Searching for a breakthrough: what EU country to choose for real estate investment & gain maximum profit?

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As reported by Knight Frank, property is the second most popular investment (56%) among high net worth individuals when stacked up against assets such as cash, gold, and bonds.

Commercial real estate remained a favoured asset class for global investors during 2017, with transaction volumes robust at US$840 billion and above-average returns recorded across many sectors and markets. The demand for property keeps on growing each year. It is associated with aiming to receive income in a stable currency and to develop business in the international arena. No less important is a possibility to obtain a residence permit/permanent residency/citizenship in the EU for investment in real estate.

In our today’s story, we will give all the details about obtaining a residence permit/permanent residency/citizenship in the EU and provide the highlights on the current situation in the EU real property market.

Obtaining residence permit of Monaco by purchasing real property

 

Conditions of participation in the government program

Under the conditions of the program, any type of accommodation may be purchased or rent. There are no restrictions on the cost, type, location of a real property item. Selected property should be appropriate to the number of people residing there. For example, in case of an investor living with his/her spouse, one-bedroom apartments would be sufficient; in case of a family of four – the apartments with two or three bedrooms will be enough. To be able to obtain a residence permit, the investor is also required to confirm the income of € 2 million.

 

The current situation in the real estate market

Demand for real estate in Monaco is growing. Annually more than 550 real estate sale and purchase transactions are being closed in the country. The imbalance between buyers’ demand and supply results in a rise in prices.

SINCE 2006, REAL ESTATE PRICES IN MONACO HAVE GROWN BY 165%. THE MOST POPULAR AREAS ARE MONTE CARLO AND FONTVIEILLE.

In Monte Carlo’s Golden Square the prices reach the level of € 100,000 per square meter.

The lack of space for the construction of new facilities is planned to be solved by expanding the area of the country. A new offshore extension project is in progress. The country’s area is planned to be increased by almost 60,000 square meters. The new platform, Portier, is planned to include residential and commercial properties, underground parking and a marina.

 

Searching for a breakthrough: what EU country to choose for real estate investment & gain maximum profit? | Migronis

According to the Savills research, Monaco’s residential property is the most expensive in the world.

Residence Permit in France for financially independent people

 

Conditions of participation in the government program

The status of a temporary resident is granted to a foreign investor in case of purchase/rental of real estate in France. There are no requirements for the cost, type and location of a real property item. In addition to the confirmation of the fact of purchase/rental of real estate, the investor must confirm his official income calculated at the rate of € 1300 per month per each applicant.

 

The current situation in the real estate market

According to official statistics provided by Notaires de France, during the period from May 2016 to May 2017, more than 900 thousand real estate sale and purchase transactions were closed. In total, 14,440 new apartments were sold in France in 2017.

The real estate market recovered quickly after the crisis. Analysts predict a further rise in prices.

IN 2017, THE OVERALL COUNTRY’S INCREASE IN THE PRICES FOR APARTMENTS AMOUNTED TO 4.2%, FOR VILLAS – 2.9%. THE NUMBER OF CLOSED TRANSACTIONS HAS GROWN BY 17%.

The most expensive real property items are in the first and second lines of the Côte d’Azur. Prices start from € 1.5-2 million and reach hundreds of millions. The most popular areas are Nice, Cannes, Villefranche. The prices in Paris are steadily growing (up to € 30,000 per square meter). The average cost per square meter of premium class housing varies from € 12,000 to € 18,000.

Housing prices in the French capital are regulated at the legislative level. The monthly rent is € 700-1000. Housing on the Cote d’Azur costs from several thousand to several tens of thousands of Euros per month.

 

Searching for a breakthrough: what EU country to choose for real estate investment & gain maximum profit? | Migronis

France offers an interesting selection of objects for renovation, including ancient castles, farms or vineyards.

Portugal Golden Visa

 

Conditions of participation in the government program

The program offers two options for investment in real property:

  • € 500,000 in any selected real property item;
  • € 350,000 in real property that was built more than 30 years ago and needs reconstruction.

 

Applicants may choose either residential or commercial real estate. They may purchase several items whose total cost meets the requirements of the program. The minimum retention period is 5 years.

 

Statistics

The program is in operation since 2012. In total 5412 investors obtained the “Golden Visa”. 5105 program participants got a residence permit by purchasing real estate, 299 preferred an option of investing in securities, 8 people invested in business.

It is not only commercial real estate that is selected by investors. 40% of foreign capital was invested in retail, 30% in logistics, 24% in office premises. The main reason is profitability. Offices bring about 7.5% percent per annum, 6.5% is a figure for logistics complexes, and street retail objects bring 4.5%.

