Introduction
Real estate plays a vital role in the world economy and exhibits considerable variation across different countries. As the world population grows, a strong economy and real estate investing represents one of the most significant endeavours to generate cash flow.
Owning real estate needs to come with seriousness and caution, considering the specific rules and regulations that govern the industry while ensuring compliance with the respective country’s laws.
Certain nations offer more favourable opportunities for investors, granting incentives such as permanent residence, Golden Visas, and even citizenship through investment programs.
In order to invest in rental properties or find real estate at affordable prices in the best countries in the world can be challenging.
Importance of Real Estate Investment
Historically, Real estate has been one of the best long-term investment vehicles an individual or company can opt into. Although there have been down periods in real estate values, the overall trend is up.
Foreigners are often allowed to purchase real estate in countries they are not citizens of or do not permanently reside in. This allows high-net-worth individuals to create a worldwide real estate portfolio and diversify their risk by investing worldwide.
Factors to Consider when Investing in Real Estate
Several factors can impact your investment decision in a foreign country. Ideally, you want to build wealth and at times this will be as non-residents.
Some of the top factors for foreign buyers include:
- Legal and Regulatory Environment: Understanding the legal framework and regulations governing foreign property ownership (non-residents) ensures compliance and protects your investment rights;
- Market Stability and Growth Potential: Assessing the stability of the real estate market and its growth potential helps determine the long-term viability and potential returns on your investment;
- Economic Factors: Examining the country’s economic indicators, such as GDP growth, employment rates, and inflation, provides insights into the overall financial health and real estate market growth;
- Location and Market Demand: Evaluating the location’s desirability, amenities, infrastructure, and growing population helps ensure potential cash flow and high rental yields; and
- Political and Social Stability: Considering the political and social stability of the country minimises the risk of sudden policy changes or social unrest that could negatively impact affordable prices.
Top 7 Countries for Real Estate Investments
We have outlined the top ten countries for real estate investment in 2023. The top countries for real estate list is truly worldwide and takes into account
- United Arab Emirates;
- Cyprus;
- Turkey;
- Greece;
- Spain;
- United Kingdom; and
- Mauritius.
Many of these countries offer investors residence or, at times, citizenship in the country if they meet the qualifying criteria. Immigration is an added benefit that should be considered in an investor’s decision.
Top Countries for Real Estate Investment
The real estate investment outlook for the United Arab Emirates (UAE) is positive, with expectations for continued growth in 2023 and beyond. Several factors contribute to this optimistic outlook. Firstly, the UAE’s strong economic growth, projected at 4.4% in 2023, will drive demand for new residential and commercial properties. Additionally, the growing population, set to reach 10 million by 2025, will further stimulate the country’s real estate market.
Moreover, the UAE government supports the those who invest in real estate by implementing policies for capital growth. This favourable environment creates strong demand to invest in real estate. Notably, foreigners can own property in specific areas of the UAE under freehold ownership regulations.
Furthermore, the absence of capital gains tax on real estate sales adds to the appeal of investing in the UAE. Lastly, you can repatriate their profits from property investment without facing any restrictions, providing an additional advantage to those considering an investment in the UAE’s real estate market.
The UAE might be the best country for real estate investors. The daily low cost Golden Visa is available for buying property for $550,000. The Golden Visa is valid for ten years and renewable if the investment is maintained.
Dubai Downtown information
- Rental Yield: 7.3%
- Effective Rental Income Tax: 0%
- Two Bedroom Apartment Rent: $5,445
- The average price of property: $5,900 m2
The real estate market in Cyprus is a popular destination and one of the best countries, with positive home prices in 2023 and beyond.
Cyprus has a solid economic growth forecast of around 3.5% in 2023, creating demand to invest in real estate.
The Cypriot government actively supports the investors buying real estate abroad. Foreigners who purchase property in Cyprus have the right to own the land they acquire. They are granted a title deed as proof of ownership and legal recognition of their property rights.
Cyprus’s conditions for international investors in real estate are an exciting one. The country allows freehold ownership for foreigners across the country, no capital gains tax on real estate sales, and unrestricted repatriation of investment profits.
Cyprus has a permanent residence program for investors who invest more than €300,000 into real estate on the island.
The average two-bedroom apartment in Pharos has the following:
- Rental Yield: 7.5%
- Effective Rental Income Tax: 0% for first €19,500
- Two average price of property: €1,250 m2
Turkey combines positive and challenging factors as the best countries to invest in property. The market has experienced steady growth, but political instability and currency depreciation pose significant obstacles. Turkey is experiencing hyperinflation, with its overall inflation surging to a record high of 85.51% in October 2022 before easing slightly to 84.39% in November and 64.27% in December 2022.
However, some positive factors could support the Turkish real estate market in 2023. Strong economic growth may create demand for housing and commercial spaces. Turkey’s population will reach 85 million by 2025, contributing to increased real estate demand. The government has also implemented policies to attract foreign investment, further supporting property investment.
In Istanbul, Turkey’s largest city and most expensive housing market, the average house price soared by 59% (inflation-adjusted) during the year to November 2022. Apartments in the marvelously attractive Bebek are much more expensive than in most other parts of Istanbul, with prices of around €4,600 per square meter.
Considering the mixed real estate market growth, you should carefully evaluate the investment opportunities, risks and rewards in Turkey as one of the best countries to invest. Investors who purchase a property for more than $400,000 can obtain Turkish citizenship. There are no restrictions to invest in real estate on the type, allowing the investor freedom of choice.
