With locations offering established or emerging overseas investment property markets, there are many attractive options. Here we give you the top 10 places to invest in 2010.
Many factors need to be taken into account when choosing your property investment location. The most important factor is supply and demand and their drivers over time. Over or under-supply will affect both the capital appreciation potential and the rental yield you might expect. Other key considerations include ease of purchase for international buyers, political matters, accessibility and infrastructure, the economy, tourism, access to finance and foreign investment.
Investors are inevitably drawn to the current investment property hotspots, where property can be secured at comparably low prices. These areas often offer high capital appreciation, as tourism is attracted and re-development is undertaken to maximise rentals and the resulting returns.
However, the world’s established property markets, such as Portugal and France, have maintained a consistent level of interest over the last 12 months. The key is the diverse selection of buyers who look to purchase in these destinations, from second home owners to those relocating for retirement to investors. This provides a constant supply of purchasers, ensuring a solid demand.
Where are the best places to invest in property in 2010?
Brazil is predicted to be the next major investment property hotspot. This beautiful country offers more than just stunning beaches.
The country is attracting a lot of inward investment, has one of the world’s fastest-growing economies, a rapidly emerging mortgage market, a general shortage of quality homes, and has been selected to host the 2014 football World Cup and 2016 Olympic Games. This will lead to the construction of new and improved infrastructure and homes across Brazil.
The Brazilian president, Luiz Inacio Lula da Silva, has already pledged to spend up to £11.5bn on building a million new homes in Brazil between now and 2011.
Also, Brazil has huge potential as a tourist and residential tourist hotspot: there is plenty of sunshine; more than 7,000 kilometres of coastline stretching across various climate zones; a good infrastructure; and importantly, good accessibility. There are more than 240 scheduled flights a week from the main European airports.
Investment banking firm Goldman Sachs believes that Brazil’s economic growth could outstrip that of the other BRIC (Brazil, Russia, India and China) member nations over the next few years.
Brazil’s economy is widely expected to become the fifth-largest in the world by the time the Olympic Games kicks off in 2016, and yet property and land prices still remain a fraction of those found in more developed nations.
France’s chic sophistication never fails to attract visitors, and this has contributed to its success as the world’s top tourist destination today. A modern culture and excellent infrastructure, in addition to a stable political and economic climate, all offer property purchasers in many key areas of France a lucrative investment option.
The nation was the first European country to come out of recession in 2009, reflecting the fact that the global credit crunch had much less of an impact on France, compared to its European counterparts.
Increasing property and mortgage transactions are boosting residential values, with the latest FNAIM data revealing that the average price of a French property appreciated by 2.8% between April and September 2009.
Although average prices remain down 7.8% year-on-year, the market is generally expected to improve further, due to France’s prudent attitude to mortgage lending.
Anyone taking out a mortgage in France is generally only permitted to borrow one-third of their total gross monthly income. This has ensured that mortgages remain readily available, with 100% loan-to-value home loans available at competitive borrowing rates.
The capital city of Paris has long been identified as one of the most attractive European cities for investment, and is typically the most popular place to buy a home in France, along with destinations on Cote d’Azur, and in Provence, Languedoc and the Alps.
The recent property price falls in the fast-growing UAE capital of Abu Dhabi, the richest and largest of the seven UAE states, have been nowhere near as severe as in neighbouring Dubai
The tax-efficient emirate has the largest fossil fuel reserve in the UAE, is the fourth-biggest natural gas producer in the world, has the world’s highest income per capita, is home to almost all of the Arabic Fortune 500 companies, and is currently sitting on more than 88 billion barrels of proven oil reserves.
Yet Abu Dhabi is now actively trying to reduce its reliance on oil, and is diversifying its economy into the financial services and tourism sectors. Billions of pounds have been allocated for infrastructure projects and the development of residential, leisure and cultural schemes across the oil-rich emirate.
The recent slowdown in the property market means that just 45,000 residences are anticipated to be completed in the capital in the next four years, augmenting the existing housing shortage.
The supply of housing stock remains scant, partly because Abu Dhabi is not part of a community master plan like those pioneered by Emaar and Nakheel in Dubai.
The housing shortfall in the capital is expected to stand at around 15,000 homes this year, which could mean that property prices and rents are forced up, while residential demand – domestic and international – is expected to increase.
Portugal offers the kind of real estate market that can provide a steady return on your investment in the medium- and long-term. Buyers know they will get good year-round weather for lifestyle and reliable rental and capital appreciation in the long-term because supply and demand are more carefully maintained than other destinations.
