The Brazilian property market has got a lot going for it. The country is attracting a lot of inward investment, has one of the world’s fastest-growing economies, a rapidly emerging mortgage market, a general shortage of quality homes, and has been selected to host the 2014 football World Cup and 2016 Olympic Games. This will lead to the construction of new and improved infrastructures and homes across Brazil.
Property investors worldwide are flocking to Brazilian shores to snap up real estate in anticipation of future capital growth Our Planetary.
One local expect projects Brazilian property prices could appreciate by up to 200% over the next decade, driven by the country’s burgeoning economy and the pending introduction of mortgages to overseas nationals.
Goldman Sachs believes that Brazil’s economic growth could outstrip that of the other BRIC (Brazil, Russia, India, and China) member nations over the next few years.
Brazil’s economy is widely expected to become the fifth-largest in the world by the time the Olympic Games kicked off in 2016, and yet Brazil’s property and land prices remain a fraction of those found in more developed nations.
The Brazilian president Luiz Inacio Lula da Silva has already pledged to spend up to £11.5bn on building a million new homes in Brazil between now and 2011.
However, potential high property investment rewards are not without risks, as crime and corruption remain widespread in Brazil.
In stark contrast to the relatively high risk, high return nature of investing in Brazil, the risks associated with investing in French property are far lower.
France has traditionally always been a rather haven for property investors. The nation was the first European country to come out of recession in 2009, reflecting that the global credit crunch had much less of an impact than other European counterparts.
France’s strong economy has a positive impact on its property market, which now appears to be on the road to recovery.
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Increasing property and mortgage transactions are boosting residential values, with the latest FNAIM data revealing that the average price of a French property appreciated by 2.8% between April and September 2009.
Although average prices remain down 7.8% year-on-year, the market is generally expected to improve further due to France’s prudent attitude to mortgage lending.
Anyone taking out a mortgage in France is generally only permitted to borrow one-third of their total gross monthly income. This has ensured that mortgages remain readily available, with 100% loan-to-value home loans available at competitive borrowing rates.
Consequently, mortgage lending in France is soaring. French mortgage broker Athena Mortgages reports a 21% rise in mortgage inquiries in Q3 2009 compared with the previous quarter.
The buy-to-let and leaseback sectors are reportedly attracting particular interest from investors due to improved yields across the country.
The capital city of Paris has long been identified as one of the most attractive European cities for investment. It is typically the most popular place to buy a home in France, along with Cannes, Marseille, and Nice, all located along the southern Mediterranean coast.
3. the USA
The USA property market may be showing tentative signs of improvement, following one of the worst economic and property crashes in living memory. Still, the downturn has come at a cost to many US homeowners.
Data from RealtyTrac shows that a record high of 938,000 US homes foreclosed in the third quarter of 2009. If this trend continues, foreclosures will reach around 3.5m by the end of 2009, up from around 2.3m properties last year.
Properties in Nevada had the highest foreclosures rates in Q3, followed by homes in Arizona, California, Florida, Idaho, Utah, Georgia, Michigan, Colorado, and Illinois.
Rising unemployment levels – currently at a 26-year high of 9.8% – were cited as the main reason for the increase in foreclosure levels. Yet, there may be worst to come, as the unemployment rate is not expected to peak until mid-2010.
Unfortunately, one person’s misfortune is another’s gain. With around 7m properties currently in the foreclosure process, compared with 1.3m for the same period in 2005, predatory investors are buying up distressed, abandoned, and repossessed homes at bargain-basement prices, as now appears to be the ideal time to fill your boots.
Although the sub-prime mortgage crisis started in the USA, there are growing signs that the property market may now be at or near the bottom of the cyclical downturn. Various indices reveal that average residential prices started to rise, albeit marginally, during the second quarter of 2009.
Sales in Norway have nosedived over the past year or so, as residential values have cooled.
However, the Norwegian property market downturn, which has not been anywhere near as severe as in other neighboring countries, appears to have already bottomed out and looks ready to lead the Scandinavian property market recovery.