A two-bedroom apartment in a good location in Istanbul has the following:
- Rental Yield: 6.9%
- Effective Rental Income Tax: 15% to 35%
- Two Bedroom Apartment Rent: €435
Greece and its economy is optimistic for 2023 and beyond. The macro market will continue to grow, driven by strong economic growth, increasing population, and government support. These factors make it one of the best countries to invest in.
Greece’s economy will expand by 4.5% in 2023, creating demand for new housing and commercial space. With an expected population of 11 million by 2025, Greece will also experience a rise in demand for real estate. The Greek government supports the real estate sector and has implemented policies to attract foreign investment.
Additionally, Greece offers an attractive investment environment, allowing foreigners to own property throughout the country and benefiting from a low % capital gains tax of 15% on real estate sales. Foreign investors can also repatriate their profits from real estate investments without restrictions. However, it is essential to consider the potential risk of political instability, which Greece has experienced and may impact the real estate market.
The Greek Golden Visa program is the most popular in the world. Real estate prices that start at €250,000 to €500,000 will give you a five-year renewable Permanent Residence with no physical presence requirements, making the program an excellent fit for those cash flow passive investors living abroad.
In Kolonaki, Lykavittos, one can expect the following from a two-bedroom apartment.
- Rental Yield: 4.2%
- Effective Rental Income Tax: 9% to 44%
- Two average price of property: €2,200 m2
Spain presents a positive real estate outlook for foreign investors in 2023. The market is poised for continued growth, propelled by various factors contributing to its allure.
Forecasts indicate substantial economic growth in Spain, with a projected expansion of 4.3% in 2023.
This robust growth fuels demand for residential and commercial properties, presenting an enticing opportunity for real estate investments. Moreover, the increasing population of Spain, projected to reach 48 million by 2025, will further stimulate the demand for real estate, offering a promising market for investors.
Spain’s appealing investment environment allows the country to be an attractive destination for international investors. Notably, foreigners enjoy the privilege of freehold ownership, allowing them to own properties in all areas of Spain and benefit from the associated rights and advantages that come with it.
Spain’s €500,000 Golden Visa contributes to its reputation as an inviting investment landscape, promising cash flow and opportunities for foreign investors seeking to participate in its thriving real estate market. Barcelona is a great city to invest into.
- Rental Yield: 6%
- Effective Rental Income Tax: 24%
- Two Bedroom Apartment Rent: €2,275m2
The UK faces several headwinds, including rising interest rates, diminishing affordability, and economic uncertainty. These factors will likely weigh on the real estate prices in the near term and could lead to a decline in house prices.
However, some positive factors could support the UK real estate investing in the long term. These include the UK’s strong economy, favourable demographics, and status as a global financial centre.
Overall, a UK real estate investment may be volatile in the short term. However, it could be a good a long-term hold in the popular destination.
One result is that foreign buyers are now liable to capital gains taxes when they sell their UK properties (previously, they were exempt). Although there is a lot of freehold property in the UK, 44% of all homes in England are leasehold. Another is that stamp duty has increased on higher-end properties. These factors need to be considered for purchasing real estate in the UK. London’s Westminster for a two-bedroom apartment has:
- Rental Yield: 5.15%
- Effective Rental Income Tax: 20%
- Two Bedroom Apartment Rent: £5,500m2
The economic outlook for Mauritius indicates a projected growth rate of 5% in 2023, a slower pace compared to the previous year’s 8.7% expansion.
The Mauritian market is showing stability throughout 2023. Both residents and foreign investors continue to display a strong interest in the property market, contributing to the expectation of rising prices.
However, it is essential to acknowledge that the global economic slowdown may impact the real estate market, potentially leading to price volatility.
In addition to these schemes, foreign individuals can own property in Mauritius by obtaining a residence permit, inheriting property, or purchasing from Mauritian citizens without any restrictions. The residence by investment schemes starts at $375,000 and gives investors a twenty-year permit.
However, it is essential to be aware that certain limitations apply to the ownership of beachfront properties by foreigners unless you have special permission. Grand Bay in Mauritius has some expensive but good-yielding real estate.
- Rental Yield: 6.2%
- Effective Rental Income Tax: 15%
- Two Bedroom Apartment Rent: $4,500m2
Additional Factors to Consider
The United Arab Emirates, Greece, Cyprus, and Spain are the best countries to invest for rental property. The UAE is the best in taxes and has decent liquidity in 2023. These countries offer favourable tax treatment, various financing options, increasing demand and relatively high rental yields. However, property management can be more difficult to find in these countries than in some others.
If you are looking for a country with the best market liquidity and exit strategies, then the United Kingdom may be a better choice. These countries have well-developed real estate markets with strong liquidity, making it easier to sell your property if needed. However, the tax treatment for foreign investors in these countries is less favourable than in others.
Turkey is the best option if you are looking for citizenship in a real estate investment, however, it might not fit the stable economies. The best countries are driving demand through a residence-based programs making them an attractive destination.
Buying real estate in foreign markets allows you to diversify your property portfolio globally.
It depends on the location within the country. All of the listed countries above have strong growth. Turkey has the most extensive percentage growth, but the depreciation of the local currency must be considered.
The UAE has easy-to-follow steps for foreigners purchasing real estate.
Greece has a very streamlined process for real estate. Specialized firms make it seamless for an investor to purchase and obtain long-term residence.
The real estate markets are growing, despite increasing interest rates worldwide. If interest rates begin to decrease, there can be a significant increase in demand for real estate.
