Top Cities for Property Investors

Home buying is firmly back on the political agenda in the United Kingdom amid concerns the recently-launched Help to Buy government scheme, which aims to kick-start the country’s lack-lustre property market, might instead create another house-price bubble.

The controversial scheme, which applies to new and existing properties up to the value of £600,000 ($955,000), enables first-time buyers and home movers to buy a property with a deposit of as little as 5%. Banks have been persuaded to get on board because of the government’s willingness to share part of the risk by covering 20% of the value of the property.

If property is an Englishman’s castle, to paraphrase that well known saying, it’s also an excellent investment vehicle as evidenced by recent signs across the world of a recovery in the property market. This has led to leading London-based property investment company Colordarcy conducting research into the world’s most accessible cities for buy-to-let investors.

Now the company has come up with a top-5 list where investors can pick up a property with high rental yields for less than £500,000 ($796,000) and still benefit from a city-centre location. The top-5 cities are London, Las Vegas, Miami, Istanbul in Turkey and Dubai in the United Arab Emirates (UAE).

Colordarcy managing director Loxley McKenzie said, “We are seeing signs of a global recovery in property markets. However, there are some cities that offer better long term potential than others.

“£500,000 is a figure you might expect to pay for a luxury property reasonably close to the centre of the world’s major cities, yet there are some cities where high yielding properties can be found for much less.

“On this basis, we have chosen five cities where investors can find property for less than £500,000 and benefit from a city centre location and higher than average rental yields.”

Miami

It’s Colordarcy’s top city for buy-to-let investors looking to spend less than £500,000. The Miami Association of Realtors reported last month that luxury condos have seen the largest sales increase after surging 63.9% in the year to July 2013. Yet, says Colordarcy, there are still opportunities to invest in luxury apartments in Miami for well below the 500k mark. Miami property remains undervalued and the pressure on stock levels continues to have an effect on home price inflation.

Dubai

Although mortgages in the UAE may be easier to obtain than they once were, Dubai still tends to fluctuate between being the best and the worst buy-to-let city to invest in. The city, says Colordarcy, is currently in another dramatic growth cycle. Property prices in this Middle-East city grew 21.7% in a year up until the second quarter of 2013. Despite the potential for property speculators to inflate prices up dramatically only for excess supply of property to begin weighing down on prices, Dubai is a wealthy city where the long term fundamentals are good.

Las Vegas

The city, says Colordarcy, has been under the radar for a long time following a dramatic fall in property prices during the financial crisis. Property prices in Vegas remain 51% below their peak, which means there are plenty of bargains to be found for the more adventurous property investor.

Istanbul

Istanbul property has been attracting buy-to-let investors looking for a bargain. Many investors have not been disappointed as Istanbul continues to outpace every other city in Europe for property price growth. A 12.2% growth in 12 months and the relaxation of ownership laws makes Istanbul a great alternative to other cities in Western Europe.

London

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It’s one of the world’s best cities to invest in property and safe haven investors have helped push home prices up 9.7% in 2013 according to the latest figures. London property prices show no signs of coming down any time soon, says Colordarcy. For more information, check out Colordarcy’s website here.