Property is the world's most popular investment today, no doubt about it. Investors piling into residential and commercial property have pushed investment returns to record lows. Experts' warnings of price bubbles are becoming more strident.

US Federal Reserve chairman Alan Greenspan has recently alerted his country to "speculative fervour" in some cities.

Yet billions continue to pour into property as he speaks. Much of that money is crossing borders as investors look for more diversification and higher returns than they can get in their own countries. As house prices peak, they turn to commercial property.

Should South Africans join them? The short answer is maybe, if you have a high net worth (R10m-plus in listed shares and other liquid capital) and want to diversify your SA investment portfolio into a long-term offshore asset; definitely not if you're a wannabe millionaire looking for a quick profit in a hard currency.

If you're neither, it is worth understanding what has been driving property's spectacular performance before you make your decision.

Everything has been going property's way for more than a decade. Technology and globalisation drove inflation and interest rates down in the 1990s. It made borrowing to own property cheaper as demand by users grew.

This improved the risk rating of property. When the tech bubble burst in 2000, central banks dropped interest rates and pumped liquidity into the world economy to keep demand up and deflation at bay.

Further interest rate falls and greater liquidity followed the attack on the World Trade Center in New York in September 2001 . Property became even cheaper to own and its risk rating fell further.

Its steady, long-term cash flows also began to look a lot safer than equity and financial markets. Large private equity investors and US opportunity funds scoured the growing international property markets for opportunities.

Home owners kept borrowing money at record low rates and buying more property. They also used the growing value of their homes to buy new furniture, cars and holidays and keep Western economies going. Clearly, the world property boom has been driven by cheap debt. It has created record borrowings (over 100% of annual household income in the UK, the US and Australia) and prices. As interest rates rise, property price growth begins to flag .

Debt-ridden households stop spending and the economy slows. This has been happening in the UK and Australian house markets as the central banks push rates up.

It will happen in the US once the Fed tightens its rate above 3,75%. Interest rates are still low and are likely to remain so because of low inflation. Yet property markets will fall or stagnate because of high debt, overcapacity, and low rents and profits.

Offshore property lost its allure for SA investors as the rand strengthened and our own property market boomed. Estate agents have stopped pushing flats in London, or holiday homes in Spain. "High net worth individuals wanting international diversification are still buying," says Andrew Golding, CEO of Pam Golding, the most active SA seller of international property.

"We believe international property - residential or commercial - will give a good return over four years or more." Pam Golding has offices in Britain, Ireland, Spain, Croatia, Mauritius and the Seychelles. It is also active in France. Prices start at euro 65 000 (R520 000) for a two-bedroom flat in Zagreb, Croatia. "The Croatian market is in its infancy," adds Golding.

"The average price per square metre is euro 1 400 (R11 000/ m²). UK agent Leitch Chance claims to have sold out its allocation of units at Talent Studios in Shanghai, China. At a little over R1m, a 99 m² two-bed flat gave a guaranteed 6,15%/year yield for three years. The driving force in China is economic growth and widespread urban migration: 100m Chinese have moved from the country to regional cities in five years. Another 400m are expected to do so over the next decade. Guy Leitch says he is bringing a new Chinese development that will guarantee an 8% yield for five years. "Guaranteed returns are the only way for investors to go in this environment," he adds.

But Golding says SA is attracting far more local property interest than offshore interest. With low household debt (at less than 60% of household income), good affordability and an emerging property market, it makes sense.

And if you're determined to invest offshore, there's always Liberty International, which you can buy on the JSE. Or the new UK fund that Corovest and Madison are listing on the LSE soon.