As Europe watches the clock tick down to Brexit in a mere six weeks time, all eyes are on the property markets in the major European cities. With companies leaving the United Kingdom to set up shop elsewhere, new centers of commerce will emerge on the European continent and property investors are scrambling to predict where they should allocate resources before local prices become out of reach. One thing is certain, the markets that will see the greatest profit growth will cross the tipping point very quickly. This is not a case of start-ups moving into locations because the rent is cheap. These are established organizations with a global presence that need access to major airports and a skilled workforce. They will bring deep pockets and big salaries to the cities where they invest and the housing markets will adapt rapidly. LeadingRE, a consortium of almost 600 international real estate brokerages in 70 countries, keeps tabs on how all of their markets are performing and they provided data exclusively to Forbes on the ‘secondary’ markets in Europe that saw the most growth last year.
“Whilst London, Geneva, Paris and Monaco continue to command Europe’s highest property prices, other cities are emerging as increasingly popular with international buyers, offering excellent investor returns,” Chris Dietz, Executive Vice President, in an email. “Our increasing popularity in emerging European markets is testament to the growing importance of international investors in these cities.”
There is something brewing in Zagreb, the capital of Croatia, and it has all the signs of reaching a tipping point in the next few years to see explosive growth. Recently the country saw its the first digital real estate company, A Nekretnine, open for business which is usually the strongest sign of a market’s potential. Asking prices for condos in this city increased by 20% in 2018 when the rest of the country only saw increases of 8.5%, according to data provided by A Nekretnine. Also, in just the past twelve months there has been a 30% increase in homes being advertised on Airbnb in Zagreb so the demand for vacation rentals is seeing its own surge as well. Nino Ćosić, founder of A Nekretnine, who estimates 20% of buyers come from outside the country, shared an insider’s tip of significantly more inventory coming to market in the next year thanks to the completion of a number of new developments that were put on hold during the last real estate crisis.
What has long been seen as a vacation destination, the city of Lisbon has recently seen demand for property purchases sky rocket. This is in part due to the golden visa system where foreign buyers who invest €350,00 in underdeveloped areas or €500,000 in upmarket places can gain a fast track to citizenship as well as a favorable tax rate for new high-earning residents. Prices increased 20% in just the past year. According to a rep from Caetano Real Estate, the city already sees a lot of interest in new luxury high end developments from South African, German, Chinese and French buyers and there is increasing interest from Canadians, Americans, Brazilians and Italians.
Plovdiv, the second largest city in Bulgaria, was just named the European Capital of Culture by the European Union which means the city is a major focus for the next twelve months and a number of urban revitalization projects are already underway. Sofia, the capital, is also seeing growth with a new metro line in the southern part of the city and a rep from the in-country brokerage Unique Estates says neighborhoods like Vitosha and Krastova vada are becoming residential centers once more after being largely industrial areas. Price trends in Plovdiv are consistent with the capital city of Sofia, where mid-priced homes saw an increase of about 9% last year. Homes in the luxury segment saw an increase of 6%. While these aren’t double digit growth numbers, the amount of investment that comes from being the Capital of Culture will make these numbers rise significantly in just a year’s time.
Feldkirch and Bludenz, Austria
Austria as whole has entered a real estate boom, which means secondary cities are becoming more attractive since they have lower property prices (for now) but are close enough proximity to the major destinations buyers still want to live there. Based on data provided by the brokerage von Poll Real Estate, Feldkirch and Bludenz, two alpine towns on the western half of Austria, saw prices increase by 25.4% and 22.1% respectively in the past year. That’s compared to the capital of Vienna where they only increased by 18%. The highest priced destination city in Austria is Kitzbühel where prices are approaching one million euro for a property and there they increased by 39.4% last year. For comparison sake, average sales prices in Feldkirch and Bludenz are around €350,000.
Rotterdam, The Netherlands
The Netherlands is unusual in that the housing market in its capital city of Amsterdam consists of 70% rentals so the inventory for buyers is very low, but there are other large urban areas worth investing in. About an hour from Amsterdam, and half an hour from The Hague, sits the growing metropolis of Rotterdam where prices increased 17% compared to last year, outpacing the national average of 10%. They also sold within an average of 33 days on market, which is 11% faster than the year before, according to data from VOC International. Home prices in Rotterdam average €271,000.
But if Europe isn’t for you, here’s a list of the best U.S. cities to invest in a second home for 2019.