Asian investors are the largest group snapping up foreign property according to research. But in which cities are they investing? And why?

As more people's attention is being drawn to real estate as an asset class, a larger number of people are seeking out foreign property. 2017 saw a large number of Asian investors enter the market sweeping up properties from the US to Canada straight to France. Recently, contrary to expectations, their attention is being drawn to residential and commercial properties in London, UK.

Propertywire's first quarter of 2018 stats https://www.propertywire.com/news/global-news/londons-commercial-property-market-top-draw-international-buyers/ reveal that overall about 5.6 billion pounds of foreign money was invested in London, with Asian investors contributing about 4.4 billion pounds or 65% of the total investments. The next highest was Hong Kong at 5 billion with Paris following from behind at 1.9 billion pounds.

If you're looking to invest in real estate, one of the major factors you would need to consider is liquidity. Based on liquidity, these are the top performing cities for cross-border real estate investing in 2018. This is indirectly influenced by population growth, employment growth and usually followed by an increase in home values or strong rental yield. 

•   New York, USA: Brooklyn and Manhattan are two of New York's favorite hot spots for foreign real estate investors. The activity of Chinese, Russian and Middle Eastern real estate investors, paying cash on high-end properties has consistently driven New York City’s real estate price upwards. With a population growth that hasn't slowed down, New York City real estate not only offers liquidity but stability for real estate investors.

•   London, UK: Despite Brexit, London leads the way as a favorite for foreign real estate capital. In the aftermath of Brexit, the attention to both London's commercial and residential real estate has been largely driven by a weaker pound and more affordable housing. Foreign real estate activity in London is largely funded by equity funds, institutional investments, and private capital. Units in the mid-range segments have been most popular among buyers. Presently, though, the government is setting tax constraints on foreign real estate investing as the cost of home ownership increases.

•    Hong Kong, China: In 2017, Hong Kong was named the "most luxurious" prime housing market for the second year running by Christie's real estate https://www.christiesrealestate.com/eng/sales/hkg . Hong Kong's housing market has shown little cooling with 4.4 billion pounds of foreign money spent by foreign investors in 2018 first quarter. The heated market in Hong Kong, as experts pinpointed, is a major reason for increased residential housing prices all through China.

•    Paris, France: The French economy is seeing a boom with the number of foreign investment activity reaching a 10 year high last year. The French economy exceeded expectations with a 2.2% growth, a large number of jobs created and strong real estate activity. Also with fairly stable mortgage rates, many investors are picking up properties in Paris and Bordeaux. Beyond 2018, analysts speculate the South of France will experience a strong housing demand.

•    Los Angeles, CA: Los Angeles may soon replace Hong Kong as the no 1 most expensive city for expats. Currently, the average price of a luxury property in Los Angeles is $2.5 million. With population growth, increasing disposable income and a thriving tech sector, Los Angeles real estate offer stability and liquidity for investors. However, housing is in short supply. A situation leading to soaring house prices. With population growth and a great economy, Los Angeles is a great option for single-family investors seeking high rental yield.

As we move into 2024 and 2025, the housing market is likely to see some significant changes. After a tumultuous couple of years, there is some optimism about the future of the housing market. However, there are also concerns about rising interest rates, inflation, and a potential housing bubble. In this article, we will take a closer look at the Housing Market Forecast 2024 & 2025 and make some predictions about what we can expect over the next five years.

Introduction

The housing market has been on a wild ride over the past few years. In 2020, the COVID-19 pandemic led to a sudden and severe downturn in the market. However, the housing market has rebounded strongly in 2021, with record-high prices and a surge in demand for homes. With the economy showing signs of recovery and interest rates at historic lows, many experts believe that the housing market will continue to grow in the coming years.

Housing Market Forecast 2024 & 2025: Predictions for Next 5 Years

Increased demand for affordable housing

One of the biggest trends in the housing market over the next five years is likely to be an increased demand for affordable housing. With home prices at all-time highs and many people struggling to afford homes, there is a growing need for more affordable options. This could lead to an increase in the construction of smaller, more affordable homes, as well as a rise in the popularity of alternative housing options like tiny homes and mobile homes.

