Since the beginning of the economic crisis, numerous investors have found excellent opportunities to increase their wealth in simple ways. Clear examples of this are in cities like Dubai or Hong Kong where real estate prices have grown to 63% and 81% respectively since 2009. The increase in demand in these investment activities has led to the increase in prices.
This article, based on a report by the consultancy firm Knight Frank, discusses the origin of the principal international investors and their preferences when investing.
Until September 2013, China was the greatest buyer of real estate in the world. Certain Chinese citizens invested in real estate in high standing. In particular, in recent months, New York City has had special relevance for Chinese investors. The motives underlying these investments are, on the one hand, a decline in the growth of the domestic economy of China and on the other hand a strong and stable currency (Yuan).
The other major investors are in Singapore and Russia, followed by English and US investors.
Looking toward the future, we expect to see a trend of leadership in the real estate market of Chinese investors with high net worth not only consolidated but also increasing by 137% until the end of this decade. Additionally, we expect that the number of North American investors with real estate assets greater than 30 million dollars will increase by 32% until the end of 2016, and we expect the number of Russian investors to increase by 37%.
Additionally, the report suggests that Brazil and Mexico may become significant investors, which could surprise the market with a significant increase in international real estate investment.
Considering locations for investment, there exist countries -mostly in the South of Europe -that facilitate investment by providing a political environment to support foreign investors. However, other countries -Asian ones- are adopting positions that completely oppose this notion.
In the case of India, the Reserve Bank of India recently announced that a foreign national who is not a resident of India cannot acquire real estate unless that foreign national inherits it through an Indian national. Likewise, in China, the Government restricts foreign nationals from acquiring property there. The adopted policy in Hong Kong is not as drastic; however, those foreign nationals who acquire property there must pay an additional 15%.
On the other hand, Europe, and in particular Southern European countries, offer political environments of encouragement and support for foreign investment while facilitating all types of incentives. In this case, Spain stands out where the Spanish Government recently approved the Law to Support the Entrepreneur and Internationalization. By this Law, in effect since September 27, the Golden Visa is available for all of those foreign nationals who comply with certain requirements and invest, for example, in the acquisition of a home with a value equal to or greater than 500,000€.
Spain, in particular, currently offers optimum conditions for foreign investment. The prices of real estate have fallen by 45% in certain areas, and the Spanish housing market currently offers returns on investment that are above other traditional European capitals such as London or Paris. According to a recent report published by the CBRE (international company specialized in integrated housing services), nowadays Spain is the fourth European country with major advantages for investment.
This article is not considered as legal advice