Many of you avid property investors out there will almost certainly be concerned with the rumours of ‘double-dip recession’, the tottering Euro and the effects of the Red-Shirt riots on the Thai property market, especially as it applies to Pattaya.  However, to give you a more global perspective and possible favourable alternative leads, we have taken this opportunity to write an adaptation of the thoughts of Matthew Montagu-Pollock, the head of Global Property Guide, one of the market leaders, on the current state of the world’s property markets and the best investment strategies to adopt.  He most definitely recommends buying-to-let as the best investment.

Australia and New Zealand Property Markets

Added to the fact that Australia was the only developed country not to have directly experienced the recent recession, favourable lending rates have helped the Anzac markets survive the most recent downward trend. Due to the cyclical nature of economic dynamics, however, the currently low rates will necessarily rise and, sadly, property market prices haven’t fallen sufficiently far enough to merit “a happy investor strategy.” Matthew recommends delaying entry for at least 3 – 4 years to give the property markets chance to stabilise. This cautious longer-term approach, however, is more in keeping with the nature of the cycles inherent in property markets generally, as distinct from those in the stock markets, which are obviously subject to wilder swings on a short-term basis.

Developing vs. Developed Markets

Mortgage financing is a relatively recent concept in most of the world, where historically the cautious mortgage lending policies have served to keep prices low. The firm belief, until recently, that developed markets are less prone to risk was firmly revealed as so much hype with the most recent market collapse. In reality, developing markets frequently offer greater opportunities , especially through high rental yields, which are a crucial gauge of opportunity for appreciation.

Asian Property Markets

Prospects for investors in Asia still hold much promise, albeit there are disquieting signs of a imminent resurgent ‘bubble’. This will be apparent to anyone who has been paying close attention to the relaxed lending attitudes of the mortgage lenders and banks in Thailand, no doubt partially attempting to compensate for the recent political imbroglios and to restore some semblance of confidence.  The property markets of the more politically stable economies of Hong Kong and Singapore, too, are showing ‘bubble-like’ symptoms, so much so that authorities in there are readying themselves for an imminent restriction of lending and an increase in interest rates. China is witnessing the results of unrestricted building and consequent rises in prices and Matthew is almost certain that the market is “in danger of over-heating”. At the same time, rents have fallen to as low as 5%, which is not encouraging. In the Philippines  and Indonesia, however, whilst the rental yields are apparently high at 12%, in reality, taxes erode up to 25% of investments. In general, the Asian market policies are more on the side of the landlords, whereas Australia is neutral. Japan appears to be the most realistic of the Asian economies. There development is being tightly controlled, rents show nominal return and almost as a return to their isolationist mentality of bygone days, foreign investors will find it very difficult to get a foothold.

Eastern European Property Markets

Despite the low prices and prospects of bargains in the property markets of Russia and Eastern Europe, as a consequence of the collapse of the economies of Baltic States, Matthew once again advises caution, waiting as long as 5 years before investing so as to give the economies chance to recover. Of the Eastern European markets, only Hungary and Poland offer worthwhile investment prospects with current rental yields of 8% and 6%, respectively. Western European investment is being stymied by the bugbears of Spain, Italy, Ireland and Greece and the high taxes on foreign investors in Germany and Belgium are another disincentive, not to mention the UK where, although prices are high, the new government’s imminent cut backs are certain to make interest rates unfavourable.

Middle Eastern Property Markets

Egypt, Morocco and Tunisia hold the best prospects here, largely as a result of the potential of expatriate tenants, especially in the capitals. Jordan and Lebanon still suffer from political instability, Iraq is not worth considering and the illustrious Dubai market will take a considerable time to recover from its recent collapse, which had investors been more perceptive would have been apparent in the radical fall in rental yield just prior to market meltdown there.

South American Property Markets

Globally, South America would appear to have by far the best buy-to-let investment potential, particularly Uruguay and Brazil. Rental yields in Sao Paolo are 7%, and the Brazil is in for a period of governmental-backed growth. Colombia, while inherently dangerous, still ‘shines with its rich history’, and rental yields are also  potentially high in Lima, Peru.

North America Property Markets

North America, Matthew considers should begin to show promise 18 months from now as he maintains the property market there has ‘nearly cycled through the latest crisis’. Canada , from a buy-to-let perspective is not a good bet, however, being hampered by its pro-tenant policies.

Matthew remains confident in the benefits of property in troublesome times as a tangible asset and source of regular income from rents. And as the old maxim says if you can’t sell or rent it out, you can always live in it until prospects improve.