(This article was updated on Jan. 13, 2023.)
Let’s look into the best areas in the world for investing in international real estate in 2023.
If you want to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).
Introduction
Are you seeking for ways for investing in international real estate?
Real estate investment is a difficult business, and it has only become more difficult due to the stock market crash, the COVID-19 pandemic, and the ever-changing energy prices.
High valuations and pricing concerns, oversupply in some market segments, the impact of developing technologies, the tax and regulatory environment, interest rate risks, economic and financial market hardship, currency risks, and political risks are all hazards linked with the real estate industry.
Are you looking for the finest nations for investing in international real estate and earn high rental returns?
Apart from covering the mortgage on the property with the rent received, you must be aiming to generate cash flows. It’s analogous to being compensated for owning a home.
You must be able to traverse financial systems efficiently for investing in international real estate. Financial procedures and real estate transactions in another country may operate differently than those in your own.
The following are the finest countries for investing in international real estate if you want to receive a good return on your investment.
Best Areas in the World for Investing in International Real Estate: United Arab Emirates
The United Arab Emirates (UAE) is a popular vacation destination. It comprises seven emirates, including Dubai and Abu Dhabi. The country is also well-known for its cutting-edge infrastructure like the Burj Khalifa, which is currently the structure that holds the record for being the highest building in the world. In addition to this, it is widely considered to be one of the wealthiest nations in the Middle East.
The United Arab Emirates (UAE) is a tax-friendly country that will reward real estate investors handsomely. The United Arab Emirates does not levy any national taxes on real estate transactions, according to audit, consulting, and tax services provider PricewaterhouseCoopers (PwC).
The rental return of 5.19 percent is among the greatest, implying that you will get the most out of your money.
In spite of this, most of the Emirates impose a municipal tax on real estate, and the amount of this tax is determined by the annual rental appraisal of the property in question. The majority of the time, the renters are the ones who are accountable for making the necessary tax payment.
There are some instances in which the owner of the property as well as the tenant are each accountable for the settlement of their own set of fees. In Dubai, for example, the real estate tax on a municipal level is currently implemented at a respective rate of 2.5% and 5% of the commercial and residential property’s rental pricing per annum. This difference in rates is due to the fact that commercial real estate in Dubai have higher rental valuations than residential properties.
In most cases, the owner of a commercial property is the one who is responsible for paying the municipality tax, while tenants are the ones who pay the tax on a residential property.
The imposition and management of these taxes is handled in a manner that is unique to each Emirate, and these methods can vary greatly from one another.
Foreign investors have a large range of properties in which to invest, particularly in Dubai. Downtown, Palm Jumeirah, Marina, and International City are all attractive places for investors in Dubai, bolstering the UAE’s claim to be a prime destination for overseas property investments.
What does the cost of living in the UAE look like?
According to worldwide cost of living data aggregator Numbeo, a family of four may currently live in the nation on an estimated average of 11,533 dirhams (3,140 USD) each month, while an individual can get by on 3,317 dirhams per month (both without rent).
Apartments in the city center cost 8,853.7 dirhams per square meter to purchase, while those outside the district cost 6,721 dirhams.
A one-bedroom flat can be rented for as much as 3,407 dirhams per month outside of the city center and up to 5,712 dirhams inside it.
Best Areas in the World for Investing in International Real Estate: Germany
For investors looking for opportunities in the European real estate market, Germany is a secure bet. Germany is a superpower with a booming economy and financial clout on par with the world’s most powerful nations. It’s also a great place for investing in international real estate because of its relatively low cost of living among countries within Europe.
If you want to buy real estate in Germany, you’ll have to get a mortgage from one of the country’s financial institutions first. You will need to be able to convince the bank that you have every intention of remaining in Germany for the foreseeable future if you wish to have your application accepted.
Since certain banks and sellers view transactions involving expat purchasers as riskier than those involving local purchasers, you should be prepared to make a down payment that is greater than twenty percent of the total purchase price. Among the added expenses that you’ll be responsible for paying are the property sale tax, fees to the notary public, fees to register your property, and fees to the real estate agents. These costs can add up to approximately ten percent of the total value of your real estate.
What does the cost of living in Germany Look Like?
A family of four may expect to pay an estimated average monthly living expense of 2,882 euros, while a single person can get by on 840 euros per month, both without considering rent.
Apartments in the city center are priced per square meter at 6,675 euros, while those outside the district are priced at 4,804 euros.
A one-bedroom apartment may have a monthly rent of up to 858 euros in the city center and 629 euros outside of it.
Best Areas in the World for Investing in International Real Estate: France
Another prominent European real estate investment destination is France, a country in Europe that serves as one of the continent’s most important producer of agricultural products and a top industrial power.
