The pandemic caused a wide variety of changes to how we think and act, but one area of our lives that it impacted was the property market. In the latter half of 2020, there was a huge housing boom and a desire for more space, for sunshine and travel, as well as an increase in the rental market for its versatility. Mortgage rates are currently competitive and there’s a buzz of activity in the property market. So, is now the right time to buy property abroad? And where should you choose to invest?
There’s no denying that making money from the housing market is tougher today than it was a decade ago, since you need a larger amount of money to get started in investing. However, even after the economic crisis of the pandemic and Brexit, the real estate market remains strong and international investors are still keen to purchase abroad.
There’s been an upward trajectory in prices over the past year and the likes of the UK and Germany have experienced high levels of growth. People looking to invest are typically seeking different things to people buying residential properties. They want to know what the rental income might be, the typical occupancy levels for the area, how much they can expect to pay in management costs, and how long the rental season is. But which locations are leading the way for overseas investment?
Throughout 2020, property prices in Paris were on the rise, with the average price of an older apartment earning owners over €10,400 per square metre. In particular, properties in the Golden Triangle, Left Bank and Monceau Park have been in strong demand. The latter is particularly popular for both short and long-term investments, and attracts families due to the friendly community and access to schools.
The beauty of Paris - it’s culture, the historic buildings and rich restaurant scene - makes it a popular tourist spot, and therefore a great option for investors looking to purchase a buy-to-let property or second home. Property experts believe that property prices in the city will continue to grow throughout the remainder of 2021, rising to over 7%.
Spain has long been a top destination for Britons looking to invest abroad, making up a large proportion of the market. Even with a reduced number of foreign visitors and restricted activity, the housing market in Spain has still been incredibly active. In particular, the higher-end, luxury market in Marbella has been thriving of late, with properties over €1 million accelerating month to month. What COVID has taught us is that, thanks to remote working and digital connectivity, we can set up our homes to be anywhere we want them to be and there are opportunities to invest beyond our local area, which has inspired people to invest abroad to benefit from the perks these destinations have to offer.
The demand for apartments and villas in Marbella has grown to a much busier level than experts could have anticipated, with investors keen to close deals on available properties, which has provided a positive sign of the market’s potential over the coming months. Property specialists have noted that buyer enquiries increased by over 154%, and the number of completed sales increased by 68% in the first half of 2021, compared to the first six months of 2019.
Germany is widely considered to be one of the best countries for investment, and property prices here have been rising consistently for the past decade. Berlin, in particular, has been one of the top cities in Germany to invest in real estate. While price development has slowed slightly this year, Berlin has remained a strong contender for investment and the regulations on the rental market have actually had a positive impact on other developments.
Experts agree that prices will continue to rise here and investments in Berlin will remain popular going forward. In this city, there’s potential to benefit from a rental yield of around 8% in certain areas, overtaking the likes of London where gross rental yields are in the region of 5%.
When it comes to buying an investment property, the ultimate decision comes down to the level of risk you want to take, how much of a return you’re looking for, and the type of property you want to invest in. There are several destinations in Europe that have become popular in the past year for people looking to place their money into a property venture, and the results can be rewarding if you do your research carefully. Look for the unique characteristics of the specific market of that destination and build up your local knowledge so you can be sure you’re choosing high-quality property for increased gains.