Where are the most profitable places to buy an apartment? Payback on rental housing in 5 popular countries: analytical review and rating
In which countries is real estate now more profitable to invest in? Where is the income from renting out apartments higher, and where is it lower? These questions can be answered by determining the return on investment (ROI) in different countries. We chose 5 popular countries and analyzed their ROI, thus figuring out where the return on investment would be higher.
Recently, we wrote about which European cities are best suited for real estate investments in 2023. This data was based on an expert report called «Emerging Trends in Real Estate in 2023.» Now, we have decided to conduct our own research: we have analyzed and compared the ROI (Return on Investment) of five countries — Poland, Czech Republic, UAE, Montenegro, Turkey — and ranked them according to rental income.
ROI (Return on Investment) measures how much money or profit is received from an investment as a percentage of the value of that investment. In the case of real estate, it is the ratio of income, expressed as an average rental rate, to the average price of the apartment.
As a source of information for our material, we have chosen Numbeo, the largest database of global real estate prices.
How to calculate ROI in the real estate industry?
To calculate the ROI of an investment in real estate, you need to divide the annual rental income by the total investment you made in the property in the beginning.
Let’s say, you spent $110,000 to buy the apartment and cover the extras, and your annual rental income (after deducting spending on property taxes, water bills, etc.) was $9,600. So your ROI would be 8.7% ($9,600 ÷ $110,000).
So, let’s move on to our analysis.
Poland
Many people want to buy an apartment in Poland now, and the number of foreign buyers is increasing. In order to buy property in Poland foreigners need only a foreign passport, if it is not about the purchase of commercial premises, land, house, or house on a plot of land — in this case, you must obtain permission from the Ministry of Internal Affairs of Poland. The following data illustrates how profitable it is to invest in an apartment in Poland.
The average cost of a one-bedroom apartment (50 sq m) in the center of Polish cities is $160,000 (a «square» is about $3200); outside the center, it is $110,000 (a «square» is about $2200).
The cost of renting a one-bedroom apartment in the center of cities in Poland $550; outside the center — $450.
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So, what would be the return on investment (ROI) in Poland, or in other words, the gross rental income of the property as a percentage:
ROI (city centers): 3.51%
ROI (outside centers): 4.19%.
Top 3 cities with the highest rental income (in the center):
Łódź — (ROI — 4.36%)
Warsaw — (ROI — 3.95%)
Wrocław (ROI — 3.93%)
Top 3 cities with the highest rental income (not in the center):
Wrocław — (ROI — 4.83%)
Łódź — (ROI — 4.74%)
Warsaw — (ROI — 4.68%)
You can choose and buy property in Poland with the help of a Realting catalog.
Czech Republic
About 20% of real estate in the Czech Republic is owned by foreigners. What attracts them to this market? Firstly, a foreigner has the same rights to buy and own any real estate as Czech citizens. In addition, owning and managing their own real estate — a business, on the basis of which the Czech Republic provides a residence permit. Secondly, favorable taxation: you do not pay taxes when buying a property; if you own the property for more than 10 years, you will be exempt from income tax when selling it.
The average cost of a one-bedroom apartment (50 sq m) in the center of cities in the Czech Republic — $225,000 (a «square» costs about $4500); outside the center — $175,000 (a «square» is about $3500).
The cost of renting a one-bedroom apartment in the center of Czech cities is $650; outside the center — $500.
So, what would be the return on investment (ROI) in the Czech Republic, or in other words, the gross rental income from real estate as a percentage:
ROI (city center): 2.97%
ROI (outside centers): 2.94%
Top 3 cities with the highest rental income (in the center):
Ostrava — (ROI — 4.39%)
Olomouc — (ROI — 3.55%)
Brno — (ROI — 2.79%)
Top 3 cities with the highest rental income (not in the center):
Ostrava — (ROI — 4.44%)
Olomouc — (ROI — 3.19%)
Prague — (ROI — 2.93%)
You can choose and buy property in the Czech Republic with the help of a Realting catalog.
UAE
The demand for real estate in the UAE is still high, which, of course, provokes the growth of prices. Everyone who has money can buy an apartment in the UAE. Only thing is that it takes more time now to open accounts for Russian, Belarusian, and Ukrainian companies.
The average cost of a one-bedroom apartment (50 sq m) in the center of cities in the UAE is $110,000 (a «square» costs about $2200); outside the center — $85,000 (a «square» costs about $1700).
The cost of renting a one-bedroom apartment in the center of cities in the UAE $1500; outside the center — $900.
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So, what would be the return on investment (ROI) in the UAE, or in other words, the gross rental income of the property as a percentage:
ROI (city centers): 12.86%
ROI (outside centers): 10.77%.
Top 3 cities with the highest rental income (in the center):
Sharjah — (ROI — 50.58%)
Ajman — (ROI — 12.12%)
Abu Dhabi — (ROI — 10.19%)
Top 3 cities with the highest rental income (not in the center):
Sharjah — (ROI — 36.72%)
Ajman — (ROI — 11.38%)
Dubai — (ROI — 9.56%)
You can choose and buy a housing in the UAE with the help of a Realting catalog.
Montenegro
Foreigners can buy in Montenegro both apartments and houses, as well as plots of land. However, for Russians and Belarusians due to sanctions there are a number of restrictions on the transfer of money into the country. Besides, in Montenegro there is a program «Citizenship for investment,» but it will only work until December 31, 2022.
The average cost of a one-bedroom apartment (50 square meters) in the center of cities in Montenegro — $90,000 (a «square» costs about $1,800); outside the center — $65,000 (a «square» costs about $1,300).
The cost of renting a one-bedroom apartment in the center of cities of Montenegro — $400; outside the center — $300.
So, what would be the return on investment (ROI) in Montenegro, or, in other words, the gross rental income from the property as a percentage:
ROI (city center): 5.37%
ROI (outside centers): 5.09%.
Top 3 cities with the highest rental income (in the center):
Bijelo Polje — (ROI — 6.72%)
Niksic — (ROI — 5.93%)
Bar — (ROI — 5.22%)
Top 3 cities with the highest rental income (not in the center):
Niksic — (ROI- 7.03%)
Cetinje — (ROI — 5.95%)
Bijelo Polje — (ROI — 5.64%)
You can choose and buy property in Montenegro with the help of a Realting catalog.
Turkey
Turkey continues to attract investors from all over the world. However, there have been some recent innovations that are seriously limiting the inflow of foreign capital into the country — we wrote about that in this article. In the meantime, let’s move on to our analysis of the return on investment (ROI) in Turkey.
The average cost of a one-bedroom apartment (50 sq m) in the center of cities in Turkey is $50,000 (a «square» is worth about $1,000); outside the center — $30,000 (a «square» is worth about $600).
The cost of renting a one-bedroom apartment in the center of Turkey’s cities is $250; outside the city center it is $150.
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So, what would be the return on investment (ROI) in Turkey, or in other words, the gross rental income of the property as a percentage:
ROI (city center): 5.54%
ROI (outside centers): 5.96%.
Top 3 cities with the highest rental income (in the center):
Antalya — (ROI — 8.55%)
Ankara — (ROI — 7.56%)
Izmir — (ROI — 5.40%)
Top 3 cities with the highest rental income (not in the center):
Antalya — (ROI- 11.13%)
Ankara — (ROI — 6.93%)
Istanbul (ROI — 5.66%)
You can choose and buy property in Turkey with the help of a Realting catalog.
Let’s summarize the results of our study. Rating among the countries analyzed for the return on investment from rent (ROI):
1. UAE
2. Turkey
3. Montenegro
4. Poland
5. Czech Republic
Author
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