• Home
•  » Property Investment News

Back on Track for Property Investment Abroad?

There's plenty of talk of green shoots in overseas property investment, but house price indices are probably the only true indicators of what is really happening in the markets. Indices recently released by Knight Frank and The Economist appear to show that property investment abroad is indeed taking a turn for the better.

The Knight Frank Global House Price Index for Q2 this year opens with the affirmation that ‘global housing markets show signs of tentative recovery'. The Economist titles its index, ‘House prices are creeping up again'. However, in spite of their upbeat beginnings, both indices are cautious about announcing definitive recovery.

The Knight Frank Q2 report finds that property investment in almost half the locations in the Index is positive. House prices rose in 15 countries during the April to June quarter. Further good news comes from the fact that there were no falls in house prices of over 10% anywhere. (Several countries - headed by Dubai's spectacular tumble of 41% - saw double-figure decreases during Q1.)

But like Q1, the Q2 Index sees unusual destinations topping the best returns from property investment abroad. In the quarterly table, Scandinavia dominates the top five with Norway, Finland and Sweden in first, fourth and fifth places respectively. Australia, a perennial relocation favourite, takes second place and Israel is third. When it comes to year-on-year figures, Israel, Switzerland and Indonesia make up the top three. Israel's annual price rise at 12.5% is particularly impressive with Switzerland's 6.1% more modest.

Switzerland is also top of The Economist house price index, although the year-on-year increase in property quoted is 4.6%, slightly lower than Knight Frank. Half the countries surveyed in the Index showed increases in house prices during this year's second quarter.

However, in spite of this, The Economist warns that rising property prices may not last and points to several caveats such as the huge decline in affordability in many countries and ‘fears of a new supply glut'. Knight Frank is equally cautious, claiming that ‘further falls are always a possibility', although the real estate company is ultimately optimistic - ‘it does appear that the worst is behind us'.

Both indices are useful indicators, but many countries that are commonly part of an overseas property investment portfolio are missing. Brazil, a hot favourite for real estate, and the Caribbean countries are examples. Brazil publishes no official property market statistics, but the general impression is that prices are still rising. Last week's ‘Househunting' article in the New York Times featured Brazil and quoted real estate agents as expecting prices to rise this year as much as 5%, even in the slower economy. Proof that property investment in Brazil would rank high in any index.

And there are also alternatives to bricks and mortar property investment. In the current economic climate, many investors have chosen to diversify and include other types of property within their portfolio. Agricultural land in Ukraine or dairy land in New Zealand are two possibilities. Returns can be just as high (or higher) than more conventional property and you keep your eggs in several baskets.

« Back

Other Property Investment News