The time to invest your hard-earned money is now, but you need to figure out the best countries for real estate investment. Investing outside of your own country means being a nonresident investor. That’s not always easy, but it’s definitely an adventure that brings plenty of profits.
But what are the best countries for real estate investment? Should you even move away from your own country’s real estate market onto something bigger and potentially better?
The answer to that question is definitely YES, primarily because it can be a great Plan B. However, more importantly, investing in foreign real estate is a smart choice. With the global population growing and the urban sprawl not showing signs of slowing down anytime soon, residential real estate is potentially the safest and most profitable investment available.
Keep reading to find out what are the 10 best countries for real estate investment.
Best Countries for Real Estate Investment | A Nonresident Investor’s Checklist
The real estate markets around the world are yours for the taking. At the end of 2022, the global real estate market started to cool down a bit and, as foreseen by IMF, the prices continued to stall or drop over the first quarter of 2023.
This wasn’t that shocking as the global pandemic caused record-high prices all over the world, and the inevitable drop was expected and welcomed by people ready to invest. However, a lot of global real estate markets were left in somewhat of a flux.
Europe seems to be especially affected by this. For example, property prices fell 2.1% in the UK, 3% in Spain, and 2.6% in Italy. Meanwhile, Sweden is experiencing the biggest real estate market crash since 2008.
But, what does that all mean for YOU?
Well, it means that now might be the time to invest in foreign real estate. If you’re a cash buyer, the world is your oyster. Even if you aren’t, you can still find ways to finance your next investment adventure. The cooldown period won’t last forever — so now’s the time to invest and watch the value of your investment rise over time.
Still, that doesn’t mean you can just pick a market and buy a property. You can even buy a house in the US online! Before that, you’ll need to do some extensive research.
Here’s a quick real estate investor’s checklist for you, to help you determine whether a certain market is the right one for you.
Is the Market Open?
The first thing you need to find out is whether the market you’re considering is open, liberal, and welcoming to foreigners. Real estate markets like in the US, welcome nonresident investors and have laws and regulations that make it easy for foreign citizens to buy and own property.
Others, of course, don’t make things as easy. Countries like Thailand prohibit land ownership and restrict foreigners from owning more than 49% of residential properties, while other countries have different stipulations.
Croatia, for example, allows foreigners to buy land and real estate only if their country of origin allows Croatian nationals to do the same. Not to mention, some countries have been enforcing new regulations about foreign ownership in hopes of limiting foreign buyers from putting upward pressure on prices, thus pushing out local buyers.
What Are the Laws, Government Policies, And Regulations for Foreign Investors?
After checking that the market is open, you might find yourself rushing into a purchase. But just because the market is open doesn’t mean entering it would be particularly profitable for you.
So, you also need to check whether there are specific laws or policies that might restrict you or even potentially diminish your profits.
Some markets might only seem alluring. Sri Lanka, for example, allows foreign investors to buy real estate without any restrictions but imposes a 100% transfer tax for nonresidents. That means foreign buyers are actually paying double the price of a property than locals would. Sri Lanka also doesn’t allow foreigners to build anything closer than 330 feet from the shore.
However, not all markets are like that. Plenty of European countries like Italy, France, and Spain treat foreign buyers just like their own citizens. What’s more, some countries even have investment programs that grant citizenship or residence to investors who agree to invest certain amounts of money or buy properties in specific areas. The programs have two objectives — to attract foreign buyers and strengthen the local economy.
Other countries offer different (but equally alluring) benefits. For example, the US real estate market, one of the most liberal in the world, even offers some benefits to foreign buyers. So make sure to check that before picking where to settle.
What’s the Market Growth Like?
One of the most important questions you need to ask is what the market growth is like. Sure, France will treat you just like it would a French citizen if you were to purchase a property there, but the prices in France are dropping exponentially and reports indicate that 2023 (and beyond) is not the time to purchase property in France.
It’s vital to check the prediction for the market before making a purchase. Some real estate markets are historically known to be strong, while others are more volatile.
It’s also vital that you check the population growth (which directly affects market growth). If an area (or a market) you’re interested in is set to see great population growth, then you have nothing to worry about. Population growth is an almost guaranteed indicator of an increase in demand for real estate. And where there’s demand, there’s profits — in more ways than one. If there’s more demand for real estate it will be:
- Easier to see your property for a profit, and
- Easier to get a higher rental yield (if you’re looking to maintain and rent a property).
