Best International Cities For Real Estate Investment
Real estate values will grow as new cities all over the globe rise on fortune’s wheel. Property rents and values will rise in line with new and growing economic strength.
The Candy GPS Report reveals the top tips for global city performance according to Savills World Research. The report – produced by Candy & Candy, Savills World Research and Deutsche Asset & Wealth Management – identifies 12 cities around the globe with the potential to show strong residential property price growth as they become more fully invested in the next few years.
Prices in these rising cities are generally much lower than in the world cities, which make them more accessible and attractive to yield seeking real estate investors.
The list ranges from well established cities such as Melbourne, Australia, to centres in developing economies such as Chennai, India, that have a high number of ultra-high-net-worth residents.
“For many ultra-high-net-worth-individuals real estate has become a unique asset class, but investment to date has focused on prime property in the top tier world cities which have shown record market growth,” said Nick Candy, CEO of Candy & Candy. “Real estate will continue to play an important part in global investment with investors now looking beyond established safe havens and prime world cities.”
Yolande Barnes, Director, Savills World Research, who conducted the analysis said: “As prime real estate in many premier cities has become more fully valued, emboldened investors are now spreading their wings and looking for high yielding secondary properties in those cities as well as starting to consider the value of second-tier cities in counties with strengthening economies.
“This more adventurous approach is likely not only to provide higher income returns but also the opportunity for significant capital growth. Real estate values will grow as new cities all over the globe rise on fortune’s wheel. Property rents and values will rise in line with new and growing economic strength.”
Dario Schiraldi, Head of Deutsche Asset & Wealth Management’s Global Client Group, said: “Our UHNW clients are increasingly seeking locations outside the mainstream to broaden their real estate portfolios.”
He adds: “Demand for investment opportunities in both traditional and rising markets is very strong. Real estate fundamentals are improving with the global economic outlook and deal volume is picking up.”
Beyond the purely economic, the report identified certain characteristics that add to the attractiveness of these cities. Some of those that stand out include English as a first or second language; the presence of new tech industries and financial centres; favourable conditions for international companies; and a large, young and well educated population.
Global Real Estate Investment
The report also examines the property purchasing habits of UHNWIs. Three markets – Germany, Japan and the United States – top the list as the global locations with the highest value of direct real estate investment by UNHWIs. Together they account for 39% of all UHNWI global real estate holdings.
It also identifies those locations that have been the biggest recipients of private real estate wealth. Together five cities – Hong Kong, London, Moscow, Singapore and New York – account for 40%, or $2.2 trillion, of all global UHNWI real estate holdings. Hong Kong, with the weight of mainland Chinese investment pushing at its borders, receives the most ($798bn) followed by London, the city we identify as having the broadest global reach ($676bn).
In addition, Deutsche Asset & Wealth Management identifies some intriguing investment opportunities available to UNHW investors. Similar to real estate, investors will need to look outside the mainstream for returns in 2014. In the report, Deutsche Asset & Wealth Management explores key global trends around the world that look attractive for the year ahead.
The 12 rising cities – from the most expensive residential property to the least:
2 Bed Apartment Secondary /2 Bed Apartment Prime / Prime to Secondary Ratio
- Tel Aviv, Israel $500,000 / $1,450,000 /2.90
- Melbourne, Australia $320,000 / $675,000 / 2.11
- Miami, USA $275,000 / $900,000 / 3.27
- Chicago, USA $250,000 / $700,000 / 2.80
- Dublin, Ireland $210,000 / $560,000 / 2.67
- Panama City, Panama $200,000 / $500,000 / 2.50
- Beirut, Lebanon $180,000 / $500,000 / 2.78
- Istanbul, Turkey $125,000 / $280,000 / 2.24
- Cape Town, South Africa $110,000 / $370,000 / 3.36
- Jakarta, Indonesia $90,000 / $260,000 / 2.89
- Lagos, Nigeria $70,000 / $300,000 / 4.29
- Chennai, India $40,000 / $160,000 / 4.00
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