Emerging Market's Top Ten Property Hotspots

I just read an article headlined: 2008 overseas property hotspots revealed. The article was based on recent research by property portal Homesgofast, and the countries listed as property hot-spots for 2008 were the countries most frequently purchased in by users of the portal: Brazil, Dubai, Egypt, the U.S. and Turkey. As far as I'm concerned there is a big distinction between what is popular with buyers on a portal and what can be predicted as a property hot-spot for the year ahead.

In my opinion what should be called property investment hot-spots are the places where investors are likely to make the biggest profit, and/or the highest rental yields, with the top hot-spots having the most potential for strong returns in rentals and capital appreciation.

While most buyers are looking to make some sort of return on their investment, some buyers are primarily buying a holiday home; it being let when not in use is nothing more than an added bonus. For those buyers, where they can make the biggest yields is of secondary importance to where they would most like to holiday.

According to my analysis of rising tourism, rental yields and capital appreciation around the world, the only country on that list that can truly be called a potential property investment hotspot is Brazil. I would include Brazil in my top-ten property investment hotspots for 2008, in fact it is number one on mine, if buyers aren't primarily focusing on finding finance in the country they are buying in my list is in this order:

1. Brazil
2. Cambodia (Phnom Penh)
3. Philippines(Manila)
4. Canada
5. Argentina
6. Costa Rica
7. Thailand's island: Koh Samui
8. Thailand's island: Koh Phangan
9. Malaysia
10. Albania

For those who are looking for finance the list would change a little in that Malaysia and Canada would move to take position 1 and 2.

One thing I did agree with from the article was the up-turn in people looking to buy property at the lower end of the price scale, that is because the lower priced properties offer the most potential for high rental yields for letting when not in use.

Brazil, Cambodia, Philippines and Canada are in the top-positions, because they have the combination of high quality property priced at far less than they should be on the global market, and the potential for massive and sustained growth in the next 1-5 years.

Property in those countries has a good chance of being worth 25% more than you paid for it after the first year and even having doubled in price after four years. In the current market, investments like that, with the potential for excellent short-term gains are going to be all the rage with so much talk of credit crunches etc.

Why I would move Malaysia into the top two for those looking for finance abroad is because, although property costs comparatively more, Asia's potential for strong sustained growth is world renowned, and foreigners being able to get 70% LTV mortgages from banks in Malaysia makes a purchase there accessible to a lot more investors.

Emerging Market or Not Malaysia is Hot Property

Some will say that Malaysia shouldn’t be called an emerging market because, as an ex-British colony it has been popular with overseas investors for a while, and because prices are already slightly higher than other emerging markets in Asia and around the world.

However, as Asia continues to be the world’s biggest economic growth hotspot, there is still plenty of room for economic expansion in Malaysia, specifically from the ever growing tourism industry, which will see house prices grow strongly in the coming years. For that reason, I have felt compelled to include it as an emerging market and also because in my opinion, for those with a fairly big overseas property investment budget it is one of the best places in the world to make an overseas property purchase.

The government has and is always taking steps to encourage foreign investment, and this has led to a whole host of benefits for overseas investors:

There are no restrictions on foreign ownership, in fact foreigners are automatically granted residency in the country upon completing their purchase. Many of the laws are left over from the British colonial era, which is reassuring for people because they can easily understand the laws governing their purchase, it also means the buying process is easier than in other Asian countries. There is no inheritance or gift tax, and capital gains tax has recently been abolished altogether.

This economically friendly environment and easily understandable judicial and financial systems have also led to another massive plus for an investment in Malaysia: western banks like HSBC, United Overseas Bank, and Standard charter have set up shop in the country. That and the fact that the big Malaysian banks like Maybank will happily provide mortgages to foreigners, mean that unlike many of the other emerging property markets, and/or highly desirable destinations, buyers can easily get 70% Loan To Value mortgages to finance their Malaysian property investment.

This unrestrictive and westerner friendly economic and judicial environment is also undoubtedly a reason for Malaysia’s booming tourism industry though probably not as much of an attraction as it’s tropical climate and the sheer beauty of the place. Take the beach front Nexus Resort, a five star hotel on Sabah beach Borneo. Set in lush tropical gardens the Nexus hotel has won 17 awards in five years of operation, including the Virgin Gold Holidays award. The resort has a golf course, spa and swimming pool.