Unlike market growth, population growth is easy to predict, so you don’t have to be a business or real estate genius to know where to invest. All you have to do is follow the numbers.
What’s the Price-To-Rent Ratio Like?
Another thing you need to consider is whether the market you’re interested in (and the property you’re looking at) has a good chance of being rentable.
The price-to-rent ratio is something real estate investors around the world use in order to determine how likely it is that a specific property will be a good rental. In other words, will there be potential tenants fighting left and right to rent it or not.
If you’re looking to make an international real estate investment in order to make passive income by renting out the property, this is the most vital piece of information you need.
If the price-to-rent ratio is high, then the property in question is a good rental property. The same goes for the market. It’s vital that you settle on one that has high rental prospects because it will be easier for you to rent out your newly purchased property and make a passive income.
It’s also important to pick a market that has a steady growth in rent prices. The US market, for example, has had a steady growth rate of between 5% and 15% in the last couple of years. That means that landlords all over the States have seen an incline in their profits.
Where to Invest in 2023: Top 10 Best Countries for Real Estate Investment
Aside from the things we’ve already mentioned, it’s vital that you pick a real estate market in a country that has a stable economy, low crime and unemployment rates, and, of course, a thriving real estate market.
Here are the top 10 countries that check all those requirements.
If you’re wondering what the most popular destination for foreign buyers is, here’s your answer — the USA. Over 80% of foreign buyers are more than pleased with the conditions the US real estate market has to offer (even marking it as “excellent”).
The States have always been attractive to foreign investors due to several reasons:
- Its strong economy,
- Lack of government restrictions,
- Favorable socioeconomic climate,
- Attractive tax benefits,
- Outstanding appreciation rates (currently at 14.5%, year-over-year),
- High rental yields, and
- Exceptional ROI.
The last two factors strongly contribute to the USA’s appeal to foreign investors, which is why they spend over $59 billion on the US real estate market in 2022 alone.
With the rental market on a constant rise, investing in US real estate is a smart business move. Renting out a property and making back a hefty return on your investment won’t be an issue in a country where 36% of the population rents a home.
What’s more, considering just how quickly the rental market is growing, the US offers potentially the highest ROIs in the world. Although it’s always been lucrative for property owners, the rental market has been exceptionally favorable these last two to three years. There’s been a record nationwide rise in median gross rent. Compared to 2020, the average asking rent in 2022 was 5.77% higher.
Finally, the US has always been somewhat of a promised land for foreign investors. As the birthplace of the ever-so-famous American dream, it’s a country that offers both stability and prestige to foreign investors. From Milwaukee to the concrete jungle, everyone can find a good investment opportunity. If you are looking for the best cities to put your money in US real estate, we’ve got you covered.
Unlike some other markets that are simply welcoming to foreigners, China actually encourages nonresident investors to purchase property in this country.
What’s more, China is currently a buyers’ market, which is why plenty of massive foreign investors flocked to the Chinese real estate market at the very end of last year in order to snatch up as much real estate as possible.
But why has this happened? Well, these foreign investors are rushing to move into the world’s second-largest economy against the market because, for the first time since the late 90s, China has seen a real estate investment decline in 2022 (of over 10%). Of course, this trend won’t last forever (the market is already bouncing back in the first quarter of 2023 — home prices rose 3.5%), which explains the urgency with which foreign investors moved into the market in the first place.
Singapore is another country that can offer both safety and stability to foreign investors. It can also offer highly expensive real estate. In 2020, Singapore ranked as the 3rd most expensive real estate market in the world.
What’s more, Singapore doesn’t offer much in terms of value appreciation and rental potential. You can expect around 3% rental yield in Singapore (which isn’t much, especially compared to the 6.12% in the US). So why is Singapore a good place to invest?
Unofficially, Singapore is the financial capital of Asia. It’s the economic hub where investors, entrepreneurs, and business people from all over the world gather and, more importantly, spend money. That’s why Singapore is worth your consideration.
Not to mention, Singapore has a lot to offer. It’s a stable market, which isn’t a factor you should dismiss (especially in these uncertain times). It also offers you opportunities for other investments. As a resident of Singapore, you’ll get a lot of tax incentives as well as access to the Singaporean stock market, which is really giving you access to all of Asia.
So if you’re looking to spread out your investments into Asia, Singapore might be a good place to start.
#4 United Arab Emirates
The United Arab Emirates — more specifically Dubai — is one of the most attractive destinations in the Middle East. UAE are a country that offers a stable economy, high-class infrastructure, and a highly regulated market, which is something that all real estate investors dream of.
