The latest Global Real Estate Report released by investment group IP Global, shows that European cities top the list as the most popular property investment cities for South African investors looking to make strong returns.
The report assesses cities across the globe and measures their investment appeal by looking at affordability, economic stability and the potential rate of return, among other various other factors that make any location attractive to foreign investors.
London topped the list again in 2017, with IP Global saying the city has held firm as the world’s leading business and commerce capital, remaining one of the command centres for the global economy.
The city, which is by no means affordable, still holds the greatest prospects for property investors due to an increase in job openings and one of the lowest vacancy rates in recent years (at 2.5%).
“It is estimated that London will need 64,000 homes built in 2017 to meet growing demand, a figure far above the 42,000-unit target set in the London Plan,” IP Global said. “Private renting is on the rise, too, and rental growth for flats over the last decade is at 45%.”
According to the firm, South African investors have always held London in their stock due to the economic stability and steady rates-of-return – however, it said that they should cast their nets wider, with other cities also making the cut for strong potential returns.
“Real estate investors from South Africa have consistently shown a healthy interest in UK property in particular,” said George Radford, Director of Africa for IP Global.
“On a global level, places like London, Berlin and Chicago remain very popular due to their stability and growth potential, but we are seeing increased interest from Sub-Saharan African investors in regional UK markets such as Manchester, Liverpool, and Birmingham, as well as other key European cities.”
The top 10 cities to invest in property, according to IP Global are:
- London, UK
- Manchester, UK
- Burningham, UK
- Liverpool, UK
- Berlin, Germany
- Chicago, USA
- Vienna, Austria
- Hamburg, Germany
- Frankfurt, Germany
- Dusseldorf, Germany
A break-down of what makes each location an attractive investment prospect can be read in the report.
“South African investors typically prefer to purchase buy-to-let international residential properties for diversification and capital protection purposes, as well as income-producing assets, because they are more tangible than other property investments such as property funds,” Radford said.
“While their one or two bed units are rented out their tenants cover their bonds, and they can look forward to owning the property outright in years to come, or passing the asset onto the next generation.”