With most job markets becoming competitive for both young job-seekers and older career professionals, many are not confident in establishing, much less sustaining, a certain level of active income. This motivates people to try to establish passive income, putting some of their money in investments like bonds and stocks.
But current market consensus sees equities to be in a slump in 2016, and bonds are bracing for a drought. Given the situation, some investors see that opportunity resides most in global real estate. Whether it’s from modern in-city living or vacation-style accommodations, people can always profit from real estate. They just have to know what to look for.
The United States
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With regards to investing in property for beginners, the United States is still the top choice among many industry professionals. Respondents to a survey conducted by Colliers tagged three U.S. cities — San Francisco, New York and Los Angeles — as their top property investment picks for the American market.
In L.A., China’s Greenland Properties is reportedly working on a high-end residential development, while the Lotte group, a South Korean conglomerate, has agreed to purchase the New York Palace Hotel.
San Francisco has also become a top choice due to its aesthetic appeal and proximity to Silicon Valley.
Few would have identified Istanbul as one of the top property choices in the world, but 2016 seems to be its year. Attracting British investors who want accommodations in warmer climates, Istanbul is also home to an expanding middle class and a younger-than-30 population that composes a significant chunk of its population.
Couple that demand with relatively slow construction and poor housing inventory, and the increasing price of housing in this region is understandable and exciting. Turkey’s currency, the lira, is currently weak against most major currencies, making it even more appealing for foreign investors.
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China maintains its reputation as the place for some of the best property investments in Asia. Colliers has indicated it as a top performer in its survey, with respondents preferring it as a destination for office space, residential, and logistics property investment.
It has recently posted increases in house prices by 3.79 percent, and home sales shot up by 16.6 percent in 2015. Some experts point out, however, that third-tier and fourth-tier cities in China still suffer from a surplus of housing inventory, which prospective investors must take note of.
Germany has been a paragon of housing market stability, having avoided a housing price slump even through the 2008-2009 global financial crisis. Housing supply shortages and strong macroeconomic fundamentals (it’s the largest European economy) has contributed to the resilience of housing prices.
Berlin, in particular, has provided high yields for investors. As it also is a member of the European Union, so this country may be of interest to investors whose currency trades well against the euro.
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With low interest rates in the region spurring buyer confidence, France is becoming fashionable among foreign investors. Paris, in particular, is a popular destination among Chinese tourists who want to reside in more Western territories as a result of the encroachment of European and American luxury brands into China.
Respondents to Colliers’ survey identify France as an ideal European property investment destination. The weak position of the euro has also made housing prices more affordable for foreign investors, making the idea of buying property here and profiting off of rental demand all the more appealing.
Portugal remains ideal for British investors who are looking for a place in the sun. Investors considering investing in resort-style living spaces see plenty of opportunity here. On top of that, the Organization for Economic Development (OECD) recently identified its holiday home market as among the ones that offer the cheapest property.
The value of property in Portugal’s capital is about 1/10 that of London. There are also many dilapidated townhouses that are just waiting for renovation. Since Portugal uses the euro, foreign investors can exploit currency advantages.
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With a positive and friendly population, and understandable connection with British visitors, Australia is another promising investment destination. Global real estate companies like Colliers have tagged it as a preferred choice among European investors in Asia.
Chinese investors are also giving some love to the Land Down Under. Investment in office space is regarded as an attractive investment combination, though with Chinese demand to support it, investing in residential real estate is also feasible.
Despite the fact that many global property experts overlook the Philippines, this country just might be among the best places to invest in real estate. Strong economic performance, along with continued inflows from overseas Filipino workers and business process outsourcing companies, has driven the demand demand for luxury condo living in the Philippines, especially among expats.
Several developers compete in this space. One of them, DMCI Homes, builds condo communities that cater to the needs of the high-end real estate landlords and tenants. The archipelago is also a preferred tourist destination, making it a strong contender for investment in luxury-style rental accommodations in Asia.
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Another choice destination for Chinese tourists looking for Europe’s luxury brands, Italy also attracts interest from British investors, who are taking advantage of the pound’s dominance over the euro.
A center of European history, the rental market in Italy is strong, with Rome being the most searched-for destination. The holiday home market in this country has also been identified by the OECD as among the cheapest forproperty investors.
The United Kingdom
The grass truly is greener on the other side of the fence. While British citizens invest in property overseas, foreign investors are buying residential real estate in London. The demand for modern in-city living in the U.K. appears to be strong, with 43 percent of investors in real estate indicating an interest in this city, based on the survey from Colliers.
Chinese investors are also interested in accommodations in this city, responding to the allure of luxury brands that have expanded into the Chinese market in recent years.
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With a stable political system and low effective rental income tax, Japan is another Asian property investment destination. It topped Collier’s survey of investors in Asia, with the Tokyo office space market regarded as the most attractive investment-product combination. The rental market is also showing signs of life, as Japan recently had the highest number of foreign visitors in its history.
The country is looking to spur and ride this momentum all the way to the 2020 Tokyo Olympics, easing visa restrictions for foreign visitors. However, with its more than decade-long economic sluggishness, it is a perfect example of how, even in the hottest markets, there are advantages and disadvantages in property investing.
There are a lot of opportunities for investors to tap into global property investment this 2016. Understandably, many are still skeptical since the events of 2008-2009 economic crisis are still fresh in their minds. People can say that real estate investment is on a slump, but it depends. With the world as your frame of reference, you have endless possibilities.
John Anderson is a web developer, creative content director and a social media specialist. Follow him at @johnanderson090.