There will always be steady growth, and you won’t see the boom and bust of Spain, for example. Builders in Portugal are well-known for their conservative attitude towards speculation, and the government has very careful guidelines in place to maintain the character and appearance of urban and rural areas. This control means that new property is carefully and responsibly built, with more emphasis on quality and how it integrates and affects the surrounding area.
The Algarve is considered to be the jewel of Portugal’s crown. It is amongst the most popular destinations in Europe and can rightfully claim to have some of the most attractive beaches, services, towns and golfing facilities in the world. Also, the international airport of Faro boasts some of the best year-round connections to all major European airports.
The Algarve’s popularity as a favourite second-home destination continues, even throughout the current economic downturn.
THE CAYMAN ISLANDS
There are a number of reasons why real estate investors are attracted to the Caymans, which has for many years enjoyed a thriving economy.
Key is that there is no direct taxation whatsoever. With no direct taxation, the islands are a thriving offshore financial centre.
One chief advantage of doing international business in Cayman is that the intellectual resources in all ventures relating to global finance are readily available from experienced practitioners. In fact, few other international financial centres come close to matching Cayman’s professional resources.
British Dependency status assures investors of the island’s stability, and Cayman is signatory to international treaties and conventions.
The Cayman Islands real estate market is uniquely attractive to those looking for an overseas vacation home, or a retirement residence. For property investors, it can offer a solid capital return on investment, as well as the chance to own a secluded piece of “paradise”.
There are no restrictions on foreign ownership of real estate, and a modern land registration system is run by the government’s Department of Lands and Survey. There is a thoroughly modern infrastructure and a stringent building code.
The benefits of Investing in Cayman Island real estate
- No direct taxes imposed by the Cayman government: no property tax, no capital gains tax, no inheritance taxes, no income tax, no non-resident tax and no sales tax.
- No restrictions on foreign ownership of real estate – ownership can be held in one or more names of individuals or in a corporation, which does not reveal actual ownership.
- Stability and Security – the Cayman Islands has a stable government, sophisticated infrastructure and a strong economy based on international banking and tourism.
- Privacy – no reporting of income or ownership to any government agency.
- Caymanians enjoy one of the highest outputs per capita and one of the highest standards of living in the world.
- The Cayman Islands offer a competitive offshore financial industry coupled with beautiful surroundings on one of the safest islands in the Caribbean; political stability through its relationship with the United Kingdom; accessibility of transportation; excellent communication; and the highest per capita income in the Caribbean.
Looking at European property markets, Austria and Malta have been named the top ones (and equal second in the world) according to Knight Frank, based on year-on-year performances as of Q3 this year. Austria, which came second only to Israel, achieved price rises of 9.7 per cent in the year ending in the third quarter, which means it is the second-best performing market worldwide. The market in Austria is robust and resilient – ideal if you are looking overseas to invest. The country as a whole has fared well throughout the downturn and sellers have not had to resort to dropping prices as demand is high.
According to a recently published study by Forbes, Austria is the best retirement haven. The ranking is based on a variety of criteria ranging from safety to retiree-friendly visa requirements to decent medical care. Vienna already gained first place in a ranking for cities offering the best quality of lifestyle, so the country’s ranking doesn’t come by surprise. Austria scores with high standards in lifestyle and medical service. The country’s private clinics are world-class.
The country is certainly geographically stunning with lakes, forests, mountains and fabulous architecture aplenty. Economically, politically and socially it’s very well balanced, there is no high crime, the standard of living is very high and an increase in low-cost flights means that Austria now has plenty to offer the investor.
Mauritius enjoys a booming and stable economy, with efficient global banking and communications that combine to make Mauritius a premier international business hub. Excellent telephone and IT connections, an advantageous tax structure and a robust European legal system all help to support a pleasurable lifestyle for business and relaxation.
With both individual and corporate tax at a uniform rate of 15%, Mauritius has become one of the lowest tax platforms across the world. Mauritius is a well-sought after destination for many global business companies. The island is today home to more than 30,000 foreign companies from all over the world.
Some of the unique elements that make Mauritius an attractive and competitive investment location include:
- Political, economic and social stability;
- Pro-business environment with a supportive government and a dynamic private sector very receptive to foreign investment and open for joint venture collaborations;
- Preferential market access to the EU (under Cotonou Agreement), U.S.A. (under the Africa Growth and Opportunity Act-AGOA) and Africa (under COMESA and SADC);
- High level of protection to investors as Mauritius has signed non-double taxation agreements with 33 countries so far, and is signatory to a number of Investment Promotion and Protection Agreements;
- Mauritius is also a signatory member to a number of international, regional and bilateral conventions and agreements;
- Ease of doing business for incorporation or registration of a company. One shareholder company, with no minimum capital requirement, is permissible and 100% foreign ownership is also allowed;
- One of the world’s most generous tax regimes, where personal and corporate tax are harmonized at a low 15% and where dividends are tax-free;
- Free repatriation of profits, dividends and capital.
