Investors focused on diversifying their portfolios are always on the lookout for the best place to invest in property in the world. There are many factors to consider when searching for an area poised for strong capital appreciation and high rental yields — desirable features include a location with a growing and diversified economy, improving infrastructure, a depth of amenities, and a shortage of quality housing stock. While some established global cities may come to mind initially, the most promising investment opportunities are often found in up-and-coming areas.
This comprehensive guide examines locations worldwide primed for substantial growth in the future. We analyse a diverse range of data and insight, drawing on our expertise to determine top international spots poised for capital gains and income potential. The locations featured in this guide represent an ideal mix of stability, value, and growth for property investors seeking to diversify into international solid markets.
What Makes a Location Good to Invest in Real Estate?
Several factors must be considered when determining the best country to buy property for investment.
These include the following five:
- Economic growth and job opportunities
- Population growth
- Affordability and financing
- Nature appeal
Economic Growth and Job Opportunities
Areas experiencing business investment and job growth often see rising property values and demand for housing. Look for locations attracting significant companies, especially in growing industries like technology. Infrastructure, education, and healthcare developments are also positive signs of a robust and diversified economy.
Places where the population is increasing steadily typically have a high demand for housing. More people means a need for more homes, apartments, and commercial real estate. However, an overly rapid growth could lead to overbuilding and reduced returns. Look for areas with population growth of 1–3% per year.
Affordability and Financing
While attractive areas may see strong price appreciation over time, the initial buy-in cost is still significant. Look for locations where properties are reasonably priced relative to the local median income. This allows for a larger pool of potential tenants or buyers and more opportunities for value increases. Also, consider interest rates and down payment requirements, as affordable financing means lower carrying costs for investors.
Established and well-maintained infrastructure like public transit, motorways, schools, and hospitals improve quality of life and property values. New infrastructure developments, such as improved transit routes, can spur residential and commercial growth. On the other hand, inadequate infrastructure is challenging and can limit a location’s potential.
Places with an appealing natural landscape, climate, and recreational opportunities tend to attract more interest from homebuyers and tenants. While natural features alone don’t make a location viable, they enhance its desirability. Coastal areas, mountain towns, and resort destinations benefit enormously from their natural setting.
In summary, strong economic fundamentals, population growth, affordability, solid infrastructure, and natural appeal are key factors that make a location attractive for real estate investment. Evaluating these elements can help identify up-and-coming areas poised for long-term property value increases and stable demand.
Top 5 Countries for Real Estate Investment in 2023 & Beyond
When investing in property across the globe, it’s crucial to consider countries with strong economic fundamentals and growth projections.
Here are the five best countries to invest in real estate in 2023 and beyond:
- United Kingdom
- United States
1. United Kingdom
The UK is a top choice for overseas property investors seeking strong capital growth and rental income. Major cities outside London, such as Manchester, Birmingham, and Nottingham, have a housing shortage and projected population growth. Due to strong tenant demand, these cities offer property developments with capital growth potential and yields that transcend the UK’s average of 4.75%.
The UK also has a transparent property market with low taxes that apply to international investors as well. Moreover, when purchasing property from overseas, investors can seek guidance from UK property investment experts to make the process seamless. Investors looking for the best places to invest in property in the UK should contact their wealth managers, who can get in touch with API today.
2. United States
The US housing market remains stable, with steady price appreciation and high demand in major cities. Strong economic growth and job creation fuel housing demand, especially from millennials entering the market. Also, interest rates are projected to remain low, keeping mortgage payments affordable. And for overseas investors, the US dollar is a stable currency for property investment.
Germany has a robust, diversified economy with a skilled workforce. Significant cities like Berlin, Munich, and Hamburg have a housing shortage, especially in the affordable and luxury segments.
Property prices have significant room for growth, while rental yields are attractive at 3.36%. Lastly, Germany is a politically and economically stable country and one of the most investor-friendly economies in the EU.
Japan’s major cities like Tokyo and Osaka have a robust housing market with solid demand but limited supply. The tourism boom has increased demand for hotels, service apartments and commercial real estate. Japan also has a solid currency, and property prices and interest rates have remained low for decades, keeping housing affordable for locals and attractive for investors seeking capital gains.
Spain’s property market, especially in cities like Madrid and Barcelona, is recovering strongly after the financial crisis. Prices remain affordable but are projected to appreciate steadily over the next decade.
Spain has a high demand for rentals, especially from tourists and ex-pats, allowing investors to achieve attractive yields of up to 6.09%. The Mediterranean climate, cultural attractions, and low cost of living also make Spain appealing for lifestyle investments.
