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Investors looking for the next wave of residential growth should target Peru, Panama and Brazil, a new report on global markets suggests.
Strong economic growth, low interest rates and continued housing boom make Latin America, in general, far more appealing than other regions, according to the latest recommendations from the Global Property Guide, which tracks markets around the world.
The site’s analysis, which is weighted toward rental yields, is less kind to Europe, where “property markets have not sufficiently adjusted from their 15-year rise.” And while Asia valuations are skyrocketing, GPG believes the region is already “over-valued,” except for locales like Malaysia and riot-torn Thailand.
Overall, the GPG sees stronger markets around the world. Nineteen out of the 36 countries tracked posted gains in the first quarter of 2010, led by Hong Kong, Singapore and cities in Australia. In most countries with drops, the pace of declines is slowing, the site notes, except for Ireland, Bulgaria and Thailand, which are in “severe crisis,” the site notes in its quarterly report.
But for its mid-year recommendations, GPG steers away from Asia and the other hot markets to focus on the opportunities in Latin America. With low valuations, growing economies and under-valued currencies, even countries like Chile and Colombia provide better odds for appreciation than more established markets, the report concludes.
Panama, for example, offers “rapid GDP growth, good yields, lowish taxes, reasonably priced real estate, and reasonable round-trip costs make it hard not to put Panama on our list of recommended locations buying property, despite its history of corrupt government,” the report concludes.
In contrast, it’s “too early in the cycle” to buy in Europe, although Turkey and Hungary are singled out as potential markets. And Asia offers too many complexities, except for the markets already sky high.
“Looking at Asia does not yield a plethora of investment ideas, because each choice has a downside, either in terms of yields, or in terms of costs and taxes,” the report says.
There are opportunities in the United States, but the deals might be limited to the areas hardest hit by the financial crisis, such as Florida, Las Vegas and California.
Outside the U.S., “don't buy in parts of the world which have just come out of housing boom,” the report warns.
“In countries where prices have not fallen, they will fall (in real terms) as interest rates rise,” the report recommends. “Where prices have fallen, no need to hurry. Housing market recoveries tend to start slowly.”
The full report can be found here (free registration required).
