The Top 10 Property Investment Destinations for 2010

Well... Everybody who's anybody in the world of overseas property is currently releasing a chart of their hot tips for the best destinations for property investment in 2010. I thought I better get in on the action... My family are right, I couldn't see crap but I'd want it. Anyway... Here is my top 10 countries for property investment in 2010 in no particular order:

1: America

I'm sorry to all my regular readers, who know me as a fan of emerging markets at all cost, but the current abundance of distressed and heavily discounted properties currently available in America are just calling out as some of the most profitable buy to let investments you could ever go into.

You can choose between touristic rentals or residential rentals, and it is pretty much a toss-up actually. However, if you go for residential rentals, you are in for a potentially rocky ride until the local market fully recovers. None the less buying now is still a no-brainer, locking in the low prices currently on offer will make your yields massive as the market recovers.

Buying for holiday letting will perhaps bring in the bucks a bit quicker, because you are reliant on the recovery of international tourism, which is already showing signs of recovery, as those wealthy or well-off enough to have survived the crunch go on a spending spree -- possibly to cheer themselves up a bit and toast how bad it never got.

2: Malaysia

Asia is without doubt proving that it is the growth centre of the present world; with several Asian property markets currently seeing double digit quarterly growth, and several economies surviving the recession with only a slight slow to their growth.

I'll admit that Malaysia is not one of those countries to avoid recession. In fact output dropped quite drastically in the final quarter of last year. However, according to the World Bank and several other analytical bodies, the drop bottomed in the second quarter of this year, and things have been recovering ever since.

Malaysia is always my favourite because of its stability, as well as the host of other benefits that come from it being an ex-British colony.

Firstly the stability: the government has always been conscientious and responsible, taking constant measure to avoid speculation and the formation of asset bubbles in the property market; taking steps like limiting foreigners to luxury properties so that locals would never be priced out of the market.

The benefits buying Malaysia property gets from its being an ex-British colony are:

• All contracts are in English
• Buying process similar to that of UK
• Finance is available for foreigners
• First class healthcare system
• Stable democracy and strong values

Malaysia also has a favourable tax regime; most notably no capital gains tax is levied on property sales, and no inheritance tax on property inherited.

3: Brazil

Brazil is currently the most talked about emerging market in the world; it seemingly has everything going in its favour. The Brazilian economy, which was already growing rapidly enough to see investment groups like JP Morgan to forecast that Brazil would be the fifth largest economy in the world by 2050, became even more of a tiger when oil was discovered.

We all know that oil reserves alone can make a country incredibly wealthy, let alone one with such huge agricultural exports and services sector as Brazil.

The test of Brazil is whether the wealth is distributed to the poorer side of society. According to recent reports it is being, average Brazilian's are becoming more and more affluent and the middle class growing, which takes care of the other problem, the crime rate. It is a well known fact that poverty breeds crime, so increasing affluence and reducing poverty automatically reduces crime.

Then Brazil was awarded the honour and the privilege of hosting the 2014 World Cup, shortly before it won the (some would say even bigger) honour and privilege of hosting the Olympic games. These really completed the picture of Brazil as the world's favourite emerging market.

I recommend investing in low-profile residential property, that will benefit from the increasing demand as the middle class grows. If you want to holiday in your investment, then I recommend the north east, Natal is the favourite: great beaches, great weather, low property prices and rapidly growing tourism -- its being a host city for the world cup is just a bonus as far as I'm concerned.

4: Albania

As regular readers of mine will know; Albania will always be on my shortlist. The country's economic management over the last decade, has made it one of the strongest and most stable of all the eastern Europe emerging markets. I have explained this in full in this article for those who want to catch up.

I tip it for property investment, because developers have been clever enough to build the kind of luxury that foreigners will buy, but at the cost that allows prices that locals can afford. This is the perfect combination for an emerging market like Albania. If you gave me £50k to invest now Tirana and Saranda would definitely be two of the places I would take a plane to.

5: Panama

Again, Panama is always on my list, and again the full reasons are all covered in this article, I see no point rehashing it here. I'll just say:

Panama's economy grew by 10% annually on average in the years preceeding 2008, and it will see growth accelerate to a similar level from 2011. The main driver of growth is the Panama Canal, when its expansion triples its capacity on completion in 2014 it will be a further boost to the Panama economy. Then you have the fact that Panama is the number 1 destination for American's to retire to.

A powerful combination, and you can either choose a residential apartment in Panama City certain to attract high-yield residential lets as Panama's retail and services sectors continue to grow, or a touristic apartment on the coast, the low price of which will also give high yields from short term holiday lets.

