2016 contained a couple of curveballs that are likely to have far reaching ramifications, with the unexpected results of the EU referendum and the US election causing waves across the world and shaking up global property markets.
The upheaval has made picking the best destination to make an international property investment tricky, but we’re uncovered a list of five cities that analysts predict will yield good returns in 2017.
Lisbon may not be quite as popular as some other major European capitals, like Paris and Rome, but rising tourism and the comparatively low cost of living could see the Portuguese capital property market explode in 2017.
Thanks to its position in the south of Europe, Lisbon also enjoys good weather almost all year round.
Tourism data showed that Lisbon welcomed over 3 million tourists in 2015, a number that is expected to have risen in 2016 as visitors look to take advantage of the weather and rich cultural heritage that the city has to offer. This can make investing in properties for short-term rental through services like Airbnb extremely lucrative.
Lisbon is also a great place to invest if you are looking for a long-term rental property thanks to its role as the financial, commercial and media centre of Portugal. The employment opportunities these sectors afford means that there will always be demand for accommodation for young professionals.
Despite this, property prices in Lisbon are far more affordable that those found in other major capitals. Portugal’s financial crisis of 2010 saw property prices collapse, and they’ve yet to fully recover. But with Portugal seemingly clear of the issues that plagued it at the turn of the decade, prices are only expect to rise – almost guaranteeing that you will see a return on your investment.
While your first thoughts when it comes to investing in the Australian property market might be to look at Sydney or Melbourne, house prices in these areas have grown 11% and 9% respectively over the last 12 months. If this has priced you out of the market you could find better returns if you look to humble Hobart instead.
Hobart’s property prices only grew by 5% in 2016, but if you take rental returns into the equation, Hobart saw growth of 11% against 14% and 13% growth in Sydney and Melbourne.
This has led some analysts to predict that Tasmania’s capital city could outperform its cousins on the mainland to become the best performing property market in 2017.
The explosive population growth thanks to interstate migration in Tasmania is one of the driving factors behind housing demand in Hobart, but it has also been helped by the increasing ability for people to work remotely, so they don’t necessarily need to live on the mainland in order to pursue their career path of choice.
With Melbourne only being an hour’s flight away, there is speculation that Melbournites looking to escape the rat race may be increasingly looking to Hobart as a viable alternative.
Figures also show that Hobart has the tightest vacancy rates of all its peers with demand amplified by a limited amount of housing. Conversely, Sydney and Melbourne are facing fears there may soon be a notable surplus – meaning prices could crash.
With India claiming the title of the fastest growing Asian economy in 2016, beating even China, investors are increasingly looking to find a way into the emerging economy. Where better to start than the city of Bangalore?
The ballooning economy is causing India’s middle classes to rapidly expand, with disposable income improving and demand for higher end property increasing.
Much of this middle class is also making its way to Bangalore as management opportunities explode, with the area quickly becoming the silicon valley of India. The rapidly advancing IT and tech sectors saw Bangalore become the highest ranking city in the Asia-pacific region for development and investment, knocking off Tokyo and Sydney from the top spot in 2016.
Also making India an increasingly attractive place to invest in property is the Reserve Bank of India’s continued rate cuts. The central bank has consistently cut rates since 2015 and borrowing costs currently sit at a six-year low.
However, it can be difficult for foreign individuals to purchase property in the region, with the average buyer requiring the approval of the Reserve Bank of India (RBI) before they can buy a home unless they live in the country for at least six months of the year. But if you’re willing to jump through the extra legal hoops the returns can be quite lucrative.
While you may think of Detroit as a city with its best years long behind it, the election of Donald Trump as President could breathe new life into the city as he vows to bring the motor industry back, as well as provide increased federal funding for schools, roads and other infrastructure.
Due to the mass exodus of Detroit’s population in the late 20th century the average house price in the city is notably lower than the rest of the US, allowing you to invest with far less capital.
Prices and demand have been reportedly rising for the past few years and could lead to your seeing a significant return on your investment in a relatively short period. As Global Investments Incorporated CEO Mike Moodie explains;
‘Three years ago the average price we were selling a home in Detroit was $15,000 and we are now selling homes at $35,000.’
Detroit is also experiencing a bit of a renaissance among young entrepreneurs as the prohibitively high cost of living in San Francisco causes them to flock to central Detroit to take advantage of the cheaper prices, with areas being rapidly revitalised by local citizen groups.
However, it is important that you thoroughly research your potential property before making an investment as large parts of the outer limits of the city remain abandoned, yet are sometimes marketed by unscrupulous estate agents as parts of a thriving community or coming with long-term renters.
London may come to mind when thinking of investing in the UK thanks to the seemingly unstoppable rise in prices in the nation’s capital. However, with experts forecasting that the London market has already peaked, you may want to look to the city of Leeds for maximising the return on your investments.
With the fourth largest student population in the UK, being served by four universities, the city has a healthy demand for rental properties and with rents rising by around 3.5% over the last 12 month you can almost guarantee a return on your investment.
Leeds is also set to be host to numerous renovation projects over the coming years, including a £350m development of Leeds South Bank. As well as regenerating the area, this is predicted to create around 7,000 new jobs.
Meanwhile, the implementation of phase two of the HS2 rail project will provide the city with a high speed connection to the capital, making the Leeds property market even more attractive.
With average house prices around £150,000 it is also suitable for first time investors or those looking to expand their property portfolio who may have found the high prices in the south of England a little too steep.
However it is worth noting that while the devaluation of the Pound since last year’s EU referendum makes UK property more attractive to foreign investors, you could find your returns diminished if Sterling weakens any further.
If you plan to make a property investment in one of these markets you will likely need to transfer your money into the local currency.
By using a currency broker like TorFX to manage your currency transfer you can avoid transfer fees and benefit from an excellent exchange rate, helping you get the most for your money.
We also offer the option of being able to fix an exchange rate for up two years, helping you avoid the unpredictability of the currency market while you go through the potentially lengthy process of investing in foreign property.
If you’re considering moving abroad in the future you may be interested in finding out more about your currency transfer options.
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