In addition, the Integrated Resort Scheme (IRS) has been introduced to attract inward investment into Mauritius. IRS offers non-Mauritian citizens the opportunity to acquire freehold residential property in specific resorts approved by the Board of Investment (BOI). This is a limited offering, as government policy gives provision for around 3,000 properties over the next 10 years.
Despite being a small country, Montenegro shows significant economic potential, especially in tourism.
Its spectacular coastline and unspoilt natural beauty offers variety for even the most travelled vacationers. Set within one of the most diverse natural landscapes in the world are ancient UNESCO-protected towns, glaciated canyons, fjords, ancient forests and national parks. Montenegro is the new magnet for people seeking picturesque villas on the Mediterranean.
The Montenegro travel and tourism economy is ranked No. 1 in Long-term (10-year) Growth out of 176 countries as estimated by the World Travel & Tourism Council and Oxford Economic Forecasting.
Montenegro joined OSCE, the Organisation for Security and Co-operation in Europe (2006), became the 192nd member state of the United Nations (2006), joined NATO’s partnership for Peace program (2006), International Monetary Fund and World Bank (2007), the 47th member state of the Council of Europe (2007) and CEFTA (2007). The country already uses the euro as its official currency (2002) and expects EU candidate status in 2010.
Additionally, Montenegro is a founding member of the Union for the Mediterranean upon its establishment in 2008.
It has been rumoured that Michael Douglas and Catherine Zeta-Jones, Venus and Serena Williams, Sharon Stone and Formula One driver Michael Schumacher have invested or are looking for property in Montenegro. At the moment, Russians are the biggest investors and Roman Abramovich, owner of Chelsea football club, was reported to be negotiating the purchase of an eight-mile beach to build a luxury resort.
With the country’s economy undergoing growth along with foreign direct investment, the Montenegro property market promises to be an exciting long-term investment as well as a strong buy-to-let option.
The relaxed Arabian state of Oman, voted Destination of the Year 2008 by Vogue magazine, has long been a popular holidaying destination for people living in The GCC States (the six Arab states of the Persian Gulf).
With a population of around 2.3 million, Oman is being modernised and liberalised culturally and economically by hereditary Sultan, Qaboos Bin Said Al-Said, a forward-thinking leader.
Sultan Qaboos’ strategy for economic growth – Vision 2020 – aims to diversify Oman’s economic dependency on oil, and focus on other industries, such as property and tourism.
Demand for property in Oman is primarily being driven by the Sultan’s decision to introduce legislation in 2004 – ratified in 2006 – permitting foreigners to buy freehold property and land in designated tourist areas. These projects are referred to as Integrated Tourism Complexes (ITC). Furthermore, foreign homeowners can now apply for residency visas.
The fact that Oman appeals to end-users – not just investors – means that the medium- to long-term prospects for the Omani property market growth looks good.
Many of the high earners currently living in Britain look set to quit the UK ahead of the introduction of a 50% top tax rate in April 2010, and escape to more tax-friendly shores, such as Switzerland.
The Swiss authorities are actively lobbying to attract many of these high-net worth individuals, who are being tempted by assurances that they will be allowed to steer clear of European Union regulation and Britain’s Financial Services Authority.
It is estimated that hedge funds managing in the region of £10 billion in assets have already moved to Switzerland in the past year alone. This has increased demand for homes to rent and buy.
Due to canton restrictions, it has previously been difficult for foreigners to buy property in Switzerland. However, the country has now eased its strict property buying regulations, and opened its doors to more international buyers, partly through the introduction of ”residence de tourisme” style investments, which is similar to the ever-popular leaseback formula in France.
Switzerland, one of the richest nations in the world, is of course a tax haven. Anyone who sets up permanent residency in Switzerland would be entitled to take advantage of the country’s favourable tax laws, including the lump-sum taxation, which charges a levy based on people’s lifestyle and spending habits.
The fact that one’s taxable income is charged at just five times their annual rent or rental value of their property, and that assets outside Switzerland remain tax-free, should ensure demand for Swiss properties – to rent and buy – remains strong for years to come.
International Luxury Real Estate
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