4 Up-and-Coming Property Investment Hotspots in the UK and Europe
As property prices continue to rise in major European and UK cities, investors are looking to up-and-coming areas for opportunities to benefit from future capital growth. Several cities show strong potential as the best real estate markets in the world.
Here are our top four picks on where to invest in property in the UK and Europe:
- Nottingham, UK
- Manchester, UK
- Lisbon, Portugal
- Valencia, Spain
Home to a vibrant student population and a thriving cityscape, Nottingham is a promising property investment hotspot in the UK. With its strong rental market and ongoing development projects, investors can find attractive returns and future capital growth opportunities. Whether it’s student accommodation or residential properties, Nottingham offers diverse investment options. And what better time to start than now — reach out to your wealth manager to get things going.
With a rich industrial heritage and an increasingly diversified economy, Manchester is another up-and-coming property investment destination in the UK. The city’s continued development, pulsating music scene, and thriving cultural sector contribute to its appeal to investors. From residential properties to commercial real estate, Manchester presents a range of investment opportunities with potential for significant returns.
The city is home to several major corporations, prestigious universities, and sports clubs, all of which help to drive the local economy and property market. Moreover, ongoing investment in infrastructure coupled with urban regeneration projects is set to further enhance the city’s appeal, making Manchester a prime destination for both domestic and international property investors.
Lisbon’s property market has experienced substantial growth in recent years, driven by a thriving tourism industry, business-friendly policies, and low living costs. Investors can find good value in the city centre and riverside districts. The average property price in Lisbon is still lower than other major Western European cities, indicating room for further price appreciation.
Spain’s third largest city, Valencia, offers affordable living, a stunning Mediterranean coastline, and a historic city centre. Tech startups and innovative companies have been drawn to the city, bringing an influx of skilled workers and higher salaries. Property prices in Valencia remain relatively low but have seen a reasonable annual increase in value. Investors should look at apartments and townhouses within a 30-minute commute of the city centre.
International investors considering the UK property market might face some difficulties navigating these unfamiliar territories. It’s advisable to reach out to experts in the UK property market dedicated to making this process as seamless as possible. Contact your wealth manager to discuss your requirements with API for profitable property investments.
The 3 Best Places to Invest in Property in the US
The US remains one of the best places to invest in property in the world. Several cities and regions offer strong potential for capital growth and solid rental yields.
Here are our recommendations on the top three areas to purchase US property:
- The Southeast
- The Sun Belt
- The Midwest
The Southeast: Up-and-Coming Areas
The Southeastern US, including cities like Atlanta, Georgia and Raleigh-Durham, North Carolina, is home to a burgeoning tech industry and major research universities. New companies and a young, educated workforce are flocking to the area, fueling housing demand. For investors seeking high returns, suburban areas outside these cities offer affordable properties with the potential for significant price growth.
The Sun Belt: Retirement and Recreation Destinations
The Sun Belt, spanning coastal areas of the Carolinas, Florida, Arizona, and Southern California, attracts both retirees and tourists. Cities like Tampa, Florida and Phoenix, Arizona, offer warm weather, natural amenities and a lower cost of living that appeals to older Americans in retirement. Resort towns near lakes, beaches and golf courses also draw vacationers and second-home buyers.
For investors, vacation rental properties and senior housing in these markets can generate healthy cash flow and long-term gains.
The Midwest: Affordable Alternatives
Often overlooked, Midwestern cities like Indianapolis, Indiana and Kansas City, Missouri, provide stability and value. Housing and living expenses in the Midwest are typically lower than on the coasts. However, economic and population growth in cities like Indianapolis has spurred new home construction and price appreciation. Tech companies and corporate headquarters are also expanding in the region, bringing high-paying jobs.
For patient investors on a budget, the Midwest offers affordable properties and the potential for solid returns over time.
Emerging US cities allow investors to tap into a promising real estate market and see substantial returns over the coming decades. With proper due diligence, these up-and-coming property markets could be an avenue for lucrative investment.
4 Booming Property Markets to Watch in Asia Pacific
The Asia Pacific region has some of the world’s fastest-growing economies, leading to strong demand for property. Several markets, in particular, show promising investment potential.
Outlined below are the top three countries in the Asia Pacific region posed for substantial growth:
- The Philippines
Singapore is an essential financial hub in Asia with a stable market. Property prices have been rising steadily over the past decade.
As a popular tourist destination, Singapore’s residential market is ideal for buy-to-let investments and short-term rentals. New transportation infrastructure like the Cross Island MRT line will connect developing residential areas, making the city one of the best real estate markets in the world.