Others are enticed to move there because of the country’s diverse topography, which features extensive stretches of coastline, massive mountain ranges, and picturesque panoramas of farmland.
Paris, the capital of France, is an important city in the country due to its role as a leading cultural and commercial center on a global scale.
For investors seeking a long-term return, France is one of the greatest places for investing in international real estate. One distinguishing feature is that overseas investors can obtain in-country funding, which is uncommon in most other countries.
Mortgage interest rates are low, and refinancing is available with a loan-to-value ratio of up to 85 percent. Investors will be glad to put their money in because the rental income tax is significantly cheaper than in other European countries.
All properties held by corporations located in France are subject to a 3% real estate tax. The tax is assessed annually on the fair market value of the real estate, in proportion to the direct or indirect interest held.
Gains in capital value that are realized by individual residents upon the sale of their primary residence are exempt from taxation. Capital gains on sale of other real estate property can also be exempted from taxation so long as the value of the disposition is not in excess of 15,000 euros (16,286.98 US dollars).
If you are a non-resident in France, you can also be eligible for the capital gains tax exemption, subject to certain conditions like being a tax resident for a minimum of two years within any period prior to the sale.
A tax credit for the amount of time that the property was held qualifies for application in the case of taxable capital gains from real estate. For real estate that has been held for longer than five years, the following is used to determine the amount of the rebate that should be applied:
- 6% for every year after the fifth year that the property investment is held
- 4% for 22 years of ownership
After owning a real estate for a period of 22 years, you will be eligible for a complete exemption from the payment of income tax on capital gains.
A uniform rate of 19% is applied to the gain after taking into account any losses. Gains on the sale of real estate that are realized on properties other than building lots are subject to a higher rate of taxation if the sale price is more than 50,000 euros. In addition to the income tax and other social levies, you must pay this tax, which has a sliding scale ranging from 2% to 6%.
What does the cost of living in France Look Like?
A family of four can spend up to 3,122 euros a month on the whole cost of living in the country, while a single person can get by on 871 euros a month—both figures exclude rent.
Apartments in the city center cost 6,129 euros per square meter to purchase, while those outside the district cost 4,458 euros.
One-bedroom apartments can be rented for as much as 734 euros per month in the city center and 587 euros outside of it.
Best Areas in the World for Investing in International Real Estate: United States of America
The United States is (arguably still known as) the leading economic and military power on the global stage. It has a lot of cultural influences across the world and is widely regarded as the best country in which to invest in real estate.
A number of towns around the country have been named among the finest places for investing in international real estate for foreigners. Los Angeles, San Francisco, New York, and Washington, D.C. are safe bets for investors seeking steady and reliable returns on their investments.
The US does not impose real estate tax on a federal level property; however, such taxes are charged on the owner of real estate property – whether commercial or residential – in the majority of the states, with the amount of the tax being determined by how much the property is worth.
Typically, the tax is levied at the level of the municipality or the state, and the rate of taxation is subject to significant variation based on the monetary requirements of the taxing purview.
What does the cost of living in the US Look Like?
For a family of four, the total cost of living in the country can reach an average estimate of $3,655 per month, while a single individual can get by on $1,025 per month, both without factoring rent.
Apartments in the city center are priced per square meter at $4,429, while those outside the are area priced at $3,012.
The cost of rent for a one-bedroom apartment can range from 1,372 to 1,705 dollars per month depending on where you live.
Best Areas in the World for Investing in International Real Estate: Canada
Canada is one of the world’s largest economies, which makes it appealing to real estate investors. The country’s outstanding property possibilities and high living standards make it perfect for investing in international real estate.
Aside from its small population, Canada is noted for its pacifist stance to various issues as well as its friendly and tolerant attitude toward immigrants and visitors. Paradise Developments presented an analysis of Canada’s greatest real estate investment neighborhoods.
Municipalities in Canada are responsible for levying real estate taxes based on the projected current market value of the real estate located within their jurisdictional boundaries. For majority of the countries’ provinces and territories, the owner of a piece of real estate is responsible for paying a general levy on property owned.
If a building is occupied for business purposes, the tenant of the building may be required to pay a different business tax that is levied by certain municipalities. These levies are calculated using the property’s annual rental value and the tax rates that are imposed by the different municipalities.
What does the cost of living in Canada Look Like?
A family of four can spend up to C$4,414 per month on their total living expenses in the country, while a single person can survive on C$1,228.5 per month, both without taking into account rent.
An apartment in the city center will cost you C$8,887 per square meter to purchase, compared to $6,572 outside of the district.
A one-bedroom apartment in the city center can be rented for up to C$1,609.5 a month, while similar apartments outside run approximately C$1,364.5.
