Establishing whether or a not a country’s residential property market is a good investment is no mean feat, and deciding on investability should be based on a variety of factors determining the performance of investment markets over the next five years or more.
In Savills World Residential Investablility Ranking, investability is measured on the prospect for solid income returns and high capital growth.
The four primary factors we have looked at are:
Projected population growth to indicate underlying occupier demand.
Projected GDP growth to determine the scope for rental growth, which should in turn impact purchasing power.
Wealth growth to also determine the scope for capital growth, though this is tempered by levels of supply, with high supply limiting growth.
The position of prices relative to their long-term cycle to indicate how much growth is likely in the short to medium term.
We have combined each of these indicators and forecasts to create our ranking which puts the USA at number one for residential investability over the mid term, followed by United Arab Emirates.
Emerging and recently emerged markets such as United Arab Emirates and Singapore are likely to see faster rises when they do grow in comparison with established markets such as the USA or UK, but they are also likely to see more volatility.
We expect quieter levels of capital growth across the globe over the next five years in comparison with the last five. The obvious exceptions to this are the markets yet to recover, which is why the USA tops the table and Europe also features higher up despite weak population and GDP growth.
Local considerations should also be accounted for. There is a world of difference within the USA between top tech cities and languishing rustbelt ones. San Francisco ranks highly as one of the very best residential markets.