Overseas Property World

Unlike the other articles in this series, for the purpose of this chart, I will not be charting the emerging markets that I am trying to say are the best for property investment. This is because there are far too many far too closely matched. So this time I am saying that — while they are among the best in the world for property investment — the emerging markets detailed below are simply my favourite emerging markets to make property investments in.

Panama

You will see Panama every time I talk or write about the best emerging markets in the world for property investment. Regular readers of mine will know that this is because of the expansion of the Panama Canal.

The Panama Canal, or rather revenues earned from its operation makes up for a large portion of Panama’s services sector revenue, which in turn contributes a third of the country’s GDP.

Panama’s GDP growth averaged 10% in the last few years on the back of massive growth in tourism, including medical tourism and call-centre services. Even now during a global recession the International Monetary Fund is forecasting 3% growth for Panama this year. The expansion of the Canal is due to be completed in 2014, at which point analysts expect that it will boost Panama’s GDP massively.

All these things are making Panama a magnet for investment. This, in turn is playing a part in Panama’s continued GDP growth in a self-perpetuating cycle of growing foreign direct investment (FDI).

The Panama real estate market is also strong, again on the back of the massive tourism growth but also because Panama has the largest market-share of American retirees purchasing their retirement homes. The country is also very popular with American lifestyle buyers. Add to these the growing number of buyers from around the world and you can see why both Donald Trump and Hilton are currently constructing sky-scraping multi-use developments in Panama City.

The final bonus is the low prices of property currently on offer in Panama. Panama City — the capital — has seen values grow massively but you can still get a luxury 1 bedroom apartment for £120-140k, and a studio for about £70k.

However, if you look to the new emerging areas you can pick up some real bargains. There is one development that always springs to mind: the Bala Beach resort development, which offers 1 bedroom apartments, beach-front to Maria Chiquita Beach for £55,000. I know one company (I trust) that is selling the Bala Beach development; Azure Overseas.

As always, and as regular readers will know, I recommend that buyers do their own research, including at least one, and preferably multiple trips to the country. Things to check are the developers track record, financial situation, and to make sure that the land-ownership is secure, and that building permissions are in place and being adhered to.

Albania

Again, I always put Albania in these lists because I just love it. There are internationally marketed off plan developments available, allowing you to buy luxury property very cheaply. The fact that the properties are built to target overseas buyers and Albanians means that today’s investors will be able to sell to Albanian’s when they decide to cash-in their investment.

Albania’s government has an excellent fiscal track record over the last decade. Between 2002 and 2006 they successfully brought a quarter of the nation’s poorest out of poverty. Albania then became a middle-income country according to the World Bank’s classification. This allowed Albania to borrow money from international banks instead of relying on handouts.

Between 2002 and 2006 the economy was growing strongly. When this continued into 2007 and 2008, the government took advantage of its new status and took out a series of massive loans from international financial institutions. These included a massive loan from the European Bank for Reconstruction and Development to build a new terminal at Albania’s largest port in Duress, as well as renovating the existing terminals.

Even when the international downturn set in, Albania continued to invest in future economic growth, taking out another major loan to complete a super-highway linking the port of Durres to inland Kosovo.

This will boost the economy massively for years to come, by making it the quickest route for Kosovo exports, and also increasing tourism from land-locked Kosovo to the Albanian beaches. The latter also could be a holiday rentals market for foreign investors in coastal areas like Saranda.

Again, the future is bright for economic growth in Albania over the next 10 years at least. Not least because Albania is in the process of trying to secure entry into the European Union by 2014/15, which will increase economic growth by boosting exports, tourism and other parts of the services sector.

Again, economic growth in Albania will push up property prices: economic growth means increasing employment, increasing wages and increased affluence. This leads to increasing living costs, including the cost of building materials and labour.

This automatically increases property prices at the rate of inflation. But because property in Albania is so cheap, the increasing numbers of foreigners buying for investment and/or accommodation as businesses move into Albania could push prices up much faster. This will also boost the residential rental market and push rental yields up from the current 4% to 6% in the next 5 years.

India

In India it is simple: the population, and more importantly, the middle class population is growing far faster than property development can keep up with — as the thousands of students pour out of universities and into gainful employment in one of the world’s fastest growing economies. The IMF forecasts 5.4% GDP growth in India this year.

This translates to massively growing demand for affordable housing for the foreseeable future, which will put upward pressure on property prices == especially when developers inevitably run out of land to develop in the cities.

There is also the dynamic mentioned above, where rising living costs makes development more expensive and adds to the upward pressure on prices.

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