Property Frontiers’ International Real Estate Investment Outlook Report 2006

Property Frontiers’ International Real Estate Investment Outlook Report 2006

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Real estate markets are much like any other market; they operate in cycles experiencing growth, stagnation and even decline. In the case of property, these cycles tend to be slower than in other types of market, but timing is still the key. With this in mind, the question on every potential international property investor’s mind is; which countries will provide the best property investment opportunities in 2006?

The full answer to this question would involve a very long list of countries; many of which would be familiar to anyone with a passing interest in international property. Places such as Dubai have been hotspots for sometime and we expect this to continue next year due to the looming finalisation of the Freehold law and the early realisations of some of the Emirate’s commercial and leisure mega-projects. Similarly we expect the Bulgarian market to continue providing good investment opportunities. However, our advice to investors would be to concentrate on the ski resorts rather than the coasts.

Other parts of Eastern Europe are rightly attracting attention too. Certain areas of Poland, Latvia, Estonia, Romania and even the Ukraine will be worth considering in 2006. One of the most exciting opportunities within Europe is Montenegro which despite its many attractions and low prices is yet to enter in to the investment destination mainstream.

Beyond these more familiar markets, 2006 will see the rise of more far flung destinations, particularly in Asia which is experiencing high levels of growth. Possibly the biggest investment opportunity next year will be China. China has already attracted significant investment from UK buyers hoping to prosper from the effects of the rapidly growing economy and the expected revaluation of the Chinese currency. However, China remains a relatively untapped market and investors still have the opportunity to get into the market at an early stage.

Chinese economic growth is also impacting real estate markets in other Asian countries. China’s strong trade links with Thailand and Malaysia are driving economic growth which in turn is pushing up property prices and increasing rental demand.

In Malaysia the main opportunity is in Kuala Lumpur where prices are currently low by international standards. During 2006 we will continue to see price rises there, fuelled by general economic growth and increased housing demand from expatriates. In Thailand, the biggest tip is Chiang Mai which is both developing as a tourist destination whilst also becoming a key trade centre on the back of a new highway connecting the city to China.

The emerging markets of South and Central America also present exciting opportunities. The two most notable from our perspective are Brazil and Grenada in the Caribbean. Both markets are experiencing massive growth in tourism and have a shortage of high quality residential and hotel properties to fulfil the demand. In these locations property on managed resorts will be a good buy.

Beyond the opportunities outlined here, there are of course many others. The world is ever shrinking and this has a very rapid and obvious impact on international property markets. The choices available to investors are expansive but care must be taken to fully understand the true investment opportunity as well as the risks. When considering market potential, it is also worth remembering that the internationalisation of property investment is removing the isolation factor that historically typified real estate markets. Today, the growth cycle of one property market can be significantly affected by the economic health of another country in which many of the active buyers are resident. Consider the impact of a UK recession on the French property market for example.

Despite the complexities and considerations that must be taken into account when investing abroad, the number of opportunities continue to increase. And if investment is all about timing, then this greater choice means that 2006 will offer many opportunities to get your timing just right.