Is it game over for expat property investment?

Are the days of lucrative expat property investments coming to a close?

For decades, property has been a ‘safe as houses’ investment for expat professionals looking to make their generous salaries work for their retirements, making it one of the most globally desirable forms of saving as well as a winning combination of rental income and capital gains on sales. After all, everyone and their dogs know that long-term property investments seldom, if ever, disappoint. However, as the present day political and economic situation continues to confuse even the most experienced expat investor, are the glory days over for the buy-to-let market?

It has to be said that mortgages are, in the main, still cheap and rental demand is getting ever stronger, but houses across the vast majority of first world countries are even more expensive and capital growth is slowing down as a result. In addition, governments are now tightening laws regarding ownership and increasing the relevant tax rates in a bid to stem foreign investors. The UK’s laws are now restrictive, and New Zealand, Australia amd Canada are following suit. Global cities are now seeing rates of return shrinking along with capital growth, with yields of lower than three per cent now the norm in London, Hong Kong, Singapore and other favourite property locations.

Those brave enough to invest in Moscow properties are winning with 5 per cent returns, but sleeping at night isn’t easy. It’s all down to global uncertainty, politics, affordability and trade tensions, none of which are going away any time soon. As regards price increases, double-digit percentages are now common in desirable first-world locations such as China, several EU member state capitals and, of course, London and New York. Experts advise caution as many average prices are on the rise from a very low base and demand is now outpacing supply.

The present trend is likely to hit expat professionals working in the Middle East with its high level of salaries, with investors advised to remember that property is an illiquid asset very difficult to dispose of in the case of a market crash. Many would-be expat property investors are still kicking themselves for not taking advantage of cheap property prices during the fallout from the 2008 financial crash, but many who took the plunge are now sitting pretty and raking in the profits. Especially in London, tenants tend to stay long-term and regard their rental property as home, and the majority of those who’ve invested in student accommodation are still glad they did. Of course, the latest hurdle is still waiting in the wings, as no-one, expat or citizen, has any idea how Brexit will affect the international housing market.