If you're considering combining the adventure of living or retiring overseas with a property purchase, 2017 is the year to act. The U.S. dollar is at record highs against several currencies of note, including the euro, the Mexican peso, the Colombian peso, the Dominican peso and the Brazilian real. If owning a place of your own overseas is part of your retirement agenda, here are some top markets to consider:
1. Algarve, Portugal. Property along this coast is one of Europe's greatest bargains, and prices are discounted further for buyers with U.S. dollars to spend. Values have moved steadily up over the past two years, and rental yields are strong. Property in the Algarve is likely to hold its value over the long term thanks to restrictions on coastal construction. The average cost per square meter in the Algarve is 1,287 euros per square meter. At today's current exchange rate that computes to $1,346 per square meter, a 25 percent currency discount from 2014 prices in U.S. dollars.
2. Lisbon, Portugal. Lisbon has a lot to offer visitors, but hasn't historically been a major tourist destination compared with other European capitals. This is changing. In 2015 Lisbon saw more than 3 million tourists. Compared with other West European capitals, including Paris, London, Madrid, Dublin and Rome, Lisbon offers generally better weather, better property prices and a lower cost of living. The opportunities for real estate investment in central Lisbon are varied and compelling. This is a big area made up of many distinct neighborhoods, each with its own look, feel and character. Many spots are interesting as locations for living and also for a short-term tourist rental or a long-term rental for the local market.
Your budget can help fine tune your search. Per-square-meter prices in Lisbon range from a low of 2,000 euros ($2,080) to as much as 7,000 euros ($7,280). This means a 50-square-meter apartment in one of the lowest-cost neighborhoods can sell for 75,000 euros ($78,000), whereas the same size apartment in Chiado, for example, would cost more than four times as much.
As in the Algarve, given the current strength of the U.S. dollar against the euro, dollar holders can capitalize on a 25 percent currency discount from 2014 prices. Some areas of Lisbon have seen appreciation of as much as 20 percent in the last year. For great value, focus on areas outside the "best" neighborhoods.
3. Cali, Colombia. Property values is Cali are a global bargain. This is one of the fastest-growing tourist markets in Colombia and rental demand is expanding, as is the city's middle class. The U.S. dollar is at a record high against the Colombian peso, making this undervalued market irresistible. In the prime areas of Cali (stratas 5 and 6) the price per square meter ranges from 1.5 million to 5 million Colombian pesos ($502 to $1,670), depending on the age of the property. Typically, the older the property, the better the bargain. Prices per square meter for newer units (less than 10 years old) range from 2.5 million pesos to 3.5 million pesos ($836 to $1,170). New upscale luxury projects are selling for 3.5 million to 5 million pesos ($1,170 to $1,673) per square meter.
4. Las Terrenas, Dominican Republic. The Dominican Republic is interesting in 2017 for many reasons, including the cost of its Caribbean real estate. It's a bargain compared with the rest of the region. Las Terrenas is accessible and numbers of both international and domestic tourists are growing, meaning expanding rental demand. Depending on proximity to the water, prices range from as little as $1,000 per square meter to a high of $2,500 per square meter right on the beach. This translates to as little as $100,000 for a one-bedroom apartment.
5. Playa del Carmen, Mexico. This is another market interesting for its strong and growing rental demand thanks to greater numbers of both foreign and domestic tourists. Property prices aren't cheap, but yields are strong. Average occupancy rates are above the regional average. Real estate is traded in U.S. dollars, but your carrying expenses would be in pesos. This offers a nice edge, as the Mexican peso is another currency at an all-time low against the U.S. dollar.
Playa is the fastest-growing city in Latin America and enjoys an active resale market, an important advantage if and when you decide to resell. The average price per square meter in Playa del Carmen is over $3,000 for properties located the closest to the main drag (5th Avenue) and the beach. It's possible to find units for just under $2,000 per square meter farther away from the beach.
6. Ceara, Brazil. This region of Brazil is a top tourist draw. It sees 60 million domestic tourists annually, and the number of international visitors is increasing. The region has been targeted for government investment in improved infrastructure, including the expansion of the state highway and a new international airport. Like other markets on this list, this one is made more attractive by a weak currency.
If you like the idea of a second home in the sun that doubles as a cash-flow investment, consider Fortaleza and Aquiraz. The average price for beachfront apartments in these areas is a little over 7,042 reais per square meter ($2,140). If you're shopping with a longer investment horizon in mind, consider beachfront property in Retirinho, which is undervalued and likely to enjoy nice capital appreciation.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group.
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