The UK prime property outlook is dominated by Brexit and what will happen when, or perhaps ‘if’, the UK leaves the EU on 29th March. I’ve written before that international property investors with a penchant for risk and the ability to make long-term investments would be smart to buy in London now and take advantage of the exchange rate. For American investors, the exchange rate offers an effective 25% discount on properties and when the economy resumes growing, as the Bank of England expects it to in 2023, the market will bounce back and the profits will make up for the foreign buyer tax. However to minimise risk, it is wise to buy best-in-class assets in good locations.
For those investors looking outside the UK, here are a few up-and-coming markets that I think it would be wise to consider for investment this year.
While in Europe, Paris has been a key market for many property investors, I suspect that the growing popularity of prime property in the Portuguese city of Lisbon will justify interest from investors looking for European property outside Paris. Ten years ago in 2009 Portugal introduced a range of tax benefits for EU and non-EU citizens to encourage direct foreign investment after the Global Financial Crisis. These tax benefits along with the Golden Visa scheme operated in Portugal have contributed to skyrocketing prices in Lisbon. In some of the more sought after areas of Lisbon, such as Lapa and Avenida Liberdade, prices have risen more than 60% since 2013.
I would suggest Egypt too as an alternative place to consider for property investment this year. The property sector there has recently been growing at more than 20% and whilst there is a vast amount of property due to complete this year the rapidly growing population and strong demand is likely to keep prices growing. Growing prices are also justified by the current high inflation rates due to an economic reform programme, significant increases in the price of oil and that most purchases are made with cash (although it is worth noting that the prolific use of cash to purchase property is being cracked down on with new legislation designed to curb tax evasion and the black market).
The country’s President Abdel Fattah el-Sisi also recently removed the last restrictions on foreign ownership of land and property in Egypt. Some think there is a bubble about to burst so it would be wise to look to buy mature projects from solid developers that could withstand a crash if it were to happen. If you can tolerate some risk and are tempted by Egypt, you might consider an investment in the country’s New Capital, to the east of Cairo, which is expected to see lots of activity over the coming years.
Tokyo will soon be in the world’s spotlight by hosting two major international sporting events. In September of this year it hosts the first Rugby World Cup ever to be held in Asia and in 2020 it hosts the Olympic Games. In anticipation the city is enjoying unprecedented growth with rising rent prices and increased foreign capital driving up property prices. There is of course the possibility that it could all end once the Olympics are finished so anyone looking to capitalise on the current upward trend should do so quickly.
Long Island City, America
In America, normally high-performing markets like Miami and Manhattan have been stagnant for several years whereas tech capitals like San Francisco, Austin and Boston have climbed and are expected to keep going. It is no surprise that high-earners in the tech sector have been creating strong demand in cities where supply is limited contributing to a doubling of prices in some areas over the last ten years.
While not yet a tech capital, you might want to take a look at Long Island City in Queens, New York which is where, after much speculation, Amazon announced this month that it has chosen as the site of its second corporate headquarters. The headquarters will employ 25,000 people with many of them high earners so demand for property to buy and rent in the immediate area around the HQ is likely to rise sharply.
Last year I also wrote about Berlinas an excellent city to invest in and I don’t think this has changed. Berlin’s population is growing rapidly and whereas residents used to be happy renting due to stable prices, with the city’s increasing population rent prices are going up and so is demand to buy.
I hope you enjoyed this article this week and if you did that you will leave a comment.