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As the worldwide real estate market comes to terms with the coronavirus, many cash-rich investors are looking towards their own overseas hideaway. It is safe to say that the worldwide prime property market has not felt the same degree of wrath from the ongoing economic headwinds, compared to traditional property markets, but there is still a degree of uncertainty. We know from our own experience that many investors are increasing their liquidity ahead of a “return to normal” amid hopes there could be some very attractive investment opportunities in the short to medium term.
We thought now would be an opportune time to take a look at the top five places to target for your next overseas property getaway.
Situated in the Lombardy region of northern Italy there are few areas of the world which bring together untapped natural beauty and some of the most stunning properties you could dream of. History shows that any blip in the worldwide property market is seen by many long-term investors as an opportunity to snap up ANY properties in and around Lake Como. We are likely to see a similar scenario in the coming months to that seen in the aftermath of the 2008 US mortgage crisis. In reality there is no shortage of breathtaking villas lining the shores of Lake Como but actually finding one to buy is a whole different challenge!
This region of northern Italy has long been the domain of high net worth individuals and international investors looking for a secluded second home hideaway. Demand remains constantly high for properties, and land, when it becomes available around Lake Como. Indeed, even those relatively few properties which do change hands very rarely make it to the market before being snapped up. On occasion we have seen permission granted for new properties with many investors excited at the idea of an off plan purchase and getting more involved with moulding the style and look of their future home.
The local authorities around Lake Como are extremely respectful of the natural beauty and as a consequence have begun to limit the supply of greenfield sites zoned for future construction. As you would expect, this has increased demand for existing properties where there may be scope to upgrade or renovate on an existing land footprint. However, even if you are looking at renovations/upgrades you need to be very conscious of the local regulations and procedures. The transfer of property, upgrades and renovations must be cleared by the local authorities prior to commencement.
Despite the well-documented troubles of the Portuguese economy, and the wider real estate market in recent times, Lisbon real estate continues to attract huge investment from high net worth individuals and international investors. For many investors it is the unique mix of tradition/history and what is often described as a dream climate which makes Lisbon so attractive. To understand the importance of the prime property market to Portugal we only need to look back to the 2008 worldwide economic downturn. This prompted the introduction of “golden visas” to attract international property investors. The government were inundated with foreign investors looking to take advantage of a Portuguese visa and possible residency in the longer term.
As we touched on above, in many ways Lisbon is unique in that many of the traditional historic regions of the city remain intact while others have undergone a period of regeneration. This has encouraged the introduction of designer shopping, restaurants serving culinary delights and a nightlife which takes in everything from sedate to party time. Lisbon also offers the opportunity to mix business with pleasure but keeping each at a safe distance. Lisbon is only a short hop skip and a jump to European and international business hubs. This is why many high net worth individuals are able to mix business with pleasure while staying at their luxury villas.
The proactive nature of the Portuguese government has also proven to be extremely attractive for long-term international investors. The country has some of the lowest property taxes in Europe and there is a distinct lack of capital taxes. In recent times we have seen increasing demand for prime properties across the country but especially focused on Lisbon. This demand has far outstretched supply which is why many experts believe Lisbon property prices are unlikely to see a significant fall in the immediate aftermath of the coronavirus pandemic.
When you consider that the Swiss Alps shares take in not only Switzerland but France, Italy, Austria and Liechtenstein it is no surprise to learn demand remains high for real estate. Prime property prices in the region range from €9900 per square metre in Grimentz to a staggering €31,500 per square metre in Gstaad. So while the higher end of the market, also taking in St Moritz, Verbier and Zematt, is a price step above the rest, there are still opportunities to climb onto the prime property ladder across the Swiss Alps. Skiing obviously dominates the region and as a consequence it is not uncommon to see large chalets in areas such as Gstaad changing hands for in excess of CHF20 million.
Historically the acquisition of property in the Swiss Alps was often been an emotive decision offering the ability to get away from business and relax. However, prior to the coronavirus outbreak the average price growth for ski homes over the previous decade was a staggering 19%. As a consequence, the acquisition of prime property in the Swiss Alps is now as much a long-term investment decision as it is a lifestyle choice. Some of the other drivers fuelling demand for property in the Swiss Alps include the quality of private schools, personal safety, attractive interest rates and the never-ending investment in public transport. There is no doubt that the lifestyle in this area of the world is on a different level!