The key to the Norwegian property market is the strength of the country’s economy, which has made it one of the wealthiest in the world, while new housing output has dropped below average, which could fall short of demand next year.
Norway is rich in gas and oil, which helps to support the country’s economy and ensure that its currency also stays strong – both alluring to property investors.
The country’s population is estimated to increase by 23% – approximately one million people – over the next 40 years, which should make sure that long-term residential demand is robust.
Another positive is that unemployment is deficient – approximately 3% – compared to its European counterparts.
Almost half of the Norwegian population resides in the counties of Oslo, Rogaland, Akershus, and Hordaland, and so this is where property investors should focus their attentions. Property prices in these places remain relatively cheap compared to wages in Norway.
Many of the high earners currently living in Britain look set to quit the UK in droves ahead of introducing a 50% top tax rate in April 2010 and escape to more tax-friendly shores, such as Switzerland.
The Swiss authorities are actively lobbying to attract many of these disillusioned high-net-worth individuals, who are tempted by assurances that they will be allowed to steer clear of European Union regulation and Britain’s Financial Services Authority.
It is estimated that hedge funds managing in the region of £10 billion in assets have already moved to Switzerland in the past year alone. This has increased the demand for homes to rent and buy.
Due to canton restrictions, it has previously been difficult for foreigners to buy property in Switzerland. However, the country has now eased its strict property buying regulations and opened its doors to more international buyers, partly through the introduction of ‘residence de Tourisme style investments, which is similar to the ever-popular ‘leaseback’ formula in France.
Of course, Switzerland, one of the richest nations in the world, is a tax haven.
Anyone who sets up permanent residency in Switzerland would be entitled to take advantage of the country’s favorable tax law, including lump-sum taxation, which charges a levy based on people’s lifestyle and spending habits.
Given that one’s taxable income is charged at just five times the annual rent or rental value of their property, and the fact that assets outside Switzerland remain tax-free, should ensure demand for Swiss properties – to rent and buy – remains strong for years to come.
Historically, Swiss property values have typically appreciated in line with inflation. Properties located at the top end of the market, in cantons like Valais and Vaud, have reportedly increased by up to 20% in the past year.
The Australian economic and property market recovery has been swifter than the other leading nations around the world.
It has been claimed that the revival in the country’s property market and economy is as much as 12 months ahead of the other developed countries in the economic cycle.
Unemployment peaked in September 2009, in stark contrast to Britain and the USA, while increasing commodity demand from China has forced the Australian Central Bank to raise benchmark interest rates. Yet this has failed to cool strong residential demand, which coupled with a general housing shortage, forces property values higher.
The latest Australian Bureau of Statistics house price index shows that the average price of residential property in Australia appreciated by 4.2% in the third quarter of 2009, which means that in the year to September, residential prices increased 6.2%.
Australia could be set for a residential property price boom over the next few years, as the country’s economy continues to show genuine signs of recovery.
A recent Australian property report projected that average residential prices in nearly all capital cities would increase by between 11% and 19% by 2012, with the greatest property price rises expected to be recorded in Sydney, Adelaide, and Melbourne.
I tipped Malaysia to be the number one place to invest in property in 2009 due to the country’s robust property ownership laws, lack of capital gains tax, and attractive mortgage rates.
However, residential sales were sluggish during the early half of the year, as the market struggled as a direct consequence of the global credit crunch. At the same time, some political uncertainties are emerging.
But with consumer sentiment improving, the recent positive market recovery, supported by the construction of new residential schemes across the country, should continue in 2010.
While property prices race ahead across much of Asia – in countries like China, Vietnam, and Singapore – which has led to heightened fears of budding property bubbles, the Malaysian property market has merely stabilized, making it suited to more balanced investors.
With an extremely young and well-educated population, long-term demand for property in Malaysia looks set to grow.
Domestically, an increasing number of people are moving from the countryside into the larger citi. At the same time,le internationally, Malaysia looks set to cross a demographic landmark of huge social and economic importance.
Malaysia’s population is growing by around 2%, or an extra 500,000 people, every year. The World Bank projects that the country’s population will grow annually by 1% until 2050, placing further pent-up demand on property values.