Property investors now operate in a truly global environment. Just as UK-based investors can look at the great returns offered by established residential markets in the US or up-and-coming holiday destinations such as Cape Verde, international investors can also look at the world as a whole when they choose where to invest their funds.
It’s therefore reassuring to see that overseas property buyers are still very much active in Europe, including the UK.
Most of the international investment in Europe is cross-border activity within Europe itself (including the UK and Ireland) with the lion’s share of the rest coming from North America. However, there is also significant activity from Asian investors and interest from this region seems to be increasing.
Mature markets remain popular, even though there are supply-side challenges
Mature markets offer an attraction that emerging markets, by definition, cannot and that is familiarity. In addition to the UK, which has long been recognised as a welcoming destination for international investors, France, Germany and Sweden are all easily-accessible investment destinations.
More specifically, they are easily accessible in the sense that there is a clearly-defined route for international investors to access any investment opportunities they can find.
The problem is that there is generally a high level of competition in these markets, which means good investment properties can be hard to find and harder to secure. In some markets (especially Berlin, Paris and Stockholm), investors often have to look at older properties which require substantial renovation to make them suitable for 21st-century life.
In other markets (especially London), investors need to keep their eyes peeled for new-builds being made available for purchase at reduced prices prior to their completion date and more very quickly to secure them.
It is, however, worth noting, that the north of England (and Scotland) still offers exciting investment opportunities, particularly in the residential buy-to-let sector, where yields can be particularly good.
Emerging markets are growing in popularity - even though they are not so easy to navigate
While the term ‘emerging markets’ may make you think of the former Eastern Bloc countries and, indeed, these would come under this heading, many people involved with the European property market would probably put Ireland, Spain and Portugal into this category as well due to the rapid growth they have seen over recent years, which is a typical sign of an emerging market.
Ireland may be of particular interest to international investors due to the fact that it is an English-speaking country with a legal system which can be easier (and quicker) to navigate than the legal systems of others.
Ireland’s property market is at its most active on the east side of the country, particularly in Dublin, which has the supply-side issues often seen in major cities.
Investors who wished to spread their wings might, however, look at the west for its potential in the tourist rental market. Spain and Portugal both offer diverse opportunities, however, investors interested in catering to the tourist market may wish to proceed with some caution until local authorities work out how they are going to deal with companies such as Airbnb. Alternatively, they may wish to look at investing in commercial property such as hotels instead.
For more information on overseas property investment, please contact Hopwood House.