Europe is predicted to do well in the property hotspot list for next year with Cyprus, Bulgaria, France and Greece all set to offer good returns on investment.

But the picture is not looking quite as rosy for previous favourites Spain, Florida, and South Africa, according to property investment firm Assetz.

Southern Cyprus is set to take off as a prime second home location with the completion of Paphos airport in 2008 to strengthen the year round tourist trade.

Bulgaria is also set to prove lucrative with good outdoor sports and cheap flights from the UK.

Stuart Law, managing director of Assetz, said: "Bulgaria is likely to continue proving lucrative as a long term investment into 2006, with ski resorts boasting year round rentals and yields of up to 12 per cent - as much as double those in the coastal resorts.

"The ski resorts thrive through the summer months, offering activities such as hiking, fishing and mountain biking. The low cost of living (a pint of beer for example, costs 50p), new cheap flight routes and world-class ski facilities, mean Bulgaria is now providing healthy competition to the French and Austrian ski markets."

French house prices are also forecast to rise by ten per cent with the Languedoc region in particular set to thrive due to relatively low prices and good tourism prospects. Greece is also due to make a comeback after a year of stagnation.

But Mr Law warned against investment in Spanish properties. "Valuations on Spanish property have overshot the mark and investors may come down to earth with a bump in 2006 as prices fall back into line," he explained.

Florida was said to be "one of the riskiest investment zones" with rising US interest rates and buyers realising that they could be in for a rough ride in property investment. Natural disasters in the Gulf of Mexico also created problems with insurance.

South Africa has also seen too many houses and not enough renters meaning that investors are unlikely to get a good return on their money.