Vietnam’s economy grew by around 8% in the last year, driving up wages and demand for housing. Significant cities like Ho Chi Minh City and Hanoi offer affordable property with high yields. The coastal city of Da Nang is also an emerging resort destination, attracting tourism and residential development.
The Philippines has a fast-growing middle class and youthful population needing housing. Condominiums in Manila provide an inexpensive entry to the market with yields of 7% upward. The new infrastructure will spur residential development around Manila and other cities. The government’s “Build, Build, Build” infrastructure program aims to boost the economy and property sector further.
Malaysia’s property market, especially around Kuala Lumpur, is recovering after a few years of soft demand. The government eased restrictions on international buyers, and affordable housing remains in short supply. New rail links will connect Kuala Lumpur’s suburbs, where development is growing. Moreover, resort destinations like Penang Island have a thriving “second home market” outside the capital.
To learn more about property investment in a foreign country, have a look at how we operate at API Global.
Dubai and the Middle East: Luxury Properties With Strong Rental Demand
Dubai and the Middle East represent an attractive opportunity for luxury property investment. Demand for high-end real estate in the region remains strong, fueled by a steady influx of high-net-worth individuals and families moving to the area. These factors make Dubai one of the best places to invest in property in the world.
3 Prime Areas for Capital Growth in Dubai
Some of the most promising areas for capital appreciation in Dubai include:
- Dubai Marina: An affluent waterfront community with stunning high-rise apartments and a vibrant social scene. New developments continue to drive up prices.
- Palm Jumeirah: An iconic man-made island shaped like a palm tree featuring luxury villas and apartments. Limited supply and prestige fuel consistent price growth.
- Downtown Dubai: A central, sought-after neighbourhood surrounding the world’s tallest building, the Burj Khalifa. New, upscale apartments are in high demand.
Outside of Dubai, Abu Dhabi and Doha offer prime luxury property investment opportunities with solid capital growth potential.
Robust and Reliable Rental Returns
The Middle East attracts a highly mobile expatriate population, driving demand for rentals. Luxury properties in Dubai often achieve rental yields of more than 9% due to the following:
- Short-Term Leases: Most expats rent for 1–3 years, allowing for frequent rent increases.
- Furnished Properties: Fully furnished apartments and villas command premium rents.
- Exclusive Buildings: Developments with resort-style amenities like gyms, pools and concierge services attract high-paying tenants.
- Prime Locations: Properties in desirable, well-connected areas rent more efficiently and at higher rates.
While economic cycles may impact values in the short term, luxury real estate in Dubai and the Middle East has historically shown resilience, recovering and gaining strength and momentum over the long run. For investors seeking capital growth and high rental returns, this vibrant region offers an appealing opportunity with a proven track record of performance.
6 Considerations for Overseas Property Investors
Anyone getting into property investment from overseas should consider several important factors before deciding on the best country to buy property for investment.
Here are six significant criteria to consider:
- Legal requirements
- Currency risk
- Rental Demand and property management
- Tax liabilities
- Visa requirements
Investors should ensure a thorough understanding of the legal process for purchasing property in their country of interest. Requirements for international investors may differ, and additional paperwork or taxes may apply. Consulting a reputable law firm with experience in overseas property transactions is highly advisable.
Securing financing from a local bank in the target country may seem confusing for an international investor. Work with an international bank or mortgage broker familiar with overseas property loans. Be prepared to make a sizable down payment, often 20% of the property value.
Alternatively, a wealth advisor can assist in securing a mortgage, minimising constraints to the barest minimum for international investors. Get started with as little as a 20% downpayment and £5K reservation fee — contact your wealth advisor today to learn more about UK property financing.
If purchasing in a country with a different currency, fluctuations in exchange rates could impact the investment. A property’s value could decrease if the local currency declines compared to the investor’s home currency. Consider working with a currency specialist to develop an appropriate hedging strategy.
Rental Demand and Property Management
For investment properties, evaluate the local rental market and potential yields. A reputable property manager can handle rent collection, maintenance, and tenant screening in the physical absence of an investor. Management fees typically range from 5% to 15% of rental income. Redstone, a UK property management company, charges only 10%.
Carefully analyse the tax implications of property in the country of choice, including annual property taxes, capital gains taxes when selling, and taxes on rental income. Some countries offer international buyers incentives like lower property or capital gains tax rates. However, tax laws frequently change, so keep up to date via ongoing tax advice.
For investors who plan on travelling frequently to their overseas property, they need to understand the requirements to obtain a residency visa. Some countries provide investor visas for those purchasing real estate. However, visa rules vary significantly between countries, so check with their embassy or consulate.
