20 Best Countries to Invest in Real Estate in 2021

Published on July 1, 2021 at 10:01 am by Jose Karlo Mari Tottoc in Lists, News

In this article we will take a look at the 20 best countries to invest in real estate in 2021. You can skip our detailed analysis of the real estate industry’s outlook for 2021, and go directly to 5 Best Countries to Invest in Real Estate in 2021.

Real estate business happens to be one of the oldest and most lucrative businesses in the world. Prior to globalization, people invested in real estate in their own localities but as the world has become more globalized and connected, real estate investors effectively have access to nearly the entire world for investment.

The United States claims the number 3 spot for most received Foreign Direct Investment (FDI) with the share of real estate investment being 10% of total foreign investment in the US back in 2019 according to the latest report released by US Bureau of Economic Analysis with most properties bought in Florida. However, it’s a historical fact that developed economies like the US are largely already urbanized and have slower GDP growth rates and while an investment in real estate is likely to give returns in these countries due to predictability and stability, those gains are usually marginal. This brings us to promising emerging economies like China, whose GDP growth rate was appreciated by the World Bank which noted that it had the “fastest sustained expansion”. The country also has a huge population and workforce, and rising urbanization and annual income. Emerging economies are lucrative for real estate but the predictability factor isn’t as refined as in the developed economies.

Investment in real estate at a global level has also never been easier before. Many companies like Brookfield Asset Management Inc (NYSE: BAM), American Tower Corp (NYSE: AMT), Prologis Inc (NYSE: PLD), AvalonBay Communities (NYSE: AVB), Digital Realty Trust, Inc. (NYSE: DLR), D R Horton Inc (NYSE: DHI) and Simon Property Group Inc (NYSE: SPG) are involved in providing services related to real estate investment. There are many secondary indicators in countries that are attractive for real estate investment, but the key indicators include social and political environment’s stability, legal framework, level of economic activity, degree and nature of government regulations, robustness of its capital market and lastly, the level of real estate investment opportunities. However, these indicators are not quantifiable and this is where the secondary indicators come in, which can be viewed as subsets for the primary indicators. Any country with healthy indicators is a good place to invest your capital in. However, you may only find a very few countries that meet all the criteria.

20 Best Countries to Invest in Real Estate in 2021

Photo by Ronnie George on Unsplash

Our Methodology

For our list, we are going with average annual growth rate in real estate as the key metric for countries while considering other metrics as important peripherals. We used housing growth data from macroeconomic data platform CEIC.

With this context and industry outlook in mind, let’s start our list of the 20 best countries to invest in real estate in 2021.

Best Countries to Invest in Real Estate in 2021

20. Poland

Poland is an Eastern European country. The country has an average housing prices growth rate of 2.3% based on data from the year 2007 to 2021. Poland is an emerging market with a lot of potential for growth. The rule of law in the country is improving. foreign investment has also been increasing with a 26% increase from the previous decade. All these factors come together to make Poland an attractive market for real estate profits. The country ranks 20th in our list of the best countries to invest in real estate in 2021.

19. Germany

At number 19 is Germany with a GDP per capita of $45,733 in the year 2020. High GDP per capita is often correlated with increased real estate value. The country saw an 8.1% increase in real estate value in 2020-21 compared to the previous fiscal year. The historical long term growth rate is also pretty stable at 2.5%.

Overall, the German real estate market is stable due to reasonable policies, legal frameworks and rule of law. The European Systemic Risk Board predicts soaring real estate value in the coming years. Much of it has to do with low interest real estate rates in the country which drive the demand up.

18. Denmark

Denmark makes it at the number 18 with a 11.7% increase in house price rates in 2021 compared to the previous fiscal year. The 13 year average for real estate value increase for Denmark stands at 2.8%. As of 2021, there’s no interest on loans for real estate in the country which is what has likely driven the demand higher for housing. The country is also politically and financially stable with robust legal and political institutions.

As the economy begins to recover all over the world, real estate stocks like Brookfield Asset Management Inc (NYSE: BAM), American Tower Corp (NYSE: AMT), AvalonBay Communities (NYSE: AVB), Digital Realty Trust, Inc. (NYSE: DLR), Prologis Inc (NYSE: PLD), D R Horton Inc (NYSE: DHI) and Simon Property Group Inc (NYSE: SPG) are back into the limelight.

17. Russia

Russia has an average real estate growth rate of 4.4% based on 15 years of data. The country is an emerging economy with huge potential for growth. There are also less bureaucratic hurdles because of friendly real estate legislation in terms of investing in real estate from outside the country. The country ranks 17th in our list of the best countries to invest in real estate in 2021.

16. United Kingdom

The United Kingdom grabs a spot among our list for being one of the hottest markets for real estate. The UK has an average real estate growth rate of 4.4% calculated from data available from the year 1992 to 2021. The Bank of England has set the base rate at 0.1% for mortgages around the country which is pretty low. Low mortgages combined with a high annual income and strong legal, political and financial institutions are promising for real estate investment in the country. The country ranks 16th in our list of the best countries to invest in real estate in 2021.

