No matter what kind of investor you are, it’s important to have a diversified investment portfolio. This is true whether you make your living by investing, or simply invest as part of your retirement plan. Investing can be a risky source of income, so it’s important to have money in multiple areas. The economy is a complex organism, and diverse investment opportunities react to market conditions in different ways. Traditionally, real estate is considered a good investment opportunity, especially for people who have the resources to stay invested for a long time. While the real estate market goes through down cycles just like every other part of the economy, it always recovers. This means that investors who have the resources to hold on to property through a recession will come out the other side in a strong financial position.
Investing in Real Estate
The idea of property investment can mean several things. It covers the purchase and subsequent sale of real estate for profit, as well as gaining income from owning, managing, or renting out property. Real estate development or improvement (a.k.a. ‘flipping’ property) is considered a sub-category of property investment. Property investment can be done on a small or large scale. Some people choose to buy vacant land near where they live and sell it later for profit when the market is good. Others invest on a large scale, buying property or shares in commercial buildings all over the world.
If you are an investor interested in buying properties in various global locations, it’s important to research all the options. There are many experts who forecast areas they believe hold good investment potential. These forecasts are based on trends in the economic and real estate sectors, as well as historical analysis of investments in the area.
Opportunities in the European Real Estate Market
Recent research on the European real estate market has identified 12 locations considered hotspots for buying investment property. One of the big factors in identifying a great investment opportunity is the amount of growth and change in the area. For this reason, London is at the top of the list. The next two cities are Dublin and Paris. Additional details propelling these three cities to the top of the list are technological infrastructure, along with talented city managers and ambitious plans for urban development.
European ‘New World Cities’ make up the majority of the rest of the list: Randstad, Munich, Stockholm, Copenhagen, Berlin, and Barcelona. These cities boast strong infrastructure as well as fairly steady economies in the face of challenges. The most surprising city on this list is Istanbul, which made the cut because of its property prices combined with strong initiatives to improve infrastructure and become a global business hub. Manchester and Edinburgh round out the list, ensuring the United Kingdom’s reputation as a great place for property investors.
Investment Properties in the Asia Pacific Region
Japan is one of the most impressive countries for investors looking into the Asia Pacific region. Although Japan faces a few domestic challenges, there are several factors making it very attractive to investors. Borrowing costs are low, and Japan has remained sheltered from global economic volatility. Additionally, the outlook for return on investments is very solid.
The Japanese real estate market is running extremely well, with sales in the last two years double the number of the previous three years. Additionally, the quick turnover in the real estate market means that many investors can consider their property investments as liquid assets, rather than waiting for years before seeing a meaningful profit. Growth in the rental market is predicted to grow at a rate better than anywhere else in the region.
Unique Options in the Americas
New York is consistently considered one of the best places for property investors to prosper. However, new housing trends in other cities such as San Francisco are offering interesting opportunities for investors and venture capitalists. Many of the larger cities in the United States have an overcrowding problem, where there is not enough housing (or affordable housing) to meet the demand of the population. Some of the most innovative developers are experimenting with a completely new housing concept: dormitories for adults.
Many people remember the dorms of their university days, small apartments with shared kitchens and common areas. This concept is now being successfully marketed to adult residents of crowded cities. The primary market for these “co-living” options is young Millennials who enjoy the thought of living with others in a similar phase of life and foregoing the hassle and expense of finding an apartment alone.
This new housing concept offers a fantastic opportunity for investors. Traditionally, real estate investments in large residential buildings (such as apartments or condos) require several years of a steadily growing economy before the investor sees a significant return. However, these new housing concepts are being treated as consumer-focused venture capital investments, which indicates extremely quick growth and the potential for great profit. Many investors see this as the property version of investing in a start-up, meaning there is the chance for significant gains in a short amount of time.
Investing in property can be a great choice for people who want to diversify their portfolios. Real estate offers diversity not only in the type of financial asset, but also in the physical location as well. An investor’s portfolio can include assets in various economic markets all around the globe.
Property investment can be a significant financial expense, and may not offer a quick pay-out. However, for investors who have the means to wait through potential market depressions, there is potential for great economic gain. In many ways, buying property is one of the most secure types of investment. No matter what the economy does, physical property will always hold value. People need places to live, to work, to buy and sell and to congregate. Even in tough economic times, real estate doesn’t risk depreciation on the same level as stock certificates or certain types of currency. Buying property can be the right decision for many investors, especially those who do the research to determine the best locations and investment opportunities.