Continued growth in suburban areas

Another trend that is likely to continue over the next five years is the growth of suburban areas. Many people are looking to move out of crowded cities and into quieter, more spacious areas. This has led to a surge in demand for homes in suburban areas, and this trend is likely to continue in the coming years.

Rising interest rates

One concern for the housing market over the next five years is rising interest rates. While interest rates are currently at historic lows, they are expected to rise in the coming years as the economy recovers. This could lead to a slowdown in the housing market and make it more difficult for some people to afford homes.

Potential housing bubble

Another concern for the housing market is the possibility of a housing bubble. With home prices at record highs and demand outstripping supply, some experts are worried that the market may be overinflated. If this is the case, a correction could be on the horizon, which could lead to a significant downturn in the housing market.

Increased focus on sustainability

As concerns about climate change grow, there is likely to be an increased focus on sustainability in the housing market. This could lead to an increase in the construction of eco-friendly homes and the retrofitting of existing homes to make them more sustainable. Additionally, there may be an increase in the popularity of alternative housing options like tiny homes and shipping container homes, which are often designed with sustainability in mind.

Growing popularity of smart homes

Smart home technology has been growing in popularity in recent years, and this trend is likely to continue over the next five years. With the rise of the Internet of Things (IoT) and the increasing availability of smart home devices, more and more people are expected to embrace this technology in their homes.

FAQs

What will happen to home prices over the next five years?

It's difficult to predict exactly what will happen to home prices over the next five years. However, many experts believe that prices will continue to rise, although at a slower pace than we have seen in recent years. Rising interest rates and concerns about a housing bubble could lead to a slowdown in the market

What do you do when bank financing is not available in your destination country? This article explores other options to finance your foreign property investment.

You’re not getting the same mortgage deal you’re used to

Bank financing abroad will be different from what you’re used to at home. Here are some ways in which the terms will likely be different:

1. Loan-to value ratios will be around 50 to 75 percent of what you're used to.

2. Terms may be shorter. It's almost impossible to get a 30-year loan when buying abroad.

3. You will be offered adjustable interest rates, rather than fixed.

4. You might be required to get a life insurance to secure your loan for foreign property. This isn't good news if you're already around 60, as banks wouldn't borrow you loans of more than 15-year terms. The reason being that insurance companies, as a rule, wouldn't cover you when you're above 75 years old.

Hence, there is need to check out other financing sources.

Financing tips from experts

Generally, here are some financing tips from foreign property experts:

1. If possible when starting out; start small and pay in cash. If this isn't possible, you can use your current home as collateral, without having to rely on banks or regular mortgages. Depending on the amount of equity in your home, you might get lower rates.

2. Research bank financing terms, requirements and laws in your destination country to decide which financing option would work for you. 

3. Since most of what you know about real estate might be ineffective in your destination country, it would be wise to get a partner or local agent. You'll need someone who can offer useful advice regarding financing and home ownership laws in the country.

4. If you'll be transferring funds denominated in your domestic currency, either to make a down payment, full payment or mortgage payments, don't go through the local bank. Local banks, with their wide dealing spread and limited transaction sizes, offer poor Forex services. Foreign exchange services would offer a better deal. 

Options to finance foreign property without using the local bank

Here are three options for foreign property investors who don't want to go through the local bank:

1. Personal loans.

Potential buyers with excellent credit will often fund an overseas purchase with an unsecured personal loan for foreign property. Interest rates can be in the single digits for qualified buyers.

Financing with a personal loan avoids the risks that go with leveraging property with a HELOC or cash refinance. This type of financing is particularly attractive when you are investing in a developing country where mortgage rates are high, and the cost of property ownership is relatively cheap.

2. Seller financing.

Some private sellers might be willing to pay part of the price. The conditions will be whatever you and the owner decides, and an average term is up to five years. In most cases, the longer a bit of property has been on the market, the better conditions you can negotiate. Much like bank funding, don't expect the owner to provide the deed until you've finished paying the loan.

3. Home equity (HELOC).

When cash is not an option, tapping into your home equity is one of the easiest ways to finance a property abroad. If you are investing in a country without a developed banking industry, it can also be the cheapest. Getting a HELOC has the added benefit of making you a cash buyer, which provides leverage when negotiating price.