This month we introduce our first-ever Global Property Investment Index.
It’ll be an annual affair.
The objective is to present a comprehensive overview of the markets we’ve identified as offering an abundance of real estate investment opportunity, rating and ranking each based on a list of criteria you should consider when making any property purchase overseas.
Among other factors, as we detail in our survey, country risk, economic risk, market risk, and currency risk all play key roles.
So does the size of the required investment and what it represents as a percentage of your portfolio. I don’t recommend buying a US$300,000 condo in Panama City if that US$300,000 is 100% of your investable funds. Even if all other risks are low, having all your money in one property ignore the most important fundamental—this is all about diversification.
That said, you have to start somewhere, of course, so if you have only US$50,000 or less to invest, you may find yourself with one property in one market as you begin to build your portfolio.
The destinations featured in this year’s Index all come with different risk levels, category by category. However, overall, they are all better-than-reasonable bets in the context of the expected rewards.
For this first-ever survey, we chose destinations offering broad ranges of opportunity. In some, we highlight specific recommendations, but these markets all have legs. These are all places where any smart buy should do well long term.
That judgment was made in every case based on personal experience. Over my 25-year investment career, I’ve invested in all but one of the seven markets included in the Index myself… and am actively preparing for a purchase in the one location where I haven’t yet.
It wouldn’t be a proper index if it didn’t name a winner… and ours does.
The Winner Of Our Index
Panama City comes out with the highest overall score. That doesn’t necessarily mean it’s the best place for you to invest personally. Northern Cyprus, for example, till ranks high on the list thanks to receiving 10s in four categories including property cost and projected net rental yields.
However, it scores lower than Panama City in the liquidity category. It’s more reliant on foreign buyers.
Every index likewise has a loser… but, in this case, the market that ranks last on the list isn’t that. Our first-ever Global Property Investment Index ranks Ceará, Brazil, last, but you have to remember the context. For this project, I’ve cherry-picked the world’s top markets, and Ceará, Brazil, qualifies even if its overall score places it last on that list.
Why does Ceará fall to the bottom of our bests list?
FX controls and currency risk.
While you can’t do much about the currency risk, you can, in fact, bypass the FX controls when you sell by selling to someone willing and able to pay you outside the country. It’s a common strategy. And, despite that complication, this can be an ideal market for an investor with a small getting-started budget. You can find many good investment options for less than US$100,000.
Each destination has unique qualities to recommend it. Belize is the only English-speaking country on the list (although you’ll find English-speaking attorneys and agents in all the countries). If you can qualify for a mortgage in Portugal or Spain, interest rates are extremely low right now. Puerto Vallarta is easy to get to and an extremely mature vacation market. Etc.
My First Annual Global Property Investment Index is featured in this month’s issue of my Global Property Advisor. If you’re a member, watch your inbox.
If you’re not yet a GPA member, I suggest you become one here now in time to receive this important resource with my compliments.
Lief Simon
Editor, Offshore Living Letter
