World's top property hot spots

SINGAPORE - Investors looking for real-estate investment opportunities in overseas markets have choice picks next year, as the global housing-market outlook is starting to look brighter.

Property analysts said that next year will generally be a year of continued recovery, with investment volumes showing at least modest growth as sentiment improves.

The United States housing market has shown signs of bottoming out in recent months.

Attractive opportunities also exist in many parts of Europe, as lawmakers there are trying to entice foreign high-net-worth individuals to invest in property and salvage their troubled housing sector.

Spain, Portugal and even Britain, for example, are rolling out flexible schemes for foreign property investors to attain permanent-resident status.

That said, My Paper brings you the top few cities that property experts recommend Singaporean investors to park their money in as the new year approaches:

London, Britain

While housing prices in this cosmopolitan financial hub have generally dipped over the past three years by 10 to 20 per cent, London is typically regarded as a safe haven for real-estate investment.

True enough, property prices have stabilised and also increased this year, on the back of strong foreign-investor interest.

Ms Jennet Siebriets, head of residential research for London at property consultancy CBRE, noted in a recent report that the average values of homes in prime central London have risen by 12.6 per cent since the start of the year.

"The prime market is swelling in size," she said.

"Prime values can now be achieved across a greater area, with selected developments breaking local price ceilings in areas such as the City, Canary Wharf, the Southbank and even in areas like Vauxhall."

New York and Miami, The Unites States

Few analysts doubt that the US housing market is on track for genuine multi-year recovery, and more signs of price increases are expected to kick in during the second half of next year.

Global financial-services firm UBS forecast nominal US national house prices to rise by 4 to 5 per cent a year over the next few years.

Mr Ong Kah Seng, director of R'ST Research, recommended that investors look specifically at New York, given that it is the financial hub of the US with a large number of multinational companies.

The large number of bank foreclosures has pushed many attractive homes onto the market, and housing investment yields there could come in between 3 and 6 per cent each year, he said.

Meanwhile, Mr Mark Matthews, head of research for Asia at Julius Baer, has his bet on Miami.

In a recent contribution to The Business Times, he noted that the city is a private-banking centre for Latin America, has excellent infrastructure and attracts people from Venezuela and Brazil, who go there for medical tourism.

Yet, the average price of a single-family home in Miami is just US$150,000 (S$183,000), he said.

He also pointed out rental activity in greater downtown Miami, including for condos and apartments. Rents jumped 12 per cent in the third quarter of this year from a year ago.

"There is value there, for sure, if one can take a long-term view," said Mr Matthews.

"Singapore investors have a further consideration: currency. There are short-term issues facing the US dollar, with the looming fiscal cliff and third round of quantitative easing."

Madrid, Spain

The Spanish economy may be in trouble, but this means that there are lucrative property investments to be picked up, especially in the main cities.

Mr Ong pointed out that Madrid, in particular, still retains its relevance as a vibrant commercial area, and its exotic culture attracts millions of tourists - many of whom tend to stay for longer periods - every year.

Investors looking to Madrid should buy units in high-activity areas of the city, even if they have a personal preference for a quieter area, he said.

They should also tap on established chain operators in the city that help to manage and lease apartments to tourists.

He added that property investors in Madrid could attain yields of between 3 and 7 per cent each year.

"Attaining a loan from the local authorities may be very difficult at this juncture, as the national banking system is filled with poor-performance loans and defaults, so make sure that you have ample cash," cautioned Mr Ong.

"Also, ensure that transactional contracts are translated explicitly into English and that what you hold is the legal title deed of the property, which only one buyer will have. There could be cases of multiple contracts (another buyer claiming that he has a contract with the owner)."

Jakarta, Indonesia

The capital city of Indonesia surprisingly emerged as the top place in the Asia-Pacific which property investors are most bullish about next year. This was an increase from the 11th position the year before, in a recent survey on investor sentiments by the Urban Land Institute and PricewaterhouseCoopers.

Mr Colin Galloway, principal author of the report, noted that Jakarta has been seeing an impressive turnaround in the past couple of years, and could be the place for more adventurous investors on the hunt for strategic opportunities and higher yields.

This is especially since the economy is growing steadily at about 6.5 per cent annually, interest rates and inflation are stable, and foreign direct investment is increasing at a substantial rate.

The city's real-estate sector thus holds strong investment promise, although risks - such as difficulty in securing bank loans and rule-of-law issues - remain, he said.