Best Areas in the World for Investing in International Real Estate: Australia
Australia’s economy is thriving, and its residents enjoy high living conditions. The country has consistently been ranked as having one of the highest rates of economic growth.
These are some of the reasons why the country attracts real estate investors looking for high returns and prospective expansion. There are numerous wildlife regions and other tourist attractions, as well as farmlands, that lure visitors to the country.
Land taxes are levied on property owners in every state and territory of Australia depending on the “unimproved value” of the land they hold, according to PwC. There are certain exemptions, however, such as those imposed for a principal residence, as well as those for land used for specific reasons.
In addition to this, municipal councils are responsible for imposing various taxes and fees on land located within their jurisdictions.
Certain states in Australia also levy an additional duty or land tax surcharge on the real estate investments of a foreign national, private company, or trustee of a foreign trust.
Furthermore, a foreign owner of a residential property in Australia is subject to a yearly vacancy fee that is levied by the federal government if such property has remained largely unoccupied for at least six months in a year. This fee is applicable to properties that have been purchased at any period since May 2017.
The Australian state of Victoria has a so-called windfall gains tax that is levied amid a minimum rise of 100,000 dollars in the property’s worth due to a rezoning that comes into force from or following the first of July 2023.
What does the cost of living in Australia Look Like?
For a family of four, the total cost of living in the country can reach a projected average of A$5,245 per month, while a single individual can live on A$1,476 per month, both without accounting for rent.
Apartments in the city center cost A$9,881 per square meter to acquire, while those outside the area cost A$7,149.
One-bedroom apartments can go as high as A$2,145 per month in the city center and roughly A$1,677 outside of it in terms of rent.
Best Areas in the World for Investing in International Real Estate: Turkey
With its central location and thriving economy, the Republic of Turkey has been a magnet for investments in land, residences, and other real estate possibilities. Turkey is a crossroads of cultures and religions, serving as a link between Europe and Asia.
The country enacted legislation that made it an appealing investment location for foreign investors. Foreigners can now obtain Turkish citizenship through real estate investment in a simplified process.
The Citizenship by Investment program of Turkey was first introduced in 2016. The Turkish government rolled out the scheme toward the end of January 2017, so as to attract foreign direct investment and boost the Middle Eastern country’s real estate market.
When the government of Turkey first introduced its citizenship-by-investment scheme, they stated that the minimum investment required to participate was a million dollars, minimum.
As a direct consequence of this, it failed to garner the interest of many investors. Midway through 2019, the Turkish government reduced the required amount of capital investment to 250,000 US dollars after coming to the conclusion that the amount that had been established was a tad unrealistic.
The minimum investment required to gain Turkish citizenship has then increased to 400,000 dollars from 250,000 dollars in response to the growing number of applicants interested in pursuing this goal.
In terms of property tax, it is determined based on the tax value that was established in the year that the individual property was acquired. This tax value is subsequently reassessed per year.
Specifically, for buildings that are used as residence, the tax imposed is 0.1%; other buildings are subject to a tax rate of 0.2%. Land, on the other hand, is charged a levy of 0.3%, which becomes double when it is located within metropolitan areas.
In addition to the property tax, a new form of levy was announced in 2019 for residences in Turkey that were worth over 5 million Turkish lira at the time and those that are valued at roughly 6.2 million lira for 2022.
This tax is to be determined on the residence’s surplus value. The rates that are applicable range anywhere from 0.3% all the way up to 1%, and it all depends on the residence’s worth.
What does the cost of living in Turkey Look Like?
A family of four can likely spend up to 25,103.5 lira per month on their total living expenses in the country, while an individual can get through with 7,160 lira per month, both without adjusting for rent.
Apartments in the city center cost 20,844 lira per square meter to buy, while those outside the area cost 12,783 lira.
The monthly rent for a one-bedroom flat can reach 5,293 lira in the city center and 3,465.5 lira outside of it.
Best Areas in the World for Investing in International Real Estate: Indonesia
Indonesia is one of the finest places for investing in international real estate because of its robust economy and abundance of natural resources. Those who invest in Indonesian real estate has a strong possibility of making a profit.
Because residents are more inclined to rent a house, the domestic market is quite profitable. Rental yields are consistently rising and stable in this heavily populated country.
The rental yields in Indonesian capital Jakarta hit as high as 10.8 percent per year as of late 2022 and stood at 5% on average (including 4-bedroom apartments), according to Global Property Guide.
The rent for an apartment with one bedroom within and outside the capital’s city center currently stands at roughly 7.6 million rupiah and 4.3 million rupiah, respectively, as per Numbeo.
Foreigners may find it difficult to purchase property in Indonesia, but leasehold arrangements provide a more convenient method to navigate the real estate market.
