Two new cities have made it onto the list of the next upcoming property investment hotspots, according to the latest report in the IP Global Property Barometer. Both Dubai and Edinburgh are newcomers to the list, although they’ve arrived for different reasons. Analysts are impressed with economic confidence in Dubai, while Edinburgh’s sharp increase in investor transactions has drawn attention from market prognosticators. Hotspots in the U.S. include Boston, Chicago, Seattle and New York, while places to watch around the globe include Brisbane, Munich and Tokyo. Despite making the list, experts warn that bubbles are a threat to several of these regions and particularly in Dubai. For more on this continue reading the following article from Property Wire.
Dubai and Edinburgh are up and coming property investment hot spots, according to the latest IP Global Property Barometer covering the third quarter of 2013.
Dubai makes a debut appearance on the property investment company’s global investment hotspot list as it benefits from a rising economic confidence regionally and investors are seeing yields of up to 6%.
The report says that Edinburgh, also making its debut appearance, has seen a 50% rise in transactions, following the upturn in London’s property market and Manhattan has seen an inventory plunge of 31% pushing up prices and home seekers to satellite towns.
It also reveals that prices per square metre in Munich are significantly below other major European cities offering investors attractively low entry points.
The firm, which specialises in securing prime investment opportunities in emerging and developed markets around the world and providing unique property investment opportunities for its multimarket client base, reveals what it believes are the best investment destinations at the current time.
Other up and coming investment destinations include Chicago, New York, Boston and Seattle in the United States and the Australian cities of Melbourne, Sydney and Brisbane. German cities Munich and Berlin, which were favourites in the first three months of the year, have made a comeback and Tokyo makes its second appearance of the year.
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‘We are pleased to see Dubai benefitting from rising economic confidence across the Middle East North Africa region. Here, prices have risen an impressive 11.9% in 2013 to date, with potential for more growth in a market that remains 30% below the peak levels of 2008. The ever increasing inflow of expat workers in the city from all over the world is a key factor in driving consistent rental rises,’ said Paul Preston, director and head of IP Global Middle East.
The newfound investor confidence is achieving net yields of up to 6% but Preston does advise that investors should exercise caution as the 2008 property bubble could repeat itself but hopes the Central Bank’s recently announced regulations restricting the amount of cash that home buyers can borrow will provide the framework for sustainable growth.
Looking at the US, the report says that the regional business hub of the mid west, Chicago, is moving out of stabilisation period and offers excellent potential in the short to medium term. The lower price points and higher yields are looking very attractive to investors. Home prices in the area were up 7.8% in the year to July 2013, while condominium prices increased by 14% in the same period.
It also points out that New York has long been seen as an investment safe haven and remains among the top investment destinations in the world. The heart of the city, Manhattan has been a hot market for some time, and that is set to continue, after an inventory plunge of 31% in the second quarter of 2013.
These rising housing costs have pushed home seekers to parts of Brooklyn, Queens and New Jersey, having the knock on effect of pushing up prices there too, the report adds.
The analysis also suggests that Boston, home to several of the world’s top universities, offers stable local economic growth. The Massachusetts capital’s property market only lost 18 % during the recession, which is considerably less than most other cities. Home prices are up by 6.2%, and this trend is only likely to continue as supply dropped a significant 20% between July 2012 and 2013.
The Seattle property market has seen double digit growth for five months as of July. Due to large employers like Boeing, Starbucks, Amazon and Microsoft supporting job creation, rental demand has also pushed prices 6% higher than 12 months ago. For sale home inventory is 23% down on last year’s June level and this restriction on supply will support continued price growth, the report explains.
In Europe, Edinburgh is looking very strong with a 50% rise in transactions, following the lead of the London upturn. Forecasters are expecting this trend to continue and estimate a 23.8% increase in prices by 2017.
Also in Europe, Germany topped the charts in the first quarter of 2013, with Munich and Berlin showing the most promising returns. ‘In the third quarter the Munich real estate market continues to be one of the standout cities of continental Europe as prices per square metre in Munich are still significantly below other major European cities,’ the report says.
‘Berlin also stands out for its cultural and commercial opportunities and is growing at a rapid rate, but housing remains relatively cheap, with only 27.4% of income typically spent on rent. Germany does enjoy a reputation as renter’s paradise but investors are now reflecting on the Bundesbank’s recent warning that properties in German cities may currently be overvalued by between 5% and 10%,’ it adds.
The report says there was a bi-polar Australian economy in the second quarter of the year with only Western Australia and Queensland thriving due to the mining boom. By quarter three, however, Australia is faring better with Melbourne, Sydney and Brisbane have been highlighted as hot spots.
The report says that Melbourne, Australia’s largest seaport, has a diversified economy which is fuelling healthy economic growth. Meanwhile Sydney, Australia’s most populous city and business hub, is likely to become even more popular following the Australian central bank’s recent cutting of interest rates to an all time low combined with the continued weakening of the Australian dollar, which has fallen 11% since the start of 2013.
Australia’s third largest city Brisbane, was recently ranked the fastest growing mature city, so rents have risen 5.1% annually since 2010, after house prices being flat for the last five years.
This article was republished with permission from Property Wire.
