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International Investing Hot Spots

Investors actively participating in the U.S. housing market have, up until recently, had a relatively easy path to profits. Those who were lucky enough to acquire cheap properties in the wake of the recession are likely reaping the rewards right about now. However, with the recovery, it is becoming increasingly difficult to acquire properties with sufficient profit margins. As a result, investors may want to consider alternative markets to add to their portfolio. According to IP Global, a property investment company, investors may want to consider Edinburgh, Tokyo and Dubai. Each may be the next hotspot for investor activity on a global scale.

Investors intent on following hot market trends may want to consider the increased propensity Edinburgh has demonstrated for price appreciation. IP Global has acknowledged that the rest of the U.K. is starting to follow the lead of London, where industry data show September home prices rose 5.0 percent annually.

Despite a recent failure to instill considerable optimism, housing prices in Edinburgh have more than doubled since the turn of the century (2000). Subsequently, rental rates have risen on a consistent basis for approximately four years. Rents in some areas have risen as much as 10-18 percent over the past two years. Both housing prices and rental rates serve as an encouraging trend for potential investors.

The potential for Edinburgh to become an active investor region may be attributed to a lack of viable inventory. “The New Town area in the heart of Edinburgh suffers from a significant lack of supply that sees new properties being snapped up very quickly,” IP Global said in a report.

However, it is more likely that investors would be attracted to the incentives that are being offered by the local government. The government’s “Help to Buy” plan, which includes a lower deposit and government guarantee on higher-risk mortgages, may be behind recent demand. For the time being, homeowners are enjoying the rates of appreciation, but some fear a bubble crisis is on the horizon.

For those interested in a more urban dynamic, IP Global supports the idea of investing in Tokyo, Japan. Their ranking of the Japanese market recently increased from “fair” to “bright.” Tokyo is now more attractive than it has been in years. According to a report issued by IP Global, “With property prices still below half their 1980s peak, there is great potential for returns in the city. The weak yen, strong rental yields and substantial growth projected for the next three years mean confidence is growing.”

Supporting their claim, are housing start rates that increased by as much as 8.8 percent from the previous year. Fifty of the top construction companies also increased their orders for new materials by 21.4 percent.
Another surprisingly hot pick by IP Global is Dubai. After the market crashed in 2008-09, the desert oasis made its market notorious globally.

According to Alex Bellingham, head of IP’s Singapore office, “Dubai seems to be emerging from the crash years and there is now more of a buzz around real estate than we have seen in recent years. The property market is picking up, and private and government-owned developers have unveiled billions of dollars in new projects.”

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