Places you should buy overseas property right now
Property is always near the top of the list when it comes to sensible places to stash your cash. After all, as Mark Twain said, ‘Buy land - they’re not making it anymore’. But some property markets are better than others; the prospects for any location change over time due to factors of economics, politics and fashion. We’ve taken a good look at the facts, maps and figures to present this list of the ten most attractive property propositions for 2014.
Prices per square metre in Berlin rose by more than 30% between 2007 and 2012 and show little sign of slowing, prompting many, including the Bundesbank themselves, to worry about a German property bubble. But the normal signifier of a credit boom - an expansion in mortgage lending - is conspicuously absent. In fact, mortgage lending as a percentage of German GDP has fallen since 2009. With investors fleeing the troubled UK and US property markets, Germany, despite sluggish economic growth, looks like a save haven.
Traditionally the top place for foreign investors to put their money in Spain was in holiday homes in the sunny costas. But the Eurozone crisis devastated Spanish property prices, leading to a drop of around 30% since the December 2007 peak. But local experts now think the bottom is in sight and the smart foreign money is gearing up to move not back into the holiday resorts but rather the Catalonian capital. Luxury properties in Barcelona are now available at bargain prices and, with added incentives for foreign buyers, look very attractive indeed.
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Rio de Janeiro
Brazil has had one of the most buoyant housing markets in the world over the past few years with the national house price index registering rises of over 11% in 2013 and nearly 20% in 2012. Those rises are now slowing nationwide due to a weakening economy but Rio still has a few tricks up its sleeve, namely the 2014 World Cup and the 2016 Summer Olympic Games. The huge influx of tourists over and above Rio’s already strong numbers should see prices in the carnival capital continue to rise steadily.
Turkey goes from strength to strength. Economically the country rebounded quickly after the global financial crisis and growth is predicted to be around 3% in 2014. And despite the political problems of the current regime, the nation is growing in stature as a regional power broker. As such the country is seen as a stable prospect for foreign property investors, particularly those from the middle east. The devaluation of the Turkish Lira has made property in Istanbul very affordable for those holding dollars, pounds or euros and, even though rental yields are modest, strong demand should see recent price rises of around 20% per annum hold steady.
Offering much better value to investors than neighbouring Croatia and nearby Italy, Montenegro’s Adriatic coastline looks like the top spot for investors in search of a place in the sun. The country’s tourism industry is booming and the inevitable knock on effect for property prices in the major tourist towns is materialising quickly. With low transaction costs and low tax rates on rental income, this is a market which should look very attractive to cash buyers.
New York property is booming and nowhere more so than in the self-proclaimed ‘Centre of the Universe’. Property development in the financial district, though robust, stands no chance of keeping up with demand as wealthy city workers in their tens of thousands attempt to pour their cash into luxury pads. A flurry of sales activity in late 2013 indicates that while price rises are modest, the only way is up for a median sales price of $855,000.
The housing market in Dubai has experienced spectacular growth in recent years: the residential property price index was up 24.9% in the year to November 2013. Even though construction of new homes continues to surge in the UAE’s largest city demand is keeping pace due to an influx of overseas money that began when restrictions on foreign freehold ownership were lifted in 2006. Increasing numbers of foreign expats, attracted by high salaries and low taxes, and a burgeoning tourist industry mean that prices look set to continue their dramatic rise.
Poland, really? While it may seem an odd choice while Poles themselves are flocking in the opposite direction, and while recent years have seen price falls of up to 20% from their pre-crisis peaks, Krakow property could be a relatively low risk move for investors. The market has almost certainly bottomed out, with price falls of just 2.6% in Poland’s second largest city in 2013, and prospects look good due to a recent wave of EU backed investment that has attracted Google, IBM and GE among others. Rental yields on Krakow property, and moderate tax rates, also mean that Polish property could be a nice little earner.
It was recently found that the Israeli government has been seriously underestimating house prices in urban areas over the past few years. So in Tel Aviv, the city with the highest average house prices in the country, already bullish-looking official increases of 12.7% in the year to Q3 2013 might be even larger. Demand which far outstrips supply, falling mortgage rates, a robust economy and decent rental yields mean that Tel Aviv property is almost guaranteed to hold its value.
During the property boom in the US the central american nation of Costa Rica saw a huge influx of foreign property investors buying up homes on the cheap with money borrowed from US banks and flipping them for a profit shortly after. The resultant bubble enjoyed the same fate as that of its US counterpart, ending ignominiously with the credit crunch. A lack of official house price data makes it difficult to assess prevalent trends but local experts are reporting a definite turnaround in the last couple of years. Luxury properties in particular are becoming very popular with high net worth individuals who are currently able to snap up Caribbean beach condos at real bargain prices.
Any property purchase carries risk and you should consult with experts before carrying out any transaction or signing any contracts or paperwork.
This article should not be interpreted as financial advice. It is commentary only.