Proper due diligence makes purchasing property abroad advantageous while mitigating risks. We recommend investors seek the assistance of property investment experts to overcome likely hurdles. With the correct guidance, investors can navigate the complexities and confidently add an international investment property to their portfolio.
5 Expert Tips for Evaluating and Selecting International Property Investments
The following tips can help guide investors to the best opportunities when evaluating international property investments:
- Do comprehensive research.
- Focus on fundamentals.
- Identify values.
- Manage risks.
- Build a team.
1. Do comprehensive research.
Conduct thorough due diligence on any potential market or property before investing. Research historical and projected population growth, job growth, and infrastructure investments to determine an area’s potential. Examine national and local economic factors like inflation and interest rates that can impact real estate.
Review trends in property values, rents, and cap rates over the last 10–20 years to identify patterns. At API Global, we conduct all of these and more on the investor’s behalf, recommending the best place to invest in property in the world based on any investment profile.
2. Focus on fundamentals.
Go after investments in areas with solid market fundamentals like limited supply and high demand, especially for residential or commercial real estate. Areas experiencing urbanisation and lifestyle improvements tend to see strong, sustainable growth. Also, consider locations with major local employers, universities, and transportation hubs that drive economic activity.
3. Identify value.
Look for properties that are undervalued relative to their potential. This could be due to temporary issues like high vacancy rates or lack of investor interest that are likely to be resolved over time through active management and improvements. Value-added properties may require renovation or repositioning but can generate strong returns. Note that all API Global developments don’t require renovation and are already move-in ready from the point of investment.
4. Manage risks.
Be aware of risks like currency fluctuations, lack of transparency, and political instability in some markets, which can threaten property investment. Choose locations with stable governments and economies. Also, hiring a property management company can help avoid issues with foreign laws, language barriers, and tenant relations. Consider diversifying across markets and property types to minimise risk exposure as well.
5. Build a team.
Property investors should work with experienced real estate lawyers, tax advisors, property managers, and brokers in their target markets. They can offer expert guidance on real estate investment, help avoid costly mistakes, and source the best deals. Look for professionals with a proven track record of working with international investors.
Following these tips and conducting thorough due diligence will put investors in the best position to capitalise on emerging markets abroad and build a profitable property portfolio. With the proper knowledge and local expertise, international property investment can be advantageous. Investors keen on making profitable property purchases should contact their wealth manager to learn more about property investment and to discuss the next steps; they have the necessary knowledge and experience to save investors the hassle.
Frequently Asked Questions
What locations offer the best opportunities for capital growth?
Up-and-coming cities and towns attracting investment in infrastructure, business, and tourism present solid opportunities for capital growth.
Some of the best places to invest in property in the world include the following:
- Secondary cities in developing countries with a growing middle class, such as Kuala Lumpur (Malaysia), Kent (Ashford) (UK), etc. Property values in these cities are still relatively affordable, but demand is increasing.
- Tourist destinations, especially eco-friendly and sustainable locations. Areas of natural beauty that appeal to experience-seeking travellers tend to hold value well over time. New Zealand, for example, is an ideal location.
- University towns and cities with a highly educated population. These locations attract businesses, entrepreneurs, and investment. College towns in the UK, US, Canada, and Australia can be excellent investments for long-term capital growth.
What locations offer the highest rental yields?
Some of the locations offering the highest rental yields for property investors include:
- Major commercial hubs and capital cities in developing parts of the world, such as London, UK or Bangkok, Thailand. There’s high demand for rental properties in these fast-growing cities.
- Tourist hotspots with consistent visitor numbers and short-term rental potential, such as Liverpool, UK or Cusco, Peru. Income from short-term rentals and platforms like Airbnb can provide incredibly high yields.
- University towns and cities, especially if there are restrictions on building new student housing. Limited supply and high demand from students drive up rental rates and yields. College towns in the UK are beautiful for buy-to-let investments.
Overall, the locations offering the best opportunities for property investors depend on an investor’s specific investment objectives and risk tolerance. Many countries and cities can provide strong capital growth and rental yields with thorough due diligence. The key is finding the right balance of opportunity and stability in a profitable investment market.
The world offers many attractive investment locations for property if investors know where to look. Doing proper research, understanding the risks and rewards, and finding the right property in an up-and-coming location that matches one’s investment goals are important.
Investors seeking strong capital growth, high rental yields, or a balance of both, have several opportunities out there to take advantage of. With prudent investing and choosing the best place to invest in property in the world, investors can achieve excellent returns over the short and long term. Get started today by contacting your wealth manager!
Disclaimer: Any information provided by API Global does not constitute financial advice and is for educational purposes only.