15. Canada

Canada is one of the advanced economies that presents great real estate investment opportunities. Significant land in the country is available for very cheap prices. Towns like Mundare, Alberta and Pipestone, Manitoba have commercial lands and plots selling for not more than $10. However, conditions include building up a property on land, usually within one year of the land purchase.

The rationale is to induce development and growth in different remote towns in the country. The average growth rate for house prices in the country is at 1.8% but given that most land sells for pennies, it’s a bargain. The country also has robust legal and political institutions and a high annual household income. The country ranks 15th in our list of the best countries to invest in real estate in 2021.

14. Austria

Austria is another lucrative market for real estate. The country has an average house price growth rate of 4.2% based on data from 1987 to 2021. The average mortgage rate in the country fell to 1.28%. Austria is a high income country with very strong socio political and legal institutions, ensuring a smooth functioning market and society. The country ranks 14th in our list of the best countries to invest in real estate in 2021.

13. Slovakia

Another Eastern European nation to make it to the list is Slovakia. The country has an average annual real estate growth rate of 4.8% based on 17 years of data including the year 2021. It’s an emerging economy with a lot of prospects for growth in virtually all sectors. The country is also gaining ground on strengthening its legal and political institutions for a smooth economic growth.

12. Netherlands

The Netherlands is another great country to invest in real estate. The country’s average house prices growth rate stands at 4.6% based on data from the year 1996 to 2021. The Netherlands’ legal, social and political institutions are also very strong and market friendly.

Mortgage rates in the country are low which means higher demand in the real estate industry which translates to higher returns on investment in this sector. The country ranks 12th in our list of the best countries to invest in real estate in 2021.

11. Australia

Australia is another lucrative free market with a high GDP per capita of $52,158 for 2020. The country has sustained a healthy yearly average of 5% increase in real estate value from the year 2004 to 2021.

As far as the demand for housing is concerned, Australia’s mortgage rate is slightly below average at 3.93% but high GDP per capita makes up for more than that to drive the demand for real estate high. The country’s strong legal and political institutions also ensure that the market is stable and predictable. The country ranks 11th in our list of the best countries to invest in real estate in 2021.

10. Luxembourg

Luxembourg is an European country characterized mostly by its rural life and nature parks. The country has an average annual real estate growth rate of 5.2% based on data from 2008 to 2020. The country has decent legal, political and social institutions to discourage market volatility. The country ranks 10th in our list of the best countries to invest in real estate in 2021.

9. Lithuania

Lithuania is a country located in Europe’s Baltic region. It is a very healthy emerging economy with promising prospects for financial investment in the country.

Data from 2007 to 2021 puts Lithuania’s increase in real estate value at 5.6%. The country has an average mortgage rate of 3% which is less than impressive but its GDP per Capita is growing at an average annual rate of 10.43% which should make up for the unimpressive mortgage rates to drive real estate demand.

8. New Zealand

New Zealand is a small country neighboring Australia. The country has an average annual real estate of growth rate that stands at 5.8%. The country is an advanced economy with very strong social, legal, financial and political institutions to encourage market stability. The country ranks 8th in our list of the best countries to invest in real estate in 2021.

7. Peru

Peru is a country located in South America. The country is a very healthy emerging economy which was categorized as an upper middle income economy by the World Bank. Based on data from 12 years up till 2020, Peru has an average real estate growth rate of 9.6%.

Although the average mortgage rate in the country is incredibly high, at 10.8%, there are a lot of other factors that make up for a healthy average growth rate that is mentioned above, including a high average annual income of around $45000 and affordable cost of living. Peru is also making headways in strengthening rule of law and reinforcing institutions.

6. United States

The US is one of the world’s most lucrative markets for investment in a lot of different sectors. A lot of the world’s capital is invested in the US. As mentioned earlier, the country is positioned 3rd for the most received foreign direct investment in the world. One of the reasons has to do with the fact that the US is a country with one of the most market and tax friendly institutions in the world.

Based on data from 1992 to 2021, the average growth rate in the US for house prices stands at 5.3%. Mortgage rates in the US are not very high or very low. Unlike most other western nations, the US has one of the biggest populations in the world with immigration policies ensuring a sustained rate despite low fertility prevailing in the developed world.

A huge population combined with tremendous economic activity, immigration, GDP growth and innovation, almost all sectors in the country are likely to grow, including especially, the real estate. The country also has one of the strongest social, political, financial and legal frameworks in the world ensuring a smooth pace for economic activity.

As the economy begins to recover in the US, real estate stocks like Brookfield Asset Management Inc (NYSE: BAM), American Tower Corp (NYSE: AMT), Prologis Inc (NYSE: PLD), AvalonBay Communities (NYSE: AVB), Digital Realty Trust, Inc. (NYSE: DLR), D R Horton Inc (NYSE: DHI) and Simon Property Group Inc (NYSE: SPG) are back into the limelight.

Click to continue reading and see the 5 Best Countries to Invest in Real Estate in 2021.