The best real estate markets for foreign investment.
Are you finally ready to branch out and diversify your portfolio with an investment in foreign real estate? A foreign real estate investment has so many advantages including diversity, accessing offshore makers, and, in some cases, residency.
In rare cases, immediate citizenship is offered after a high enough investment in real estate. This is especially attractive for those looking to expatriate or those who want to earn a second passport in order to extend the amount of visa-free travel that is possible. This can play a key role in offshore retirement or years of stress-free travel.
There are also a lot of tax benefits that come with investing in real estate offshore. In fact, it is one of the few ways that an American can legally keep some of their money offshore privately. When real estate is held directly in an investor’s name, as opposed to in a trust or LLC, the investment is not reportable.
One of the most important reasons investors choose to buy real estate internationally is to save their wealth abroad. By owning foreign real estate, an investor can keep their money outside of the reach of their local government. There are also greater returns in the real estate markets of other countries.
European Real Estate Market
Europe is a very popular place for foreign investors right now, especially for retirees, due to low interest rates because of the European Central Bank’s monetary policy. Other reasons investors are choosing European real estate is for asset class diversification, high income return, geographic diversification, and to hedge against inflation.
Some investors are looking for a solid return while others are hoping to make the new investment their home. Whichever path you want to take, there are several European countries that can make that dream a reality.
Where should you be looking for your European real estate investment? Below we have gathered some of the strongest markets to be aware of in the continent.
Germany is one of the biggest economies in Europe. Therefore, it was almost unaffected by the housing crash that hit most of Europe in the 2000s, making an investment in property a stable investment idea. A recent interest in people buying property has caused an increase in prices with a 5.8% increase in 2015 and 8% increase in 2016. The market is mostly affected by local forces like availability of housing stock and changing demographics.
Today, metropolitan German real estate is thriving. This real estate cycle, which began in 2009, has brought upon a rise in prices in residential properties in popular cities throughout the country. The growing real estate market is paired with strong population and employment growth as well as declining unemployment. In 2017, employment went up roughly 4% in Berlin.
Since construction rates are low, there is a lot of data showing that demand is high and supply is not able to catch up. In fact, in the popular city of Munich, there’s a vacancy rate of nearly zero. Other cities to note with high demand are Hamburg, Dusseldorf, Stuttgart, and Frankfurt.
With a warm climate and an increased effort by the government, encouraging foreign tourism and residency, buying property in Spain has become quite popular. In fact, Spain receives more foreign income from tourism than any other European country. There are about 2.8 million legal foreign residents in the country and the tourism numbers continue to increase. More than one million foreigners are expected to reside on the Spanish coast in the next 6 years, as predicted by the Spanish Ministry of Tourism.
After the world economic crisis, the property market of Spain continued to fall until 2013 when the decline slowed. Today, Spanish real estate is viewed as a strong investment, especially because of its popularity among foreign investors. This interest has many predicting steady price growth over the years. In 2015, property transactions grew 11%.
Spanish economic growth is forecasted to continue growing according to the European Commission.
Currently, the Portuguese real estate market is performing well. The strength of the market is backed by a demand that is rising due to improved economic conditions. In November of 2017, it was recorded that the property prices have risen by 4.84% from the year before to around 1,144 euro per square meter.
For those looking to make high returns from the property, apartment owners are seeing a yield ranging from 4.5% to 6.7% in the Lisbon District.
Luckily, for international buyers, there are no restrictions on foreign property ownership in the country and transaction fees are moderate.
France does not lack the European splendor that many non-Europeans are seeking when looking for offshore property. Paris, Marseilles, Lyon, and many more French destinations offer wonderful real estate options for investors or those looking to live in the country.
The French market has experienced a slight incline over the past couple years after major dips in 2009 and 2013. Overall, the market is strong and the country prides itself in a pool of desirable property options.
There are no restrictions or special requirements for non-citizens looking to buy property, although the process can prove to be more difficult as a foreigner. Working with a real estate agent can ease these difficulties.
Being an incredibly small but wealthy nation, Switzerland is an optimal place to purchase real estate. The small size of the country puts a higher premium on real estate than would exist in a more sprawling nation. In addition, the relatively high wealth of the citizenry means that it will not be hard to find clients to rent out one’s Swiss real estate.
For most hopeful buyers, the Swiss housing prices are simply out of reach, even with current low interest rates. With the combination of high prices and strict mortgage requirements, the low interest rates mean nothing.
Foreign buyers come from all over to take advantage of Swiss real estate such as other European Union countries or the United States, Canada, or Russia. Though there are many buyers from outside counties, 85% of home buyers are Swiss.
There are no restrictions for EU citizens to buy property but a non-EU citizen must obtain a permanent residence status permit to real estate.
Your wealth is important. If you are serious about your life goals, financial planning and investments are probably important to you. Financial planning can involve many steps from tax optimization to asset protection. Different investments have different rules with different returns.
With the help of financial planning, you will be able to predict where you will be in the years to come by evaluating where you are currently, what sources of income you plan to have in the future, investments you plan to make, and your retirement plans.
Alpen Partners Wealth Management International AG, the sister company of Alpen Partners Wealth Management AG, is now a registered investment advisor with the U.S. Securities and Exchange Commission (SEC). Together with our partner Swiss private banks, our company can now offer the full Swiss private banking experience to American clients, both resident and non-resident.