beaches, and being in easy reach of airports to reduce travel time. Most buyers have bought in destinations with extensive tourism infrastructure including cultural and historical attractions, golf courses, beaches and children’s entertainment.

In France, Italy and Switzerland, buyers have typically opted for older, traditional style properties, while in the US and Cyprus, and also albeit to a lesser extent in Spain and Portugal, investors have tended to buy more modern properties. This reflects the volume of new build development in these locations.

Holiday home owners like outdoor living, reflected in their preference for balconies and terraces with their properties. Buyers like the modern conveniences of their primary home to be available in their holiday homes. Internet connection is on the rise, particularly in long haul destinations. Air conditioning is in half of properties and 80% of home owners have access to either a private or shared swimming pool.

More than half (55%) of our survey respondents said that income generated from letting their property partially covered costs, helping them to mitigate against current global economic conditions. More interestingly, almost a third of respondents said that rental income completely covered their costs and 13% indicated it made them a comfortable profit: Over one in 20 holiday homes generated in excess of £30,000 per annum.

A 2011 survey of more than one thousand tourists who were looking to rent holiday  properties showed that similar to traditional overseas buying trends, Spain, France, the UK, Italy, Portugal and the United States topped the list of favourite destinations. They were followed by areas in south eastern Europe, Cyprus, Greece and Turkey, with Ireland in tenth place. These are typically summer destinations, with almost 80% of holiday rental requests being for the months April to September, with peaks in July and August.

In areas where prices are thought to have bottomed-out, most notably in selected US locations, investors are now looking at high yield potential and capital appreciation opportunities that will come with recovery. This demonstrates that appetite for investment has not disappeared.

There are investment opportunities where low house prices and high rental income can generate strong yield potential, especially in areas of the Caribbean, such as the British Virgin Isles and parts of the US, South Africa, the Spanish islands and in Portugal’s Algarve region. This demonstrates that despite comparably low capital values in these locations, holiday home rental demand supported by strong tourism fundamentals, remains strong.

Rebecca Gill, research analyst at Savills International and the author of the report, said: “Clearly, holiday home owners and tourists share similar preferences for overseas properties. Strong underlying “lifestyle demand” for a property helps to support an investment case. It is these fundamentals that drive longer term capital appreciation and attract rental income.”