Dubai is a particularly good real estate investment opportunity, which is why both local and foreign investors are quick to claim their space in the Dubai real estate market.
There are several different reasons why that’s so:
- The economy is strong and dynamic,
- There’s a significant growth in population that drives demand,
- The infrastructure is exceptional, and
- There’s a favorable tax regime for real estate investors.
The fact that the government of Dubai invests and supports projects both in commercial and residential areas is another reason why Dubai is such a great opportunity.
If you’re interested in investing quite a bit of capital while also looking to profit off of it as much as possible, you’ll love the tax regime in Dubai. Property owners don’t pay property taxes, nor do they owe the state anything in terms of rental tax or value-added tax. That means there’s a minimal tax liability, something that few markets can rival.
In 2021, the European country that sold the most real estate was none other than Turkey. This doesn’t come as such a surprise, given how rapidly the Turkish economy is growing.
What’s more, considering that the prices of real estate rose by 902% over the last 12 years in Turkey, it’s clear that the steady rise of the market isn’t a temporary fluke.
Aside from that, the Turkish government is doing its best to incentivize foreign investors by offering them a variety of financing options. This, combined with the growing population in Turkey, increases the demand for real estate, which translates into promising ROI and rental yields.
Although the Turkish market still can’t rival some other markets (like the one in Singapore or the US), it’s a valid choice, especially if you invest in major cities such as Istanbul or Ankara.
Turkey has somewhat reasonable prices of real estate and a moderate return on investment as well as a gross rental yield of 5.63%.
A market that has risen over 60% in the past 5 years alone, Portugal is an excellent investment opportunity for everyone, no matter what they’re looking for. Although not as good when it comes to cash flow, Portugal is the ideal market for everyone looking for a second home in Europe.
This isn’t such a surprise, considering that Portugal has always been welcoming to foreign buyers. Their Golden Visa program — which offers residence in exchange for investments of more than $500,000 — has been attracting foreign investors for years now.
Although the market faltered a bit during the pandemic, it has bounced back quickly and will probably continue to get stronger over the course of 2023. And, even though there’s word of the Golden Visa program ending, Portugal is still quite an attractive destination for nonresident investors.
If you’re looking to buy a property in Porto and Lisbon, the country’s two biggest cities, you’ll have to pay 49% and 83% more than you would have 5 years ago. On the plus side, given that financial experts are giving a favorable forecast for the Portuguese market, your investment will most likely continue to appreciate in value over the next couple of years.
One of the main benefits of Portugal is that it’s the second cheapest country in the EU. The cost of living is favorably low, so if you’re looking for a place to buy so you could retire there, this might be the ideal market for you.
The same goes if you’re looking for a summer rental property — with an increase of 500% in February 2023, it’s safe to say that Portugal’s tourism is making an excellent comeback after the pandemic. Therefore, investing in properties that could be used as summer rentals (or year-round rentals, really) is an excellent move.
According to the World Bank, the Indian economy is expected to grow 6.9% in 2023, making it the fastest-growing economy among seven of the world’s largest up-and-coming economies.
This growth is followed closely by increased urbanization and, thus, increased demand for property. Due to that, India proved to be quite resilient to the global crisis, at least when it comes to the real estate market, which grew by 36% over the last year.
Paired with a slight devaluation of the national currency, the rupee, India might be the hottest real estate market in 2023. Foreign investors have taken notice of this, along with the fact that developer credibility is high in India, which is why they won’t hesitate to make an investment in 2023.
When it comes to real estate, it’s all about the location. As a country located along the biggest shipping lane in the world — the Strait of Malacca — Malaysia has an extremely favorable location, which makes it a prime real estate investment opportunity.
Malaysia is a politically and economically stable country. It has some of the advantages that other countries in the area simply can’t offer:
- Notable oil reserves,
- Foreigner-friendly policies, and
- A strong banking industry.
So, although it isn’t as well developed as some other countries, Malaysia is definitely putting itself on the map.
It’s important to note that the rental yields in this country are low (around 3%) and occupancy rates are quite discouraging. But Malaysia is currently experiencing population growth and it’s expected to gain another 10 million citizens by 2050. That means that the demand will start to rise over the next couple of decades (or even years), which means that now’s the right time to seize the opportunity and invest.
Luckily for you, Malaysia makes it easy.
