You'll find many articles about foreigners investing in U.S. real estate but what about Americans investing in foreign real estate? Besting NYC, London is now ranked the number one investment city in the world by many experts including the Association of Foreign Investors in Real Estate (AFIRE). Although the U.K. does rate number three among the best countries for real estate investing, Germany takes second place behind the U.S. on the global scale.
photo credit: Werner Kunz via photopin cc
The European market is different from our own market. During the recession, the European debt crisis was more severe than ours and took substantially longer to recover. The result has been little recovery in the real estate markets until recently. Investors looking for the best risk-reward opportunities should take a look at European real estate.
What to Expect From the European Real Estate Market
As a whole, European real estate transactions are on the increase.
European Real Estate Trends
Global capital is returning to Europe with steep competition for the best buildings in the tier one gateway cities. Even southern Europe, Spain in particular, is seeing a resurgence of investor interest. Last year, Spain was a complete no-go region. Two of the hottest markets are Munich, Germany and Dublin, Ireland.
Most foreign investment capital is coming from Asia. The other big inflow of capital is coming from both of the American continents. As 2014 continues, both major foreign sources of capital are expected to increase. However, European banks are similar to the U.S. banks in the fact that they are not making many loans. That will keep competition for properties lower than if more capital was available.
Munich and London have likely top out in price growth as the top investment zones in Europe. Secondary markets such as Stuttgart, German are now seeing more growth from both investors and renters than the primary markets.
Risk is On
Many international investors believe that with recovery from the financial crisis comes the best time to take risk in a recovering economy. After seeing the U.S. real estate market make fast strides in recovery, these investors are anticipating a similar recovery in Europe. An annual increase of between 10% and 15% is forecast for the next couple of years and then real estate values can be expected to stabilize going forward.
This article is only a general overview of the complex European real estate market. Fully understanding the market requires in-depth research. Along with research, a good strategy would be partnering with some one deeply knowledgeable about a particular market you are interested investing in.
About the author: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.
This is a good list.
I was wondering if the reduction in value of a primary residence as a result of the 2007-08 financial crisis can be claimed as a casualty loss for income tax purposes. I bought a house in the 2007-08 time period (at the height of real estate valuations) and now the house is worth a lot less than I paid for it. I can quantify the lower valuation from annual property tax bills - taxes have been reduced based on the tax assessor's analysis. Any comments?
I'm not a tax expert. I suggest that you explain your situation to an accountant or attorney that specializes in real estate. However, I don't think you can write off the loss until you sell the property.