Top 10 Investment Markets For 2016
Kathleen wrote earlier this month to tell you about our picks for the best places to live or retire in 2016. That’s part of our Live and Invest Overseas agenda—where best to spend your time. The other part is where best to spend your money…
New Year’s Eve seems like a good time for regrouping, so I have been reviewing investments made in 2015 and making a plan for what I intend to purchase in 2016. Favorite markets for 2015 carry over into the New Year and, in some cases, overlap with Kathleen’s picks for top lifestyle havens.
Portugal, Specifically The Algarve And Lisbon
In 2015, I bought an apartment in Portugal’s Algarve region. I closed on the property last month and am working now to get it ready for rental. Prices in Portugal in general and in the Algarve in particular were irresistible in 2015. They are firming up but will remain appealing in 2016. Rental yields are and will continue strong. The country’s fundamentals support continued growth, and the Algarve continues to compete effectively for expat retirees and year-round vacationers from northern Europe.
In other words, Portugal’s Algarve region is a top all-around pick, a place where you can enjoy a quality lifestyle at an affordable cost while also making money. In 2016, we plan to expand our focus in this country to include Lisbon, another all-around top pick, where I intend to pick up another apartment for rental.
In Panama this year, we purchased the building that houses our Live and Invest Overseas business and staff. This made sense not only because we’ll be our own tenant but also and more so because commercial and office space in Panama City are the best investment sectors in this market right now. This purchase diversifies our Panama portfolio beyond residential and gives us an expanded stake in one of the markets we’re most bullish on both short and long term. Panama’s economy continues strong, and rental demand, especially commercial, is only going to increase. This market will be a regular focus of my Global Property Advisor service in 2016.
Meantime, residential rentals in Panama City still provide good returns. The market is heating up in the high-end neighborhoods, as prices break through their per-square-meter highs from 2007 and 2008. Rents are keeping up, as residential construction has leveled off in many neighborhoods due to lack of space for new buildings. Punta Pacifica specifically is seeing strong demand.
Agriculture in Panama will also remain a strong buy for 2016. While I continue to look for new agriculture investment options in other countries, Panama has benefits that set it apart. For example, Panama imposes no income tax on agricultural revenue. Plus, a long list of in-demand fruits can be grown in Panama, which is centrally located for shipping to either U.S. coast and to Europe.
Also this year Kathleen and I invested in a condo-hotel unit in a resort on Ambergris Caye. Belize’s tourism draw remains strong; its Caribbean and island coasts offer some of the best diving and snorkeling in the world. Plus, Belize is easily accessible from the United States. Southwest Airlines recognized the opportunity and included Belize as part of its first round of expansion into international service.
We were attracted to the rental condo I chose this year because it’s a fully turnkey option; I increasingly appreciate investments I can buy and hold while someone else manages the property. Also, I like the architectural style of the construction of this property in particular, the vision behind the property, and the fact that it has the support of a major hotel brand. I see this as a good complement to my agricultural investment in Belize’s Cayo District.
Units in the condo-hotel are still available. In addition, Belize can be an overall good choice for a rental investment, on Ambergris, in the Cayo, or along the southern mainland coast in Placencia.
Turkey And Argentina
Two new markets on our radar for 2016 are Turkey and Argentina. In truth, both have been on our list for some time. Kathleen and I invested in Argentina post-2001. Recently, it’s been a matter of waiting for a new administration to take office to signal an opportunity to invest again. This has now happened.
I have wanted to buy in Turkey for the past three years but haven’t had time to find the right opportunity. This country, especially Istanbul, remains an excellent choice for pre-construction and rental investment. Istanbul’s economics are compelling. This city enjoys a large young population and a growing middle class. The economy is strong, and the housing inventory is undersupplied, both in absolute numbers and from a quality perspective. Much of the current housing isn’t up to modern standards and is expected to be replaced.
Plus, Istanbul is a world-class, brand city, on par with Paris and Manhattan, and has become one of our favorite places to spend time.
With prices for studio and one-bedroom apartments starting at less than US$50,000, appreciation rates in the high teens, and net rental yields as high as 7%, now is the time to buy into Istanbul. We’re determined to take a position in the New Year.
Argentina is a perennial favorite. This is a country of charm and character, and Buenos Aires is another of the most interesting cities in the world… a city, like Istanbul, where you can walk the streets in any direction to find something interesting and engaging. The interior of the country offers vineyards, skiing, fishing, trekking, biking, and any other outdoor activity you might be interested in.
Now that the country has a new president who appears to be trying to get things back on track economically, we’ll be looking at Buenos Aires for an apartment in 2016. While we expect to be able to find something that makes sense from an investment perspective, we’d be happy to own an apartment in this world-class city again regardless.
The apartment we bought in 2002, in the wake of Argentina’s decoupling from its peg to the U.S. dollar in December of 2001, was a purchase made with friends who decided they wanted to sell in 2008. That turned out to be a good call. We doubled our money on this rental property, from which we had been earning an annual yield of about 6% the years we held it.
Brazil And Chile
Two wild cards for 2016 are Brazil and Chile. Each has seen its currency depreciate significantly against the U.S. dollar, making real estate in both a relative bargain.
Brazil prices look good in U.S. dollar terms, but the economy is in recession. It’s a good time to buy, but the question is how long before the economy turns around. With so many other good options for 2016, any potential investment in Brazil would have to be a global bargain to get my attention… and I believe I have found one opportunity that could qualify. I’ll be sharing details of this with members of my Global Property Advisor service in the January issue.
Chile is a compelling choice for an agricultural investment. The hiccup here is the distance. Chile isn’t part of my current circuit, so only a truly turnkey opportunity in Chile would make sense for me. Still, you should consider Chile while dollar prices are a bargain.
Uruguay And Mexico
The short list of other markets we’re bullish on for 2016 also includes Uruguay and Mexico, both for agricultural investments.