The yearly levy on land and buildings is equal to no more than 0.5 percent of the market value as defined by the country’s regional government.
If land and buildings are disposed of, the seller will be subject to income tax on the profit that resulted from the sale or transfer of the property. The rate of such levy is set at 2.5% of whichever is greater: the gross sale value or the market value that the regional authorities has set.
What does the cost of living in Indonesia Look Like?
For a family of four, the average monthly cost of living in the nation is around 30 million rupiah, while a single individual can survive on 6.6 million rupiah per month, both without considering rent.
Apartments outside of the city center can be purchased for about 13 million rupiah per square meter, compared to roughly 25 million rupiah inside the city center.
Rent for a one-bedroom apartment can range from 2.6 million rupiah outside the city center to as high as 4.2 million rupiah inside it.
Best Areas in the World for Investing in International Real Estate: Colombia
Colombia is a fantastic choice for investing in international real estate since it is a market that is always coming up with new ideas. The real estate market has been maintained and propelled by consistent economic growth and a doubling of GDP over the last decade.
Due to an excellent rental yield that reached an average 6.46% in Colombian capital Bogota as of late 2022 (and not less than 5% in other cities), property investors have been making money.
Real estate tax is imposed as a form of municipal tax that can vary in rate from 0.4% to 1.2%, based on the type of the property and how it is used. In general, it falls somewhere in the middle of that range.
What does the cost of living in Colombia Look Like?
A family of four may expect to pay an estimated monthly average of 5.9 million Colombian pesos for their total cost of living in the country, while a single individual can live on 1.7 million pesos, both without factoring in rent.
Apartments in the city center are priced per square meter at 5.2 million pesos, compared to 4.4 million pesos for apartments outside the district.
A one-bedroom apartment can be rented for up to 1.1 million pesos per month in the city center and for roughly 963,696 pesos outside of that location.
Best Areas in the World for Investing in International Real Estate: Philippines
The Philippines is another great place to buy property if you’re looking to invest in a foreign country. Expats make up a sizable population in the country, which serves to push up property values, with even stronger future prospects.
Exploring the real estate market in this area will help you earn a profit on your investment. With more than 20 million Filipinos looking for rental properties, investors can help close the housing gap. In comparison to other countries, the return on investment is also improved by lower property taxes.
Local government divisions are responsible for charging a levy on property, which are assessed on a yearly basis and are calculated based on a predetermined percentage of the property’s value.
Real estate situated in a province may be charged a real property tax of up to 1% of its taxable value, whereas those situated in a city or in a municipality within Metro Manila could be charged up to 2%.
The renting out of real estate falls under the umbrella of the service industry, which means that it is charged a value-added tax (VAT).
A VAT of 12% must be paid on rental units that receive monthly payments of more than 12,800 pesos ($233) if the property owner has an annual gross rental income that’s greater than 1,919,500 pesos. If the rental payment received is the same amount but the landlord’s gross rental income is lesser, a flat tax rate of 3% will be charged against the gross rent.
For businesses, when a corporation sells, exchanges, or disposes of land or buildings that are not actually used in the operation of its business, it is subject to a final tax in the amount of 6% of the amount that is higher of the gross selling price or the fair market value.
What does the cost of living in the Philippines Look Like?
A family of four may expect to pay an estimated average monthly cost of 94,392 Philippine pesos for living expenses in the country, while a single person can get by on about 27,308 pesos a month, both exclusive of rent.
Apartments in the city center cost 130,177.7 pesos per square meter to purchase, whilst those outside the area cost 66,126 pesos.
One-bedroom apartments can be rented for as much as 18,700 pesos per month in the city center and 10,497 pesos outside of it – even less, if you know where to look and if you’re not picky.
Best Areas in the World for Investing in International Real Estate: Morocco
Morocco is another attractive real estate market for foreign buyers. The country has a low cost of living and a high standard of living. Foreign investors can be confident that their interests will be protected if the financial system is sound.
Foreigners benefit from the tax system since they are not subject to double taxation. A property’s rental value is used to determine how much tax is owed on it. The standard levy is 10% of the rental value as per local authorities’ assessment.
Only 25% of the real estate’s assessed rental value is charged a levy if used as primary residence. Furthermore, there is a 1% to 6% registration duties imposed on the transfer of real estate in the country.
What does the cost of living in Morocco Look Like?
A family of four can spend up to 14,315 Moroccan dirhams per month on their total living costs in the country, while a single person can live off of roughly 4,046 dirhams per month, both without accounting for rent.
An apartment in the city center will cost you 14,615 dirhams per square meter to purchase, compared to 7,580 dirhams outside of the district.
A one-bedroom apartment in the city center can be rented for up to 3,114 dirhams a month, while similar apartments outside of the center run approximately 1,797 dirhams.
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