High net worth (HNW) investors are increasingly looking to diversify their investment portfolios by looking abroad. The search for cheap property and the promise of quick and high returns in short time frames is leading some to new frontiers for development or to once unattractive areas now starting to turn around.
Even with the coronavirus outbreak slowing global markets, investors should not be deterred from seizing upon the opportunities offered by countries across the world.
As Founder and CEO of online prop-tech platform Square Seven, I am currently overseeing the development of our advanced tools for providing clients with the most up-to-date intelligence on global property trends.
From the insights provided by our board advisors we have determined these are the five countries which we’ve determined calculated to be the most promising for investors.
United Arab Emirates (UAE)
Conventional wisdom has always seen the UAE as an indicator for the overall health of the global economy. Growth and prosperity in one should yield the same in the other.
After weathering a difficult few years and seeing property value plunge 40% since its peak in 2014, the UAE is finally seeing signs of an encouraging turnaround motivated by improving economic conditions, government incentives and increasing foreign and domestic investment.
Dubai has an obvious draw to HNW investors, with numerous renowned developments including the Dubai Marina, Business Bay and Barsha Heights to attract investors such as Canadian fund manager Brookfield Asset Management and Afghanistan-based Azizi Developments.
Both have been very active in the region and taken on large-scale projects which indicate long-term faith in the UAE’s continued economic prosperity.
Egypt is currently poised on the cusp of a housing boom, owing partially to a development push by the government. Relative to many other countries, Egypt has had a low level of inhabited land (approximately 7%).
If the government is successful, in the coming years this number would rise to around 12% in order to keep up with the country’s rapid population increase, which has grown by an average of 2.5% per annum. This has made overcrowding a serious problem, especially in the country’s capital Cairo, where demand for housing has skyrocketed.
Lower property prices tend to start at £30,000 with a year-on-year capital appreciation of 20-30%. For HNW investors, Egypt offers immense potential based on the lower cost of property and promise of rapid growth.
The last decade has seen much written about Greece’s housing market, very little of it optimistic. Greek property was once seen as a fairly safe investment, making the markets later crash all the more devastating. Since then, the story has been a long and slow recovery which has been until now relatively unattractive to HNW investors looking for high rates of return. That finally seems to be changing.
In a recent report from ING, it was concluded that “there was a clear turnaround in 2019 and we expect that the recovery will continue in 2020,” forecasting an advancement in prices by nearly 6%.
Though the market is still weighed down by non-performing loans, an upcoming government plan to exempt house sales from VAT for the next three years will likely help to motivate the continued recovery of house prices, making Greece a market investors would be wise to reconsider.
Similar to Greece, Cyprus’ housing market has been in the grips of a decline for over eight years, with prices plunging and showing few signs of a miraculous recovery. This has now started to abate.
According to PWC’s Cyprus’s Real Estate Market report for the first half of 2019, the value of property transactions over that term rose by an impressive 25% when compared with the same period the year prior. Of the 2,482 properties which were acquired in this period, roughly 70% of purchasers were nationals of non-EU counties, signifying a remarkable movement in interest by HNW foreign investors towards the country.
Spain’s housing market has been enjoying a period of growth since 2015, which followed seven prolonged years of unshakable decline. In spite of seeing a general economic slowing in recent years, the outlook for the country’s housing sector has remained optimistic following projections of a 5.5% rise in 2020 from a Moody’s report.
The area to see the greatest growth has been in the Balearic and Canary Islands, which experienced approximately 11.3% growth in 2019. Similarly, major cities such as Barcelona and Madrid saw a sizeable 4.6% growth.
While these rates are quite attractive to investors, property overall is I still quite expensive in these areas, which will deter those looking for the cheap buys of a place like Greece or Egypt.
In Spain, those opportunities are more likely to be found beyond the major metropolitan areas, where the market still yields a comfortable 1.3% growth rate.
At Square Seven, we leverage our strong working relationships in all parts of the property sector to offer HNW individuals the best opportunities for investment across the globe. Our market intelligence and knowledge helps us to identify new and exciting emerging opportunities, as well as a seamless buying experience to facilitate real estate transactions from start to finish.
Global real estate is changing quickly, with formerly uninteresting countries suddenly reversing their fortunes and once small markets scaling up with unprecedented speed. Identifying and capitalising on these opportunities before they have passed can mean the difference between a modest return and a wildly successful one.
*Emad Hefny is founder and CEO of Square Seven