 

The current situation in the real estate market

According to the official report prepared jointly by RICS and Confidencial Imobiliário, consumer demand is growing while supply is decreasing in Portugal. Apart from this factor, the rise in prices is caused by an improvement of the country’s economic situation, a decrease in the level of unemployment. 80% of deals are concluded with foreign buyers. Buying activity index in 2017 has grown one and a half times. The total volume of investments was € 1.9 billion. Analysts forecast an increase to € 2.5-3 billion in 2018.

REPRESENTATIVES OF CONFIDENCIAL IMOBILIARIO SHARE THE VIEW THAT DURING 2018 HOUSE PRICES WILL INCREASE BY 3% PER YEAR AND IN THE NEXT 5 YEARS THE INCREASE WILL AMOUNT TO 6 %.

The most expensive real property items are concentrated in the capital region and in the Algarve resort (the minimum cost threshold is € 1,500 per square meter). Another one in the top three of price leaders is Madeira island, where one square meter costs € 1205. Monthly rent of one bedroom apartment in the central part of the capital will cost around € 500, and in resort towns its cost is twice as high, being € 1000.

 

Searching for a breakthrough: what EU country to choose for real estate investment & gain maximum profit? | Migronis

The capital of Portugal holds the 25th position in the ranking of the most comfortable cities in the world.

 

Residence permit for investment in Greece

 

Conditions of participation in the government program

To apply for a Greece Golden Visa one should own a real estate worth from € 250,000 in the territory of the peninsula. There are no requirements to the type of real estate (it may be either residential or commercial property, primary or secondary market). Housing must be purchased by a foreign investor. The status of the temporary resident is valid until the investor owns the property. Selling real estate without losing the status is possible only in case if the investor acquires another object with a minimum cost of € 250,000.

 

Statistics

The program has been in operation since 2014. The total number of golden visas that have been issued is more than 5,000. In 2016, the residence permit for investment was granted to 1,522 foreigners, in 2017 their number was 2,170. The prevailing majority of the program participants are the Chinese citizens (945 people), Russians (387) and Turks (191).

FOR THE TIME OF RUNNING THE PROGRAM THE VOLUME OF INVESTMENTS ATTRACTED TO THE COUNTRY’S ECONOMY IS MORE THAN € 1 BILLION.

 

The current situation in the real estate market

The real estate market in Greece has not fully recovered after the economic crisis. Although housing is becoming cheaper, analysts are pointing to the changing trend: in 2017, the housing prices have decreased only by 1% per square meter compared to the same period of the previous year. This is the best result for 10 years. From January to March 2017, the apartments depreciated by 1.9%, and in October-December by only 0.3%. It is likely that in 2018 there will be a rise in prices for residential and commercial real property.

According to Kapa Research, previously investors preferred buying residential property in big cities such as Athens, Thessaloniki. Now they are looking to tourist areas. The country has plenty of attractive real property: whether apartments worth over € 50,000, or luxury villas on the coast worth over € 1 million.

According to the World Travel and Tourism Council, the flow of tourists from abroad to Greece increased from 14.9 million in 2009 to 24.8 million in 2016.

 

Searching for a breakthrough: what EU country to choose for real estate investment & gain maximum profit? | Migronis

Greece holds 29th position in the ranking of “Best Countries 2017”.

Permanent Residency and Citizenship by Investment in Cyprus

 

Conditions of participation in government programs

In Cyprus, there are two investment programs offered for the investors. You may obtain either permanent residency or citizenship in exchange for investment.

In order to qualify for permanent resident status, an investor needs to purchase a new property worth at least € 300,000 and also open a deposit account in a Cypriot bank in the amount of € 30,000. It is possible to invest in two items with a minimum total cost of 300,000:

  • two residential property items (apartments or a house);
  • residential property and a store (warehouse) with an area of up to 100 square meters;
  • residential property and office space with an area of ​​up to 250 square meters.

 

To obtain the citizenship of Cyprus, it is required to purchase a residential or commercial property worth € 2 million. A purchase of either a finished object or a construction plot is acceptable. Furthermore, you can collect a portfolio consisting of different objects. The retention period is 3 years. The property must be purchased not earlier than 3 years before the moment of submitting the case for a second passport.

 

Statistics

During four years while the citizenship by investment program is in operation, over 2,000 passports have been issued for investments. The attracted investments amounted to 4.4 billion US dollars (data as of May 2017).

 

The current situation in the real estate market

In January 2018, 64% more sale and purchase contracts were entered in the Land Registry of Cyprus than for the same period in 2017. The trend towards the growth of buying activity was outlined yet in 2017. In September, the number of closed contracts increased by 8%, in October it increased by 18%, and in November – by 39%. In January 2018, 695 real estate sales were made.

The largest number of contracts were closed in the city of Famagusta, where the increase made up 129% on an annualized basis. Equally popular are Nicosia (+ 103%), Paphos (+ 71%), Limassol (+ 70%). One-third of the total number of contracts were concluded with the participation of foreign buyers.

