Minimum Risk and Maximum Income: Top 5 Best Countries for Investment in Apartments

While markets are sagging and property owners in the worst-hit countries are losing control of properties, cash-strapped and highly trained investors are keeping a close eye on interesting property offers. Indeed, it is the instability of the business environment that makes it possible to sensibly assess the potential of real estate in the midst of a crisis.

Here are just 5 countries that deserve special attention from investors interested in profitable apartments in 2021.

Georgia

Georgia is a country rebuilt with correct decisions, bills, and relations with foreign investors. Despite the general skepticism of buyers regarding the countries of the post-Soviet space, skepticism disappears somewhere when the object begins to bring profitability from 8 to 12% per annum in dollars:

• First, there is no tax on the purchase and ownership of the real estate in Georgia for non-residents of the country. 
• Secondly, Georgia is ranked 4th in the world’s security ranking.
• Third, $ 1.88 billion was transferred to Georgia in 2020, which is 8.8% more than in 2019. Consequently, despite the crisis caused by CV-19, the inflow of foreign exchange to Georgia has increased.

The National Tourism Administration of Georgia predicts an increase in the duration of tourists’ stay in the country, which, accordingly, will lead to an increase in income from rental housing. Moreover, every year, with the exception of 2020, the flow of tourists is growing. In 2019, more than 9 million tourists visited the country, despite the fact that the population of Georgia is 3.72 million people. Over the past year and a half, the average rental income has been from 5.89 to 7.2% per year (NUMBEO).

As a minimum, a reason to think. As a maximum, apply mirrored investing (a strategy in which the investor observes the actions of more experienced investors and mirrors their steps).

Related: Furnished Apartments in Austin: The Ultimate Solution for Short-Term Stays

United Kingdom

The UK formally left the European Community on January 31, 2020. Since then, the main issue that threatened business on both sides with losses was the principles of trade. It was assumed that from January 1, the EU and Britain will switch to trade with taxes and quotas under the terms of the WTO. However, at the end of the year, the parties were still able to agree on maintaining the duty-free space. Well, Soft Brexit is another growth driver for the UK property market.

It should be noted that the dynamics of demand for rental housing in the UK are very stable and have only been growing since 2008. Rental income per year will be approximately 3.67 to 4.14 percent, in the case of student housing, the figure can rise to 5% (NUMBEO).

Another trend that may turn out to be very promising: investor interest is shifting from London to the periphery, where it is cheaper to buy real estate than in the capital, and the annual income will be higher in percentage terms.

At the same time, it is worth thinking 1000 times before buying real estate in a country with a “complex” tax system. However, tax consultants recommend keeping up to 10% of the transaction amount in stock. After all, Council Tax, for example, reaches $ 3,000 (whether you want it or not, you have to maintain the police, municipal institutions, and street cleaning). Utilities cost an average of $ 2,600.

Hong Kong

According to NUMBEO, Hong Kong ranks first in the ranking of apartment price-to-rental income. It would seem much simpler, here is the rating, here is the country with the most favorable price / rental income index. But, of course, it’s not that simple. As you know, not only stagnation and fall in value but also the rapid growth of any asset, whether it be apartments or securities, is a high risk for an investor.

According to the calculations of the Nobel laureate Robert Schiller, the historically average corridor for real estate valuation is Price / Rent from 10 to 15. That is if an apartment costs from 10 to 15 annual income from rent, it is priced fairly and rent is economically equivalent to a purchase, if it’s below 10, it’s cheap, if it is above 15, then the property is overvalued and the rental income is low.

If the P/R is near or above 25, real estate is unreasonably expensive, it’s a bubble. By the way, in Hong Kong, the P/R in 2020 was 43.5.

Georgia (14.5 according to NUMBEO data), Hungary (13.8), Portugal (12.5) can again be cited as examples of adequately assessed markets.

All in all, Hong Kong breaks all records and brings in fabulous income for square foot owners in enviable working areas. But what will happen tomorrow is hard to say.

Turkey

Turkey is a pro-Russian country with a high level of service. For reference, more than 7 million Russians visited Turkey in 2019. This is 17.6% more than in 2018. Turkey has become the second home for many middle-class Russians.

Since 2002, Turkey has shown steady GDP growth and a slowdown in inflation, and the World Monetary Fund predicts that Turkey’s economy will expand by 6% in 2021. If we take into account that Turkey is rapidly adapting to the peculiarities of online trading due to the pandemic, it can be predicted that the process of buying and selling for foreign investors will be easier. Already in 2020, Turkish real estate sales to foreigners grew by 13.8% compared to the same quarter of the previous year.

In the summer of 2020, Turkey adopted a completely new mortgage program, and almost 230,000 houses and apartments were sold in the country in July, according to the Institute of Statistics. Compared to July 2019, sales increased by 124 percent. And the average rental income ranges from 5.38 to 6.1% per year (NUMBEO).

Apartments are now going to be sold out rather quickly, even before the end of construction. Prices for apartments and housing will rise significantly in the near future, as the new law obliges each apartment or apartment to secure its own parking space. It is worth investing in real estate right now so that then it will sharply come to a plus just due to the increase in the value of the real estate.

Government involvement and market support create a reliable springboard to your own pool, somewhere on the coast of Bodrum, Alanya, or Antalya.

Portugal

We all know that Portugal has the most affordable Golden Visa by Investment program. Now the visa is issued immediately for two years and then twice for a period of two years. When an investor applies for citizenship five years later, he is in the middle of the third term of the golden visa and does not need to apply for permanent residence. In addition to “investing in oneself,” the Portuguese market also offers profitable apartments.

The latest research from 2019 ranked Lisbon as the most promising city in Europe for real estate investment, surpassing Berlin and Madrid. This is due to the fact that the Portuguese capital has become an attractive destination not only for foreign tourists as potential buyers of real estate but also for representatives of the business community.

The Golden Visa program played an important role, thanks to which it became possible to obtain a residence permit in Portugal in a simplified manner when buying expensive real estate.

However, changes to the Golden Visa program, which will take effect from January 2022 will exclude Lisbon and Porto from the list of destinations for real estate investments.

Therefore, now is the time to purchase, and it is best to look for real estate in the suburbs of these cities. As soon as the “Golden Visa” is closed there, real estate in the vicinity can rise immediately by 30-50 percent, because the suburbs of Lisbon are still more popular for living and renting than the inner part of the mainland. And now few people need the suburb, although prices there are much lower than in the city. At the same time, the average rental income is already 4.77-5.59% per year (NUMBEO).

Summing up

Investing in apartments in any country is profitable if the buyer is satisfied with the guaranteed profitability after taxes. There is no country with attractive apartments, there is an attractive yield. 

Even now, during the pandemic, more than 60% of investors and consultants consider quarantine to be the right time to complete transactions and are actively looking for objects for investment (according to Tranio).