A number of exciting locations are luring investors overseas, with promises of high capital gains and great rental yields. The Australian property market is out of reach of many Australian. The median house prices in our biggest cities going for seven-figure asking prices.
Investors are now looking in regional areas, interstate and increasingly overseas. Head of global research at Knight Frank, Liam Bailey, highlighted Paris, Berlin and Capetown as the strongest property markets for 2019. Their annual price growth of 6-7%. Calculated risks definitely do pay off. For example, focusing on areas that outperform the wider city markets could deliver growth of more than 10%.
If you are looking for an opportunity to invest in property at a more affordable price point… Manchester, Berlin and Orlando provide low median house prices with potential for excellent returns.
Manchester, England – the most liveable city in the UK.
Median house price: $ AU 336k, price growth of 22% since 2014 and strong rental yields averaging 7.3%. This market is still undervalued with the following set to support your investment:
- Multiple infrastructure projects will boost the population.
- Large student population with high retention post-graduation increase rental demand.
- Manchester’s economy is projected to grow by 14.8% over the next ten years.
Median house price $ AU 575K – average rental yields of 6.05% – 12% property price growth in 2018.
- High population growth with an increase of 400 000 new residents forecast by 2030 driving housing demand and price increases.
- $8bill Brandenburg Airport is scheduled for opening in 2020. They will offer direct flights to major cities and increasing accessibility to Berlin as a business destination. Overall, this change will attract overseas investors.
Median house price – $AU 299K, property price growth of 11% and rental yields of 5.7%.
- High potential for capital gain as homes are still recovering from the last property crash.
- Growing employment, population and affordable prices.
Top three tips to find the next hot spot!
Both our domestic and international markets offer some great investment opportunities. In your search consider:
- Relative Value – invest in the undervalued fringes of a well-established, expensive location.
- Connectivity – Find the areas where money is being invested in new infrastructure and regeneration projects. Like new stations, airports, spruce up schemes will attract new investment and push property prices up.
- Lifestyle/Soul – great culture and popular leisure activities consistently attract residents and visitors. Access to good quality education also makes an area more desirable.
What about the risks?
As an entrepreneur, every investment will have its own risks. Overseas property can pose a variety of risks including:
- currency fluctuations
- unforeseen economic, social, tax and interest rate change
- different legal systems
- risks of crackdowns on foreign buyers
- language barriers
- lack of local knowledge about best suburbs.
What should I consider before investing offshore?
- Therefore, get a skilled accountant to help you navigate the relevant tax rules and regulations, both here and offshore.
- Make sure you understand how the property management industry works. It is going to be different in every country.. You need to make sure they will look after your interests. Ask prospective property managers is to provide the following.. Their specific processes and procedures around rent collection, tenant references/screening, maintenance and rental arrears.
- Get ready for a trip overseas to visit your desired location(s) and do your due diligence.
- Make sure you understand the rules regarding foreign property ownership.
Zaki Ameer, DDP Property founder, advises investors to “never buy a property they don’t know”.
In conclusion, whether buying property in Australia or overseas… Ameer recommends for prospective investors to ensure they know:
- The property is sound and secure, with no hidden secrets that will pop up post-purchase.
- Growth rates and yields will help select a property that matches your property portfolio growth strategy.