Property Investment - Global Regions
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This section gives a quick survey of regions of the world to give my view on good 'baby-boomer' property investment market opportunities.
Predicting where large populations of retiring citizens will migrate to areas where supply is restricted, will provide a key to future capital value increases, if there is also a stable and growing economy. Proximity to amenities, communications, sea, sun and warm weather are important, as well as purchasing a property that is good value and has a way to go on the growth curve.
A further consideration is the currency risk – no use finding property prices have risen but the currency has crashed!
Another consideration is – what will you do with the property if you buy it? As a rule, properties should be self funding – e.g. rents at least cover borrowing and costs. Therefore, you need to buy a property in a location that also has a strong rental market – either holiday lets or permanent lets and a healthy yield.
Go for sun, sand, sea, sailing. Other considerations are golf, skiing, city centre culture. I favour Arizona, Florida and coastal California with coastal Carolina and possibly coastal Oregon as future growth areas. These are fairly well established already as retirement centres – expect them to become even more popular. I particularly like the golfing communities of Arizona – many ageing US citizens will find the dry all year round climate particularly good with arthritis and other medical problems. Southern coastal California and coastal Florida also seem reasonable bets.
Most Mediterranean coastal areas will become more popular, though be careful which country you invest in. The best countries will be those with an expanding population as well as baby-boomers retiring and the developing countries rather than the ultra-mature countries like France/Germany/Holland.
Watch out for economies that could suffer major economic down-turns – I would put Portugal and Italy in this category; or stagnation – I would put Germany and Italy in this category.
Look on the map for good all year round weather, large populations and migration patterns of both nationals and foreigners – I would favour southern Spain (Costa del Sol), south of France, and possibly Greece. High-risk opportunities include coastal Balkans and coastal Turkey. I would avoid Italy since the population growth is so low (1.2 births per family in 2002) and prices already so high that there is a chance of prolonged property price stagnation in this country.
The south coast of the UK is also a good bet, along with the south coast of Norway (west of Oslo) and coastal Swedish area close to Stockholm. All these three countries have a fairly health population growth (1.7-2.0). Coastal Bulgaria is also a good bet since prices are incredible cheap and this market will be driven up my vacationing Western Europeans and the wealthier Bulgarians.
Holiday destinations on the south coast of China, India, Thailand and Malaysia are likely to see an influx of wealthy retiring locals in the future – it is best to research the demographics of each country before visiting any of these destinations. But it does not take a rocket scientist to predict that 500 million retiring Chinese in the next say 25 years will drive the prices up in coastal retirement spots. That said, culturally most Asians give a high priority to be close to their families and may stay in the cities such as Shanghai and Mumbai.
Coastal retirement spots in New Zealand and Australia with good climate will most likely do very well – examples include beach locations near Auckland on North Island and the Australian Gold Coast – Queensland and coastal areas around Perth. These areas are quite well established already and are likely to command ever increasing premiums as wealthy retirees fight for some sea-front locations.
Most property locations in Africa are high risk – though South Africa could be a reasonable bet in the long term as long as it is politically stable, crime does not increase significantly and you can handle the currency risk. Coastal areas around Cape Town and to the east seem very cheap, though for most foreigners, the travel time and cost is prohibitive (12 hours to Europe albeit on a similar time zone). Law and order, land-grabs and political stability need to be considered in most countries – some countries also do not allow foreign ownership (e.g. Libya).
Most Middle East countries do not allow foreign ownership. Furthermore, political risk is high. Some property purchase are possible in Dubai, though prices are already high – so could come tumbling if there was any regional or nation country shock. I might consider instead Beirut where properties prices are far cheaper. The city is recovering from the troubles in the 80s and developing again into a playground for the rich Middle Eastern people on the Mediterranean coast. High risk.
Argentina is recovering from the financial crisis a few years ago and property prices have already shot up – there is still room for growth. Selecting where the Argentineans choose to retire would be a good first step. The same applies to Brazil – coastal areas around Rio de Janeiro and Sao Paulo could be a good bet. The same model applies for Venezuela and Columbia. Culturally, these citizens tend to like to congregate and like nothing more than promenading in the evening next to the coast and eating out.
The Caribbean is already very expensive though there are still probably bargains to be had in countries like the Dominican Republic. I would avoid its neighbour Haiti. Watch out for Cuba one day – if things open up as they are likely to one day, beach-front Havana could be a good bet. All these countries rely on a stable political climate and improving economy to fuel capital value growth – most of these countries are high risk, particularly for a foreign investor that does not have a good feeling for the local laws, markets, languages and values.