Want to make some sound investments in the real estate market? Have you been contemplating about investing in rental property overseas? A lot of property investors are looking at the global markets for overseas property investments that will bring them high rental yields. It will not only help you generate cash flow but will also let you cover the mortgage from the rent paid by your tenant. As a landlord, you would be getting paid to own property- it can’t be better than that! For its latest study, GoBankingRates has created a list of the best countries across the world for overseas property purchases that offer a high return on investment (ROI). Take a look at some of the best countries for real estate investment and make the most of the high rental yields they offer.
Top countries for real estate investment
If you have decided to build a nest egg for the future by investing in the overseas market, make sure you navigate through the financial systems properly. The procedures in other countries might work differently compared to those at your homeland, so be prepared to navigate through all of that. To give you a fair comparison of prices vs rental yield we have looked at the cost per sq.m and average rents for 2-bedroom apartment units in all these countries.
With a healthy economy and a variety of natural resources, Indonesia is one of the best countries for real estate investment. It has a good investment climate so if you invest there, chances are high that you won’t feel disappointed! Another reason that you can consider buying property in Indonesia is because of its profitable domestic market. It is a densely populated country where you can find various consumers willing to take a property on rent. As an overseas landlord, you can give it on rent and enjoy more stability and better profits as the rental yield grows. While it is still not easy for foreigners to buy a property outright in Indonesia, leasehold arrangements are common. In addition, the government has also been contemplating a proposed bill to introduce overseas investments in property.
- Rental Yield: 8.61%
- Effective Rental Income Tax: 20%
- Rent: $2,486
- Average cost of property: $1,200 per sq.m (inside City Centre), $656 per sq.m (outside of centre)
Characterised by a desire for innovation and change, Colombia can be a good choice for foreign property investments. During the last decades, its economy has grown by 3.8% and the GDP has even doubled, which clearly indicates the tremendous progress the country has made so far! Moreover, it has a high rental yield which means you can generate more profit while investing here.
- Rental Yield: 6.51%
- Effective Rental Income Tax: 24.75%
- Rent: $1,548
- Per square metre cost of an apartment: $1,400 (inside City Centre),$1,100 (outside of centre)
If you are planning to buy property across the world, consider buying one in the Philippines. With the increasing number of foreigners in the country, the value of the properties in this country has a great potential to escalate in the future, making you reap the benefits of the investment you make today! There is a massive housing backlog in the Philippines which means that more than 20 million Filipinos are looking for rental properties. The increase in middle-class buyers in the Philippines has also led to a higher supply of houses in this bracket. Another interesting thing to note here is that unlike Indonesia and Columbia, the Philippines levies a lower tax on the properties, which translates into a very high ROI.
- Rental yield: 6.13%
- Effective rental income tax: 4.06%
- Monthly rent: $2,422
- Per square metre cost of an apartment: $1,800 (inside City Centre), $1,000 (outside of centre)
Panama is one of the best countries for real estate investment. With the investment of Venezuelan, Columbian and Argentine buyers, its property market has become quite stable. It is constantly making progress as compared to the other real estate markets in this region. Besides that, it is a fertile bread-basket so once you invest there, you can also make money by participating in agricultural projects if you are so inclined.
- Rental yield: 5.75%
- Effective rental income tax: 2.08%
- Monthly rent: $2,075
- Per square metre cost of an apartment: $2,200 (inside City Centre), $1,500 (outside of centre)
Having a reassuring macroeconomic status, Morocco can be one of the best places for foreign property investments. It is relatively more affordable and also offers a higher standard of living. Besides that, it has an effective banking framework that can protect your business interests in the best possible way! In case, you are wondering about the double taxation issue that most expats have to face in other countries, worry not, you are not subjected to such issues in Morocco.
- Rental Yield: 5.52%
- Effective Rental Income Tax: 10.7%
- Rent: $854
- Per square metre cost of an apartment: $1500 (inside City Centre), MAD $800 (outside of centre)
United Arab Emirates
Want to invest in a tax-friendly country? You can think of investing in the UAE. The country offers a higher rental yield, thus making you reap the maximum benefits of your investment. As there is no income tax, you also don’t end up having to pay tax on accumulated rent. If investing in residential units is your goal, you can choose from Dubai’s wide range of properties. According to Bayut’s real estate report, the most popular areas of Dubai for buying apartments include Dubai Marina, Downtown Dubai, International City, and Palm Jumeirah. The average price of studios, 1-bedroom and 2-bedroom apartments in Dubai Marina ranges between AED 850k to AED 1.95M while the average cost of studios, 1 and 2-bedroom flats in Downtown Dubai lie between AED 1.1M to AED 2.9M.
- Rental Yield: 5.19%
- Rent: $3,070
- Per square metre cost of an apartment: AED 9,000 or $2,500 (inside City Centre), AED 7,000 or $1900 (outside of centre)
You can count on Thailand while planning to make an investment overseas. The country has a strong economy and expanding tourism industry that can make your investment more worthwhile. Make sure you invest your money in the condo market because a condo is more cost-effective and easily manageable as compared to the other individual properties. Moreover, it is the only real estate that you can take freehold, so buying it would be more beneficial for you!
- Rental yield: 5.13%
- Effective rental income tax: 2.73%
- Monthly rent: $2,029
- Per square metre cost of an apartment: $3,500 (inside City Centre), $1,800 (outside of centre)
With steady rental yields, Cyprus has become one of the most significant countries for real estate investment. You can enjoy the benefits of a stable income that would cover your running costs, mortgage payments and other monetary problems that may pop up while buying a property. The property sales prices are also pretty decent, so investing in Cyprus’ real estate market can be a win-win situation for you!
- Rental Yield: 5.12%
- Effective Rental Income Tax: 0%
- Rent: $966
- Per square metre cost of an apartment: $2,300 (inside City Centre), $1,700 (outside of centre)
When it comes to making a property investment in one of the European countries, Germany can be your safest bet. Having attained a state of financial stability, it has established itself as one the leading financial forces in the world, so you wouldn’t be in a loss upon investing there. Another factor that makes Germany one of the safest countries for real estate investment is its low cost of living and an effective income tax rate that you can capitalise on.
- Rental Yield: 3.99%
- Effective Rental Income Tax: 2.71%
- Rent: $1,769
- Per square metre cost of an apartment: $5,500 (in major cities such as Berlin), $3,700 (outside of centre)
The French real estate market is one of the most popular areas for long-term ROI in Europe. It allows you to make in-country financing – something that not all countries can claim to offer! The interest rates for mortgages are quite low while the loan-to-value is as high as 85% which means that you can opt for more refinance options. As far as taxation is concerned, the rental income tax is lower than the other European countries.
- Rental Yield: 2.79%
- Effective Rental Income Tax: 10%
- Rent: $4,379
- Per square metre cost of an apartment: $6,900 (in major cities such as Paris), #4,200 (outside of centre)
And that wraps up our list of the top countries for real estate investment. However, besides these countries, many people also make overseas property investments in the USA and UK. You can expect a 4.31% rental yield by investing in the UK and the USA that can offer you a 4.69% yield. What is your investment budget?
If you have a million dollar to invest, check out the properties around the world that you can buy with $1M.