In order to maintain the natural beauty of the region, the acquisition of prime property by foreign investors will require local authorisation. It is also worth noting that the rules and regulations surrounding property investment and property ownership will vary between the 26 different administrations in Switzerland. This firm grip on property development has allowed Switzerland to maintain its strong cultural backbone while also attracting an array of different cultures to the mix. When it comes to finance, there are no problems with mortgage funding because Switzerland is one of the most proactive and liquid financial centres in the world.
Australia is a part of the world which is often overlooked when it comes to prime property, very much at the expense of international investors! The country’s most populated city is Sydney which has a very vibrant real estate market ranging from sub-AU$1 million properties to those in the tens of millions of Australian dollars. While many regions of the world have experienced economic downturns and serious challenges in recent times, the Australian economy has continued to move steadily forward. Indeed, there is some debate as to whether or not Australia actually dipped into recession in light of the 2008 US mortgage crisis – which impacted the whole world.
When it comes to the attractions of Sydney, there are many. This is a city which perfectly reflects the multicultural society which is Australia today with a vibrant and exciting social life. There are few cities across the globe which can boast a thriving transport hub, beaches the envy of the world, renowned education facilities and the most outstanding real estate you will ever see. After each of the more recent worldwide economic downturns, including investment restrictions imposed on Chinese investors in 2017, there has been an immediate rebound in Australian property prices. In a similar fashion to the London prime property market, there are many investors waiting on the sidelines for their opportunity to buy that dream home.
However, there are a number of restrictions on foreign property ownership across Australia with a greater emphasis on new and nearly new properties. This ensures that older properties are still in theory affordable for the Australian masses but it also allows high net worth individuals and international property investors to take an active role in the styling of their future homes. So, we have a strong economy, weather many of us can only dream of, beaches as far as the eye can see and an easy-going welcome culture/social scene. It is therefore little surprise Sydney is one of the up-and-coming prime property markets and attracting the eye of many high net worth individuals/international investors.
A recent Knight Frank report into the worldwide prime residential market, just prior to the coronavirus outbreak, predicted that Miami real estate would increase in value by 5% during 2020. When you bear in mind the ongoing economic challenges surrounding the US, Europe and the Far East, even prior to the pandemic outbreak, this in itself would have been an impressive performance. In light of the coronavirus pandemic a number of these forecasts have been revised and Miami is now in the “flat or low price falls” zone. This would suggest prime property price changes of between 0% and 4.9% during 2020. When you consider that many countries are expected to announce double-digit GDP falls during 2020, even a worst-case scenario would be an impressive performance for Miami real estate.
Miami has long been a strong magnet for high net worth individuals and international prime real estate investors. This is an area of the world which hosts sandy shores as far as the eye can see, a local cuisine which takes in everything from European to Latin American as well as being party central for those looking to let their hair down. Aside from the odd tropical storm, you will be pleased to know that the sun shines in Miami almost all year round. The speed of life in the area can be as hectic or subdued as you choose; just a few miles apart you have a vibrant social scene complemented by many quieter areas in which you can relax.
While the focus tends to be on Miami’s nightlife and social scene, the natural beauty in and around the region is a sight to see. The only city in the US nestled between two national parks you have the Everglades to the west which boasts a subtropical climate perfect for those wilderness adventures. Hiking, biking and wildlife spotting, but you will need to be careful of the region’s estimated 200,000 alligator population! Designer shopping, award-winning restaurants, a healthy lifestyle and access to the beaches 24/7, it is no surprise that high net worth individuals and international prime real estate investors continue to flock to Miami.
While there is demand for prime real estate in areas such as Lake Como, Lisbon, the Swiss Alps, Sydney and Miami, mortgage lenders will follow. The mix of local finance and international mortgage lenders taking in traditional banks, private banks and niche lenders has created very welcome competition. As an independent mortgage broker we have access to more than 300 lenders across the globe and as a consequence we can inject a huge degree of competition into fund-raising exercises. This ensures that we are able to secure extremely competitive rates for our clients. Indeed, our relationships with private banks/niche lenders allow us to indulge in bespoke funding structures, which is very much our forte.
There is no doubt that the likes of Lake Como, Lisbon, the Swiss Alps, Sydney and Miami will continue to attract huge interest from prime property investors. These are areas of the world where prime property demand remains constantly high, creating a backbone for prices in times of economic turmoil. Historically, leading prime property markets have tended to fall less than traditional markets and in many cases the bounce back has been much stronger. As a consequence, many of our clients are increasing their liquidity ahead of the emergence of potentially attractive investment opportunities, brought on by short-term economic uncertainty.
If you’re looking to raise finance for a property acquisition in the short, medium or long-term, or perhaps you would like to review refinancing options, we would welcome the opportunity to discuss your situation in more detail.