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Saturday, July 27, 2013

Emerging markets: Where to invest in property for the best returns

By Mark Winters

Real estate is supported by labor market growth
Emerging markets indicate growth
A recent report from the Royal Institution of Chartered surveyors (RICS) highlighted the areas across the globe that are expected to see the largest construction boom over the coming decades. The report lists Eastern Europe, China, India, Asia Pacific, Africa and South and Central America as the premier places to invest in commercial property.

Brazil to become luxury sector world beater

RIC’s latest report shows that China, India and Brazil will become the major players in the global property market in the next ten years, with the increased demand for property development being engendered by upgraded transport systems, the expectation for better living standards, labour mobility and increased purchasing power.

By 2018, the report predicts, China will be the world leader within the construction market, but India will have a higher rate of construction, whilst Brazil will lead the field in the luxury market.

110% increase for emerging markets

Researchers believe that emerging markets will enjoy an increase of 110% over the coming decade, amounting to $7 trillion, which by 2020 will represent an enormous 17.2% of the Gross Domestic Product. Meanwhile, it’s predicted that first world countries will only see a rise of 35%, representing an increase of just over $1 trillion by 2020.

Up until this point, fiscal deficits in less developed countries have led to constraints on government budgets, whilst weak consumer spending lack of finance, the rising price of materials and austerity measures have all contributed to the current lack of construction development.

Signs of recovery

But it’s not all bad news for less developed countries. The RICS report affirms that there are serious signs of recovery and asserts that for investors who want to make the maximum return, emerging markets are still the best place to invest.

Capital is becoming increasingly available throughout the world and greater investment in hospitals, transport, education and highways in countries like Brazil will also encourage foreign investment in construction, particularly within the hotel and hospitality sector.

India will be fastest growing economy

The report asserts that India is likely to be the third largest economy in the world within 20 years which will mean more money being invested in property to accommodate this densely populated country, but quantity does not equal quality and the country may not be the most lucrative place to invest.

However, Brazil is a different story. In 2011 the country’s economy grew by 2.7% and this is expected to grow to 6% in 2014. Although the country is currently enjoying an economic boom and tourism is a huge profit generator, property prices both in the residential and tourism sectors aren’t currently reflecting this and are still relatively low.

Those investors who wish to tackle the luxury sector should look to Brazil as one of the best places to invest as the price of property will increase in line with the growing economy and the luxury market is set to explode as tourism increases, so in order to get the best possible ROI, Brazil is the ideal country to invest in.

About the author: Mark Winters is a keen financial blogger and financial advisor at Aspen Woolf- specialists in identifying wealth building opportunities across the globe from Brazil property investment opportunities to investments in renewable energy sources such as biofuel.

* Image license: Sqback; RGBStock.com royalty free. 


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