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Print PageBerlin Or Brazil? British Buy-to-Let Investors Target Overseas Property Hot Spots
As the British property market begins to cool, overseas property investors reveal growing interest among British buyers for property investments away from traditional destinations such as France and Spain.
"While property enquiries for traditional countries usually targeted by British buyers, such as France, Italy and Spain, are still proving popular among our users, we are also seeing considerable interest for properties in other destinations such as Latin America and Germany,” explains Dale Lovell, Editor of JustOverseas.co.uk
Overseas interest rates
It is argued that the increased interest in these destinations can be attributed to British buy-to-let investors moving away from the British market, where rental yields are now typically as low as 2-3%, in favour of more lucrative returns overseas.
Many emerging markets typically see rental yields above 10%, as well as increase in equity value, something that is unlikely to continue in the UK after more than a decade of property price rises.
“There are some real bargains available in the emerging property markets if investors choose wisely. As with any property purchase, location is key, but other factors to consider should be the economic outlook for that particular country and the overall rental market. If these factors are good then the chances are your investment will grow and you will not be left with an expensive property you can’t find a tenant for,” says Mr Lovell.
To help Buy-to-Let investors find their ideal investment property abroad, here are two selected countries, one close to home, the other further afield, which could prove excellent investment opportunities in the coming years.
Top overseas property destinations
Germany – Berlin
Since the fall of Communism and reunification, Berlin has transformed itself into a cosmopolitan European city. With a stable economy and excellent rental market – most Berliners rent rather than buy – as well as excellent links back to the UK, many buyers looking for a sound investment are targeting the German capital. A recent report from currency specialists HIFX into the stress of moving abroad also found that Germany – with its uncomplicated tax system - to be the least stressful place to move to from Britain. High quality city centre apartments start at around £50k up to £120k (€75k-€168k). Capital gain is conservatively put at 7-8%. "We're aware that many pundits are predicting 20% growth in Berlin, but we prefer to be cautious," says UK director of Berlin Real Estate, Trevor Hudson.
South America - Brazil
Brazil is one of the four largest developing economies in the world and Goldman Sachs predicts that the country will be the 5th biggest global economy by 2050. Also, foreign investment is encouraged in Brazil, and there are no restrictions for foreigners buying property and ownership is 100% freehold. Brazil has a large population of more than 180 million, with a small number of home-owners, therefore the rental market remains strong. As the economy expands buying power is likely to increase, causing property prices to rise: the exchange rate is also currently favourable for British buyers.
Popular places to buy include the major cities such as Rio de Janeiro and Sao Paulo – where some developers claim 18% rental yields are achievable – and beach resorts such as Natal, where a new International Airport and numerous new developments are attracting investors from around the world.