Which cities offered the biggest real estate investment returns last year?

Angus Kidman 16 June 2016


You'd be doing impressively well if you invested in Gothenburg.

For many Australians, merely getting the first foot on the property ladder is a challenge. But if you could invest money in property anywhere in the world, where would you see the fastest return?

One imperfect but interesting indicator of that is how quickly property prices have risen. The Knight Frank Global Residential Cities Index tracks the changes in property values over a 12-month period. These are the top 20 cities on its list for 2015:

Yes, that's Sydney depressing Aussie first home buyers everywhere in fourth place, with an eye-watering 19.9% growth over the year. It's even worse over the water, with Auckland coming in second place at 25.4%.

The two stand-out countries on the list are China and Turkey, each with three entries in the top 20. While there are some expected high-cost cities (London, San Francisco), there are some I suspect most of us wouldn't think of (Ljubljana, Durban).

The unfortunate reality is that just because an investment is profitable doesn't mean it's accessible. As an Australian, the costs involved in investing offshore would trim profitability in these locations, even assuming that the local market welcomes outside investors. There's also the relative cost of entry to consider: values might be rising, but if you need several million dollars just to get started, you may well do better elsewhere.

The news isn't all bad. Housing affordability is at its best level in years right now. And this top 20 is an anomaly. Of the 165 cities Knight Frank tracks, 121 either saw pricing stay stable or actually drop in 2015. As an investment, it remains a long-term play (unless you have very good connections in Shenzen).

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on finder.com.au.

Picture: Shutterstock

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