The International Real Estate Landscape In 2015
International real estate is increasingly gracing global headlines. So is the whole world experiencing a new real estate boom? Should U.S. investors be rapidly expanding their portfolios overseas? Or should more global property investors be upping their stakes in the American property market?
When global economies and property markets pick up, the media gets buzzing. All types of destinations are pitched as the next hotspots with huge returns being promised. So beyond the hype; what’s really going on in major property markets around the globe? Where are some of the best, and riskiest places to consider investing in real estate?
6 International Real Estate Destinations in the News Spotlight Now:
Like New York, London was at serious risk of potentially losing its status as one of the world’s top financial centers in the last boom. However, as the world popped, and hopeful replacements like Dubai were squashed, London became a safe haven for the world’s wealthy. The globe’s richest investors were happy to plow their capital into the U.K. safe haven for wealth preservation and were okay with very minimal yields. As 70% of prime London properties were snatched up by rich investors from the U.S. to Asia, Russia and the Middle East property prices soared, with new projects pushing an unbelievable $10,000 per square foot. Now central London price growth is cooling, and a new 28% tax on foreign property investors which kicks in as of April 2015 already has many fleeing for safety elsewhere. If they don’t sell in time, they face not only diminished returns, but losing large chunks of capital too. Expect this to really kick in at the end of 2014 and first quarter of 2015.
The French property market has long drawn international investment, even luring many U.K. buyers. However, recent cooling measures, topped by a fresh rental cap to prevent even more property from becoming unaffordable to French nationals has investors upset, and fearful over future values, and returns. Expect a similar exodus in 2015.
3. Hong Kong
Hong Kong has long been one of the financial and investment strong holds of the world. It has boasted some of the most dense, and expensive real estate on the planet, and has held up well due to its international banking activity. However, as mainland China has incurred its own problems, and Chinese property owners have thrown up their properties in Hong Kong for sale on the cheap, and builders have been trying to unload new units HK has been bracing for a 25% plus crash in values. This will leave more international investors and Asian property buyers desperately seeking new places to invest that offer more value, safety and better growth prospects.
India has been one of the most frequently mentioned real estate markets in the media recently. Headlines paint a picture of the nation as an international money magnet. Some of the biggest US funds are making big bets on India. Billion dollar India funds are being put together. Some of the world’s most famous developers are rushing in to build new record setting luxury developments. Slums are being cleared for new luxury condos and hotels, and many more overseas investors are being made curious to see what is going on. There are certainly some great arguments for investing in Indian real estate, and why it could keep growing. Wages must certainly be rising rapidly thanks to outsourcing platforms like oDesk and how well remote working has caught on. However, the data shows the luxury market is actually lagging, with long marketing times. Others are concerned that purely investment driven markets could simply be ramping up for a major crash. Worth watching, but perhaps too risky for most individual investors to directly engage in.
Canada seems to have side stepped a new real estate bubble thanks to Carney, who has now moved on to become the Governor of the Bank of England. Toronto may still be very on edge, and with property prices in the city up 75% over the last 10 years may certainly be reaching a new peak. However, there is no question that the country stands out as a financial and economic leader and strong hold on the world map. A strong energy backbone, robust retail hub, hot new tech and startup scene, low unemployment, and rising wages are making the province of Alberta very attractive to international investors. New commentary paints Canada as the new America where the American Dream is alive and well, as a land of opportunity and optimism. While Canadians have been the most active of international buyers in recent years, many are returning to invest at home. This is perhaps with the exception of large pension funds that have been buying up big office deals from US funds in NYC, as they have run dry of opportunities north of the border.
While the U.S. economy has relatively remained flat, with jobs and wages stagnant, U.S. real estate has rebounded well. Rising property prices and home equity, construction jobs, and new startups, as well as a new push by the Maker Movement to increase manufacturing and improve American education is hoped to really push the country past the tipping point, and into a solid new era of prosperity from 2015 forward. It’s a big country with a little something for every investor. Hot markets like New Haven, CT and San Diego, CA offer virtually non-existent vacancy rates for rental property investors, while Florida cities like Orlando and Ft. Myers appear to offer a lot of value for those seeking motivated sellers, discounted property, and big profits from flipping houses.