In today’s increasingly diversified global asset allocation landscape, “Which country’s real estate is the most worthwhile investment?” has become an unavoidable question for many investors. In the past, real estate was considered a sure-fire, low-risk asset; however, today, with changes in interest rates, urban migration, policy tightening or loosening, and the fluctuating rental and sales markets across different countries, property returns have become significantly more differentiated. Without prior research, it’s easy to focus only on the superficial logic of “buying a property and collecting rent,” ignoring the significant differences between countries in terms of taxes, holding costs, vacancy rates, and future population trends.
From an investment perspective, property returns primarily come from two dimensions: rental yield (cash flow) and property appreciation (capital gains). Different countries’ economic structures, exchange rate trends, legal systems, urbanization rates, and supply changes all alter the combination of these two types of returns. To achieve higher returns, the key is not to focus on which country’s yield figures are more impressive, but rather to assess whether the country you’re interested in can sustain these returns, rather than just maintaining them for one or two years.
Stable Economy vs Rapid Growth
Real estate markets in different countries can be broadly categorized into two types: stable and growth-oriented.
Stable countries (such as parts of Western Europe, Japan, and Australia) offer more stable rental returns, but slower appreciation. Their advantage lies in predictability and limited risk. Growth-oriented countries (such as parts of Southeast Asia, the Middle East, and Latin America) offer greater appreciation potential, and rental yields may be even more attractive, but they experience greater volatility and more frequent policy changes.
Choosing which offers “higher returns” depends on whether you prioritize stability or future growth. High returns often imply high volatility, while low risk usually comes with lower returns. Neither is inherently better or worse; it depends on whether it aligns with your investment goals.
Rental Yields Depend on Supply and Demand
The most crucial indicator for judging rental yield is always the supply and demand relationship.
- When urban populations continue to increase and housing supply is insufficient, rents naturally rise, and rental yields will be higher.
- If new housing supply is too rapid and construction is excessive, even if the overall national economy is strong, rental yields will be dragged down by the “supply exceeding demand.”
Therefore, countries with high rental yields typically share a common characteristic: rapid economic and population growth, or a large influx of foreign residents. Conversely, if a country’s population stagnates or even declines, no matter how much “high returns” are touted, it will be difficult to sustain in the long run.
Value Appreciation Potential Depends on Policy
Property appreciation doesn’t happen out of thin air; it often depends on the government’s attitude towards urban development, land supply, and housing policies.
- If the government restricts foreign investment in real estate, raises property taxes, or strengthens regulations, investment attractiveness decreases, and the rate of appreciation slows down.
- If the government promotes infrastructure, technology industries, or port and tourism economies, and maintains a tight land supply, then house prices are more likely to rise.
In other words, high-appreciation countries typically fall into three categories:
1) Rapidly developing economies
2) Major cities with limited supply
3) Favorable policies or easy access for foreign investment
Many investors only look at “how much house prices have risen,” ignoring that policy is the dominant force.
Tax Costs are Crucial
Property returns in many countries may seem attractive, but taxes can significantly eat up those returns.
This includes:
- Purchase tax
- Stamp duty
- Rental income tax
- Property tax
- Capital gains tax
- Foreign surcharge
High holding costs can compress net returns even with good rental yields. Countries with high taxes often appear safe and transparent, but net returns are not necessarily high; conversely, countries with low taxes tend to have a smaller gap between nominal and real returns.
Exchange rate impact cannot be ignored
In cross-border real estate investment, exchange rates may be more important than rental income. If you buy property in a country whose currency depreciates over a long period, the appreciation in property value may be completely offset by exchange rate losses; conversely, if the currency is stable or even appreciates over a long period, returns will be amplified.
Investors often overlook this, yet it is one of the most realistic and sensitive factors in global asset allocation.
Which countries offer relatively “high returns”?
In summary, countries that have tended to offer higher returns in recent years generally share the following characteristics:
- Rapid economic growth
- Large influx of foreign residents
- Tight housing supply
- Low taxes and fees
- Relatively stable currencies
- Favorable policies
Therefore, some Southeast Asian countries, some free economic zones in the Middle East, and some cities still in their expansion phase are more likely to offer a combination of “high rents + high appreciation.” However, whether this is suitable for you depends on your risk appetite and holding capacity.
Globally, no country can maintain strength in all dimensions in the long run. High returns usually mean higher risks, while stability means limited returns. When investing in overseas real estate, the most important thing is not to pursue countries with “high returns” in the eyes of others, but to find a market that matches your investment horizon, risk tolerance, capital size, and holding goals.
If you prioritize stability, security, and clear laws, developed countries may be more suitable; if you seek growth and want to increase capital gains, emerging countries may offer better opportunities; if you value cash flow, markets with high rental yields are more worth considering; if you prioritize preserving value, exchange rate stability and tight supply are more crucial. A friendly reminder to all investors: Investment involves risk, please choose carefully.
