According to a recent analysis from worldwide real estate advisor Savills titled Spotlight on Prime Residential Retreats, while many property markets around the world have been recovering over the last five years, getaway cities are set to deliver the best growth in the next five years. properties
The Mediterranean, the Alps, South Africa, and the Caribbean, which are heavily invested and sought after hot destinations, were hard struck by the global economic slump, but 2013 marked a turning point, with revived enthusiasm for leisure property acquisitions. According to Savills, many residential getaways will experience price rise of up to 10% in some cases in 2014, with some reverting to previous heights by 2019. High-quality, low-supply prime destinations in the Balearics, Tuscany, and the Caribbean will lead the recovery.
This recovery is being fueled by three primary factors. Buyers are actively exploring for alternate real estate markets to invest in as many key city markets become more fully priced. The obvious choice is prime second houses in the most desirable locales.
Investment is returning as the market becomes more liquid. Because European interest rates are low, foreign property loans are more affordable (although lending requirements are more stringent than the pre-crunch era). In less developed markets, equity remains the primary source of funding.
Finally, certain jurisdictions, such as Portugal, Cyprus, and Antigua and Barbuda, are giving 'golden visas' to real estate buyers who spend more than a particular amount on a property. The demand for resorts and retreat properties is skyrocketing as a result of this.
"There are clear evidence that the rebound that began in big metropolitan capitals in 2009 is now rolling out to the countryside and boltholes frequented by equity wealthy homeowners during weekends and vacations," says Yolande Barnes, director of Savills World Research.
The French Riviera continues to be the most prestigious and sought-after area for second homes, with transaction volumes beginning to recover from a low foundation. Due to a scarcity of supply and high demand from purchasers all around the world, the long-term forecast for pricing in this region is good.
The British buyer has begun to return to more remote regions such as Valbonne and Mougins, with Russian and Middle Eastern purchasers indicating high desire for rental properties. Inland, Provence attracts buyers from all across Europe, especially the United Kingdom. In the South West, however, the market for remodeling projects has all but vanished.
As business enterprises, the Chinese have been prominent investors in Bordeaux grapes, with some early involvement in hotels. Savills World Research associate director Paul Tostevin adds: "Both of these developments coincide with the rise of Chinese tourism in France. If these purchasers embraced ski resorts and sunbelt locations in the same way that Americans and Europeans do, the market's potential for growth would be enormous."
After a long period of recession, there are hints that the second home market is improving. Prices for good quality second homes have dropped by a quarter to a third from their 2007 peak, indicating that there are still some nice deals to be grabbed.
The Chinese have been a big supporter of Portugal's golden visa scheme, accounting for 78 percent of the 318 visas given in 2013. British purchasers accounted for 57 percent of all purchases in Quinta do Lago in 2013. With a rise of smaller townhouses and apartments, properties at the high end of the market remain in demand.
Ibiza has been the standout performer in Spain, with prices for the top villas in the best locations returning to pre-peak levels. Although Scandinavians are particularly active in neighboring Mallorca, where supply is larger, markets have remained restricted.
British, Russian, and French customers in Sotogrande, on the mainland of Spain, are benefiting from steep discounts of 30-40% off peak prices. While some buyers are taking advantage of cheap loan rates, the bulk of buyers have plenty of equity. Due of the enormous supply, sales are still slow.
Despite avoiding the glut that plagued Spain and Portugal, Italy's residential market has struggled. The domestic market has been quiet, and mortgages are scarce, particularly for international purchasers, therefore cash buyers have dominated.
Some second home destinations, like as Venice, Lake Como, and Tuscany, have escaped major price drops and continue to draw high-end international purchasers.
Venice real estate is still in high demand, with buyers opting to live in the home as well as rent it out. Rentals are supported by strong visitor demand, and yields of 5% are possible. Tuscany, to the south, has seen price drops of 15-30% from their previous highs. Due to some high-profile vineyard transactions to Russian purchasers, the more expensive Chianti region has witnessed some market movement.