SUBSTANTIALLY, IN CYPRUS REAL ESTATE PRICES HAVE GROWN BY 1.5%, IN LIMASSOL THEY INCREASED BY 3.8%.

This growth is caused by the rush that occurred recently with regard to the Cyprus real property. Demand is much higher than supply. With 18,000 new real estate items built in 2008 on the island, in 2015 their number is only 2,390.

The cost of modest apartments in Famagusta starts from € 400,000; the cost of villas depending on the coastline varies from 200,000 to several million Euros. A small apartment in Limassol will cost € 300,000-500,000, and a luxury villa will cost more than € 1 million. There is more affordable housing in Nicosia. The minimum cost of an apartment here varies between € 100,000-200,000, and villas cost € 500,000-700,000.

 

Searching for a breakthrough: what EU country to choose for real estate investment & gain maximum profit? | Migronis

Real property purchased in Cyprus may be inherited without paying taxes.

Permanent Residency and Citizenship of Malta

 

Conditions of participation in the government program

In Malta, as well as in Cyprus, it is possible to obtain both permanent residence and citizenship for investment. In order to obtain a resident card, it is required to invest € 250,000 in government bonds and buy or rent housing. The minimum cost of real property should be € 270,000. The rent will cost from € 10,000 per year. The minimum retention period is 5 years.

In case of applying for citizenship, the investor has to make a non-refundable contribution to the national development fund (at least € 650,000), invest in government bonds (€ 150,000), and buy (for at least € 350,000) or rent real property (for at least € 16,000 per year). Leasing or subleasing out a property item is not allowed. The minimum retention period is 5 years.

 

Statistics

Official statistics shows that from July 1, 2016, to June 30, 2017, 386 foreign investors received passports. 88% of the applicants preferred to rent property, and the remaining 12% purchased housing.

Over the last three years, more than 700 Russians have acquired the citizenship of Malta, including the persons named on the Forbes list.

 

The current situation in the real estate market

ACCORDING TO KNIGHT FRANK’S RANKING, IN 2017, MALTA HAS TAKEN THIRD PLACE AMONG 10 COUNTRIES WHERE THE GROWTH OF HOUSE PRICES IS THE QUICKEST.

Over a year, the prices for apartments in the country increased by 15.86%, prices of terrace houses grew by 13.33%, maisonettes – by 20.42%. Villas became more expensive almost by 2%.

The most popular regions are Bugibba, Gozo, Mellieha, Sliema, Qawra. Today a per square meter price of residential property on the island varies from € 1.8 to € 3,000. The cost of prestigious apartments in elite residential complexes starts from € 550,000 and can reach € 10 million. The average cost of villas in Malta is € 1.7-2.3 million.

 

Searching for a breakthrough: what EU country to choose for real estate investment & gain maximum profit? | Migronis

The rental yield in Malta is averagely quite high and makes 5-10% per annum.

Spain Golden Visa program

 

Conditions of participation in government program

Residence permit may be obtained by purchasing real estate worth at least € 500,000. The minimum retention period is 5 years. It is required that real property is purchased solely for an applicant’s own resources, without resorting to mortgages. One can choose from residential and commercial real estate items. Purchasing several property items is allowed; in this case, their total value should be more than € 500,000. The purchased real estate is allowed to be leased. An option of investing in real estate was chosen by 72% of the program participants (other options include opening a bank deposit, purchase of government bonds).

 

The current situation in the real estate market

In 2017, Spain topped the list of countries in which foreigners most often purchased real estate. Spanish housing is getting more and more expensive for 14 consecutive quarters. According to Servihabitat, an average rise in price for the Spanish property reached 4.5% in both 2016 and 2017. The most attractive figures are in Madrid and Barcelona. In the third quarter of 2017, the increase was 6.7% in the annual quantities.

ACCORDING TO THE FORECASTS OF MOODY’S THE GROWTH OF PRICES FOR THE SPANISH PROPERTY WILL MAKE 4.7% IN 2018.

In January 2018, residential property sales in Spain increased by 24% compared to the same period last year, as reported by Spanish Property Insight.

According to Estate Spain, a Spanish real estate agency, it is expected that more than 530,000 Spanish real property items will be sold in 2018. Today, the average per square meter price is € 1585.

 

Searching for a breakthrough: what EU country to choose for real estate investment & gain maximum profit? | Migronis

In 2017, Spain topped the list of countries where foreigners most often purchased real estate.

Resume

Acquisition of real estate in the EU is an opportunity to prepare a “reserve airfield” outside the home country and get a residence permit/permanent residency/citizenship with all the ensuing benefits. They include visa-free travel within the Schengen area, possibility to keep one’s capital in reputable banks, have an access to high-quality medicine and education, enjoy high living standards.

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