If you’re in a position to have enough money to invest, you’re better off than a good deal of Americans. That brings with it a whole new set of issues to resolve, however, such as how and where to invest, and trying to figure out what will get you the biggest return — assuming that is your goal. As a wise man once said, “mo’ money, more problems.”
Of course, real estate is one of the most popular and foolproof investments out there. Though there were some huge losses during the financial crisis in 2008 and 2009, which left millions of homeowners underwater on their mortgage, typically property increases in value, making it an excellent place to park your funds. And now, in an age where the Internet has opened up a myriad of new possibilities, we can invest in real estate not just within our city or neighborhood, but around the entire world.
But a whole world of investment opportunities brings along with it a whole world of risk, and it can be very hard to tell where you should and should not put your money. Luckily, IP Global, an international real estate investment management firm, has taken to the habit of releasing a report that tells investors exactly what they need to know: which cities in countries are showing promise, and which you should be wary of.
IP Global’s Global Real Estate Outlook for 2015 gives us a short list of seven cities that investors should be throwing money at, a handful that we should keep an eye on, and some to avoid at all costs.
The map above, lifted from IP Global’s release, shows the cities that the firm feels present excellent opportunities for return, cities to keep an eye on, and those to avoid. The full list of the seven the firm has green-lit is below, and there are some definite common themes between them.
For one, the seven cities are located in either the U.S., Europe, or in Australia. And those cities are all brimming with industry and jobs — which in turn is attracting workers. Those workers, therefore, bring an increased demand for housing, and voila, an excellent chance for investors to put their money to work in the real estate market. Not only are housing projects needed in these cities, but the prices people are willing to pay to live there are going up as well. In Berlin, for example, average rents have gone up by more than 10% over the past year.
If we stay stateside, it’s easy to see how a city like Chicago made the list. “There are now 31 Fortune 500 companies headquartered in the city and The Loop – Chicago’s primary business district – is now the fastest-growing urban centre in the country,” the study says. “In addition to being an important financial hub, Chicago is establishing itself as a leading technology capital – job growth in this sector rose by over a quarter between 2010 and 2013.”
As for the cities on the ‘watchlist,’ which include hubs like Dublin and Boston, there is still plenty to be optimistic about — although that optimism is tempered a bit by economic conditions and local regulation. For example, here’s what the report had to say about Edinburgh, another city on the ‘watchlist’: “Edinburgh remains a strong market with high potential, but an extreme lack of supply continues to make entry difficult. The first few months of 2015 saw strong price growth, with average prices increasing 21.5% year-on-year (43), however this was also accompanied by weaker transaction growth.”
There were only two cities that IP Global recommends investors avoid — Sydney and Madrid. In Sydney’s case, there are fears that investors have overvalued the market, meaning that the opportunity for growth is hindered. Madrid, on the other hand, is still suffering from a post-recession hangover.
But as for those seven cities that IP Global gives investors the go-ahead, here they are:
- London, U.K.
- Berlin, Germany
- Manchester, U.K.
- Chicago, IL
- Miami, FL
- Brisbane, Australia
- Melbourne, Australia
Check out the complete Global Real Estate Outlook report from IP Global for further details.
Follow Sam on Twitter @Sliceofginger
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