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There are a number of things to consider when investing in international markets. Maturity and stability must be taken into account, as well as issues related to taxation, political climate and even currency.
“One has to consider a lot of things,” Joanna Leverett, Head of International Residential Markets at Cluttons, told PW on the sidelines of the British Business Group’s seminar on investing in UK property in Dubai last month.
“Both the UK and US have sound legal frameworks and policies, but each market has to be looked at individually, as there are different stamp duties, entry tax, annual tax, cost of buying, etc. For example, in Europe, the buying cost is much higher — 12 per cent in Spain and 7 per cent on the rest of [the continent] —while in the US it is less.”
Leverett said the UK is the UAE’s favourite investment hotspot. In 2014, Dh11.58 billion was invested in the country from the GCC, with 18 per cent of buy-to-let investments by UAE buyers.
“London enjoys [the top] spot because of lifestyle options, education, strong capital growth story and proximity and connectivity,” she added. Central London has posted a 45 per cent growth in the past five years and about 20 per cent growth is expected over the next five.
Other cities that promise great yields are Barcelona and Madrid in Spain, Lisbon in Portugal, New York in the US, Cape Town in South Africa and Vienna and the Alps in Austria, said Leverett, adding that Barcelona and Madrid have the best prices, having fallen by 20 per cent. The rental yields are very reasonable at 6 per cent in Barcelona’s residential market.
In Portugal, a government programme that grants investors a five-year residency visa on investments above €500,000 (around Dh2.05 million) has led to high demand from Asia, driving up prices. It has also led to shortage of property thus spurring new developments.
In New York, Leverett said the market is of particularly good value when compared to London and other major global financial centres, with strong growth and higher rental yields than the UK capital.
While there is still some political uncertainty, Cape Town is a market to watch out for. Property investment options currently offer great value because of the weak local currency. Austria, meanwhile, had the second-highest price growth last year at39 per cent and is experiencing a major shortage of products on the market.
Source: Ashutosh Gupta, Special to Property Weekly