Investing Abroad? Check Out These Cities
Looking at investing in real estate abroad? The Global Wealth Review said that India is globally the sixth wealthiest nation with wealth equal to $8,230 million. Not just that, 7,000 ultra-rich also left the country to settle abroad. The United States, the UAE, Australia and New Zealand are among some of the countries that are popular among migrating Indians but it is not just the high net-worth Indians (HNIs) who are going abroad and settling or making an investment.
A recent study has figured out that there is a scope of better returns in some countries. A personal finance resource website GoBankingRates has released a list of 25 best countries that make for a healthy investment in terms of rental returns. The calculations also take into account the effective rental tax rate. Assuming your rental returns is $1,500, which countries are best for you in case you are looking at more than just a local portfolio.
The Philippines is numero uno with a rental yield of 6.13 per cent with an average monthly rent of $2,422 and an effective rental income tax of 4.06 per cent.
Tip: Foreigners can buy condos or flats as long as 60 per cent of the entire building is owned by locals. In short, you cannot own the land but the unit only. If you are keen to buy land, you would have to route through local corporations and with sound legal advice.
The United Arab Emirates (UAE) is estimated to yield a rental return of 5.19 per cent and an average monthly rent of $3,070. The effective rental income tax is five per cent.
Tip: Foreigners can buy freehold, Usufruct or properties on lease of 10-100 years and the third category is commonhold property which is usually apartments where owners are usually developers who pay the maintenance fees for the building and the common areas. However, homebuyers can buy, sell or rent these and also give it away as an inheritance to their offsprings. Almost 70 per cent of UAE’s population constitutes expats.
Costa Rica in Central America is a treat for investors. At the third spot, Costa Rica boasts a 7.48 per cent rental yield, an effective rental income tax of 5.16 per cent and a monthly rent of $1,450.
Tip: Non-locals cannot own 100 per cent of a property in a Maritime Zone nor can they own land that is meant for the poor (agricultural property, IDA or INDER) Note that land within 50 metres of high tide is protected. The next 150 metres adjacent to it is the Maritime Zine, a foreigner can only own as much as 49 per cent of land on this zone.
Panama links Central and South America and is among the best rent-yielding areas garnering as much as 5.75 per cent while the effective tax on this income would be 2.08 per cent. The monthly rent would be $2,075.
Tip: Those of foreign origin cannot buy property which is located less than 10 km from the frontiers or on islands that is within Panama’s jurisdiction. Make sure you buy a title property or purchase a ‘possession right’.
At number five is Indonesia. With a rental yield of 8.61 per cent and an effective rental income tax of 20 per cent property in Indonesia is a good buy as monthly rent on an average is about $2,486.
Indonesian law is not as relaxed but one can acquire different titles that allow willing investors to lease, use or even build units on a structure. Foreigners owning freehold titles may be at risk because these aren't protected titles as per local laws. As non-locals, you can buy into non-subsidised land, apartments with strata titles or vacant land with appropriate permissions. Foreigners are not allowed to own land but many do so getting into contracts with locals.
Check out the list for more:
Country | Yield (in %) | Rental tax rate (in %) | Rental income (in $) |
Barbados | 5.48 | 7.5 | 2,501 |
Thailand | 5.13 | 2.73 | 2,029 |
Ireland | 6.64 | 10.05 | 2,077 |
France | 2.79 | 10 | 4,379 |
Cyprus | 5.12 | 0 | 966 |
Germany | 3.99 | 2.71 | 1,769 |
Croatia | 5.43 | 8.4 | 1,320 |
Bulgaria | 6.24 | 10 | 997 |
Hungary | 5.24 | 13.5 | 1,621 |
Greece | 4.17 | 7.5 | 1,460 |
Spain | 4.7 | 19 | 2,531 |
Canada | 3.98 | 25 | 3,740 |
Morocco | 5.52 | 10.70 | 854 |
South Africa | 3.88 | 12.80 | 1,636 |
Argentina | 4.48 | 14.70 | 1,490 |
Colombia | 6.51 | 24.75 | 1,548 |
Malta | 4.35 | 23.33 | 2,229 |
Portugal | 5.45 | 26.44 | 1,939 |
Latvia | 3.8 | 17.25 | 1,074 |
Turkey | 3.62 | 21.94 | 1,128 |