6: Turkey

Turkey offers low property prices and fantastic value for money. This has always been ture, but is particularly true at the moment because of the relative strength of the pound against the lira vs other currencies.

Turkey received over 28million tourists last year, slightly more this year and is hoping for 30million next year. That in itself makes property sound a good investment, but add to it the fact that there is insufficient commercial accommodation to house the burgeoning masses and you can see why demand for privately rented holiday properties is constantly rising.

This is also assisted by the fact that more and more people are harnessing the power of the internet to build their own package holidays and get the best value for money, it is easy to see why a high proportion of those would choose the privacy, freedom and space of a self-catering privately rented villa or apartment in the area of their choice. The cumulative effect of all this growth is 6% rental yields on Turkish property, and that is currently being achieved, not conjecture.

My favourite parts of Turkey are Altinkum, Olu Deniz for which you really need to buy in Fethiye, and Antalya where you can ski in the morning and bathe in the Mediterranean sea in the afternoon.

7: Germany

I can't even believe I am putting this one in, the yields of 4% are hardly spectacular. However, a recent study by CB Richard Ellis, found that 48% of retailers planning to expand into a new market are targeting Germany.

This will undoubtedly generate substantial growth in Europe's largest economy, which is predominantly driven by its exports sector, which is also the largest in Europe.

As many of you will know, just 47% of Germans own their own home, which forces to government to regulate rental rate rises. However, when the economy and wages grow the government allows rate rises and yields increase.

On top of that, while prices haven't fallen during the downturn, they haven't risen either, and rents have also held firm. This proves that Germany's main marketing strength; the stability and reliability of its hardly spectacular yields, is 100% true.

For anyone looking for somewhere safe to put their money with a bigger yields than the bank can offer, Germany is about the best bet in the world. You'll get a safe 4-5% yield, and when it comes time for you to sell the property will be worth the same, or maybe a little bit more than you paid for it -- prepare for it to take a little while to sell and target fellow foreign investors.

8: United Kingdom

Can't believe I'm putting this in either, but again it's got to be done. Well chosen UK property, possible distressed or repossessed property will come at a pretty substantial discount of its market value. There is every indication that, with mortgage finance continuing to be restricted, that the number of people who would normally be buying houses will either choose or be forced into settling into long term rented accommodation.

Not to mention the people forced to sell through inability to pay the mortgage, the people who's properties present the best opportunities, are also increasing the numbers of prospective tenants. Though the increase in rental supply led to falling rents earlier this year, there is every indication that demand for rental property in the UK will increase far faster than supply in 2010, increasing rental rates and yields.

Yields on the average UK buy to let used to be 2-4%, but now, on properties bought for ridiculously low sums of money the yield can be a lot higher -- obviously depending on how much needs to be spent bringing the property up to liveable standards (see this article to understand the difference between a cheap property and a bargain).

9: Canada

Canada currently strikes the perfect balance; properties have fallen in value but the market never collapsed. This means that you can buy property at bargain prices with plenty of potential for short term growth.

The Canadian economy is in nowhere near as bad a shape as its neighbour in the US. Unemployment is not rising, demand for rental property, and rental rates are both stable and strong. Carefully chosen Canada property is currently yielding a solid 4-6%, with higher yields being made possible on the below market opportunities, which also aren't as frequent as in the US or UK.

10: Australia

Australia became the first G20 nation to start increasing its key interest rate, and also advised banks to unilaterally raise their own rates even further. This is because property values began to grow so quickly that fears of a bubble forming emerged.

Of course were it not for the fact that the economy and labour market are showing such clear signs of stabilisation the rates would have stayed low.

Foreigners are only allowed to buy new build properties in Australia, but at the moment that is a good thing. Developers are currently habitually sweetening up their offers in order to increase sales. Rental yields vary greatly throughout Australia, from 5% to 10% depending on the deal achieved and the location.

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Those covered above are all assuming the investor is looking at buy to let only. For holiday home investments Spain is still a hard one to beat, obviously if you avoid the over-developed areas and get some serious discount.

I would have liked to have included India as well, which is forecast by the International Monetary Fund -- among the most pessimistic of bodies -- to grow by 5.4% this year and 6.4% next year. India has among the largest populations in the world, and among the fastest growing middle classes. Buying into an affordable housing development, either buying a property, multiple properties or as venture capital is not only one of the top 3 property investments for 2010, but for the foreseeable future.

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