British investment firm Assetz has named Bulgaria as the best destination for overseas property investment,

even though its tourist hot-spots are showing potential signs of overheating, according to a new research data.

While the United Kingdom ranks top for investment returns, Bulgaria is a close second. The remaining top five are rounded out by Canada, Cape Verde and Cyprus respectively.

While Bulgaria property maintains a strong position with a total of 71% return on cash invested, Assetz advised caution to investors, especially in the tourist areas such as Sunny Beach and Bansko where there’s an over-supply of apartments.

Local real estate agents have reported a lack of demand for new properties resulting in weak rental yields being achieved and the resale market is still unproven, the company said.

However, average property prices have increased from 17.3% to 22.5% annually in June 2007, possibly due to a number of ‘prestige' property developments coming onto the market.

Assetz commented that the rate of growth in many countries, such as Poland and Bulgaria, could not continue at a rate of 20 - 30%, and a reduction to a more stable and realistic rate of growth was necessary.