There are few countries friendlier to foreign investors than Malaysia. As a nonresident, you’ll be given the same rights as a resident buyer in Malaysia which means you can buy pretty much anything with the exception of agricultural land and land of high historical significance to the nation.
#9 Costa Rica
A favorite retirement spot of many US citizens, Costa Rica is so used to foreigners, it welcomes them with open arms. What’s more, as a tropical country with a low cost of living and an extremely steady economy, Costa Rica is practically heaven on Earth.
Of course, that’s not all Costa Rica has to offer. It:
- Is politically stable and actually abolished its army around 50 years ago,
- Continually invests in sustainability and is extremely eco-conscious, and
- Has universal healthcare and a high level of literacy and education.
All of these factors contribute to the fact that plenty of people see Costa Rica as their home (or at least home away from home), which means you won’t have any trouble renting out any properties you buy there.
As mentioned before, Sweden is in the middle of a massive property crash. However, this Scandinavian country is still an attractive destination for foreign investors.
Even though the market in Sweden is cooling down at the moment, this country is continually experiencing population growth. The demand for real estate is high because Sweden’s overall stable socio-economic status attracts plenty of immigrants and foreigners. What’s more, that same status also makes Sweden a country that’s expecting a “mild recession in 2023” which makes it a market you’ll want to look into.
Overall, even with the slow market, Sweden still has pretty decent rental yields (3-4% in Stockholm and 5-7% in Gothenburg.
How to Pick the Best Countries for Real Estate Investment: Questions To Ask Yourself
Of course, evaluating the market and looking and the numbers, as important as it is, isn’t the only thing nonresident investors need to do. You also need to ask yourself some tough questions. Pulling the trigger on buying a property (anywhere) isn’t a decision you want to make lightly.
So, before doing so, ask yourself this:
- What do you need?
- Where do you see yourself?
- What are you looking for in terms of profit?
- What can you afford?
These questions are important because not every market will fit your needs perfectly. So it’s essential that you find one that does.
- What do you want and what do you need from your investment?
Are you looking for a property that you can rent out for profit? Or do you need something where you and your family can relocate in order for you to give your kids access to everything that specific foreign country has to offer? Perhaps you’re just looking for something that will diversify your portfolio and serve as a sound investment?
The answers to these questions will narrow down your market choices. Not every market offers the same benefits, which is why research is the most important part of the buying process.
- Where do you see yourself in a decade or two?
If you’re thinking about retirement somewhere other than your home country and are now perusing properties in order to find the perfect one, then some factors won’t be as important to you.
Price-to-rent ratio, for example, won’t really matter to you if you’re a few years away from retirement. It will, however, matter if you’re looking for a summerhouse that you can use for a couple of months during the year and rent out the rest of the time.
The best countries for real estate investing are not the same for all.
So pick your market wisely.
- Are you looking to profit from rent or from property appreciation?
When looking into the price-to-rent ratio, you might be discouraged from investing because the ratio doesn’t seem as appealing as you’d like.
But if you’re buying a property in order to secure some equity for future generations of your family and aren’t that pressed about making a profit off of it right away, then you might actually want to invest in an “up-and-coming” market.
These types of markets aren’t a hot commodity at the moment (and aren’t that desirable when it comes to renting) but will be in the near future. So, you can invest smartly now and reap the benefits later.
- How much money are you willing to invest?
The size of your capital will determine whether you can actually invest in a specific market or not. Singapore might seem like the perfect market for you, but if you can’t afford the prices of properties there, then it’s not really worth your time.
The good news is that there are so many real estate markets around the world that are affordable (no matter your capital). The US real estate market, for example, valued at $700 billion, is so vast and ever-growing that it truly offers something for everyone. Believe it or not, you can even find a house for under 300k in the US.
On the other hand, if you are planning a short-term rental investment, you may want to check out the best cities for Airbnb investing.
Real Estate: Always a Safe Investment
Even with fluctuations in the global market, real estate remains one of the safest and most profitable investments, especially long-term. The question of where exactly to invest your capital isn’t one that’s easily answered. Hopefully, our nonresident investors’ checklist as well as our list of questions will help you find the one that’s right for you.
If you’re interested in investing in the US real estate market, the Nonresident Investor team will be more than happy to help. With years of experience in navigating the market here as well as a vast network of contacts and experts, we’ll help you find the perfect deal for you. The US real estate market is one of the most developed in the world and, with high ROI and rental yields, is sure to make you a hefty profit.
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