Buy-To-Let Beyond Borders: Exploring Europe's Top Investment Destinations

Investing in European property has long been an attractive prospect for many, and with the Euro dropping in value due to the Ukrainian conflict, Europe's housing market has become even more affordable for international investors.

However, it's important to note that property prices in Europe's major cities, such as Paris and Geneva, continue to command a high premium. For those looking to invest, it may be worth considering emerging markets, which can offer better returns.

For example, in the southern Spanish region of Andalusia, buyers will pay less purchase tax and stamp duty on properties bought before the end of 2021. Similarly, in Malta, stamp duty has been reduced from 5% to 1.5% until the end of the year.

Other locations with strong potential include Berlin, Lisbon, Dublin, Rotterdam, and Zagreb, which have all experienced high levels of growth.

When considering where to invest, it's essential to evaluate factors such as economic growth, political stability, legal frameworks, infrastructure development, and market dynamics.

Berlin, Germany

• Safe Investment: Germany never experienced the property boom like the USA and UK, making German property, especially in Berlin, a safe haven for investors.
• Affordable Property: Compared to other major European capitals like London and Paris, property in Berlin is more affordable.
• Internationalisation: The continued internationalisation of Berlin, along with the relocation of Germany's government back to Berlin in the early '90s, has led to an increase in property values.
• Strong Rental Market: Berlin has a robust rental market with reliable tenants, offering potential for income generation.
• No Capital Gains Tax: There is no capital gains tax on German property sales after 10 years of ownership.
• Good Rental Yields: Berlin offers safe rental yields of around 4% to 6%.
• Low Mortgage Rates: Euro mortgage rates are low, at 3%-5%, with lending of up to 60% of the property value available to non-German taxpayers.
• Rising Property Prices: Property prices in Berlin have been steadily rising, reflecting Germany's economic growth.
• Increasing Demand: With only 14% of Berliners owning property, there is a trend towards more ownership, pushing demand and prices higher.
• Safe Haven for Investors: Due to global financial instability, investors are increasingly viewing German property as a safe and profitable option.

Paris, France

One of the most profitable areas to invest in Paris is the 1st arrondissement, which is home to iconic tourist sites such as the Tuileries Gardens and Place Vendôme. Properties here generally provide a good source of rental income due to stable prices and high demand.

Another desirable area is the 7th arrondissement, located in the heart of Paris and close to major attractions such as the Eiffel Tower, the River Seine, and the Champs de Mars. This upscale neighbourhood is known for its gourmet restaurants and markets, allowing investors to charge a premium for rentals.

For those seeking a more authentic Parisian experience, Montmartre in the 18th arrondissement is full of quaint streets, bistros, and artistic history. This charming neighbourhood is ideal for renting to visitors looking for a romantic getaway or an immersive cultural experience.

Paris also offers excellent investment opportunities in luxury real estate, particularly in emerging neighbourhoods like the 9th arrondissement, which provides a preserved village life with independent shops and small bistros.

When investing in Paris, it is important to define your budget, considering factors such as deposit, mortgage, solicitor and notary fees, agency fees, and property taxes. Additionally, be mindful of the legalities and rent control system in Paris, which may impact your rental income.

Overall, with its diverse range of neighbourhoods and strong demand for rentals, Paris, France, presents a compelling opportunity for those looking to invest in buy-to-let properties.

Lisbon, Portugal

• High Rental Demand and Returns: Lisbon has a high demand for rental properties, especially in tourist hotspots like Baixa and Avenida da Liberdade. This demand has led to strong rental yields, with Lisbon offering some of Europe's highest Airbnb short-term yields.
• Affordable Investment Option: Compared to other European cities, Lisbon offers more affordable property investment options. The average price per square meter in the city centre is €4,703.87 - 10,000, which is lower than cities like Barcelona, London, Rome, and Berlin.
• Golden Visa and Citizenship Opportunities: Portugal offers the Golden Visa program, which provides residency and eventual EU passport to investors who purchase property worth at least €280,000. Lisbon's property market provides an accessible route to obtaining this visa.
• Strong Tourism and Commercial Potential: Lisbon's vibrant tourism industry and diverse range of industries make it an attractive location for commercial property investments. The city's hospitality and retail sectors are particularly strong, with areas like Baixa and Avenida de Liberdade offering prime commercial investment opportunities.
• Renovation and Resale Potential: Lisbon has many old buildings that can be renovated and converted into short-term rental apartments or boutique hotels, offering investors the potential for high returns on their investments.
• Safe and Stable Environment: Portugal is ranked as the third safest country in the world, making Lisbon an attractive option for those seeking a secure investment location. The country also offers political and economic stability, providing a favourable environment for real estate investments.

Overall, Lisbon, Portugal, presents a compelling opportunity for buy-to-let investors due to its favourable economic conditions, high rental demand, affordable property prices, and the potential for strong returns.

Athens, Greece

Athens, in particular, has a lot to offer investors. The city has a range of buy-to-let apartments, houses, villas, and cottages available, with prices starting from €97,000. For example, a one-bedroom apartment in the Agios Panteleimonas area is listed for a total of €58,000, with an estimated yield of 6.0%. There are also more expensive options, such as a three-bedroom apartment in the Kipseli district, with a total area of 137 m², listed for €137,000, with a yield of 3.65%.

Athens also offers the opportunity to invest in real estate near popular tourist destinations, such as the Acropolis. For instance, there is a one-bedroom renovated apartment near the Acropolis listed for €45,000, with a yield of 6.0%.

In addition to the lower investment threshold compared to other EU countries, Greece offers other benefits, such as the ability to rent out your property after purchase and the option to include family members in the residency program.

It is important to note that the Greek Golden Visa program has recently undergone changes, with the minimum investment threshold increasing from €250,000 to €500,000 for certain areas, including specific municipalities in Athens. This change took effect on July 31, 2023.

Rome, Italy

The Roman property market is stable, with prices increasing by 3.8% in 2022. The average price per square meter in Rome is €7,162, which is lower than the average cost of property in London. Properties in Rome range from €6,000 to €10,000 per square meter, with the luxury Via Appia area and Trastevere, a popular student neighbourhood, being at the higher end of the price range.

Some of the best areas to invest in Rome include:

• Historic Centre (Centro Storico): This area, which includes Trastevere, Piazza Navona, and Campo de' Fiori, offers higher-priced properties with excellent potential for capital appreciation and rental income due to their central location.
• Piazza di Spagna and Via Veneto: These areas, known for their luxury boutiques and elegant cafes, appeal to tourists and renters seeking high-end accommodations.
• Prati: Located near Vatican City and St. Peter's Basilica, Prati is a residential neighbourhood popular with expatriates and professionals. Properties in Prati offer relatively lower prices compared to the historic centre.
• Monteverde: Situated on Janiculum Hill, overlooking the historic centre, Monteverde is a residential area known for its green spaces and panoramic views. This area is ideal for those seeking a quieter lifestyle while still being close to the city centre.
• Parioli: Parioli is an affluent residential neighbourhood with tree-lined streets, prestigious schools, and exclusive properties. This area is ideal for targeting affluent renters.
• Ostiense: Ostiense has undergone redevelopment, transforming it into a trendy district attracting artists, young professionals, and creatives.
• Testaccio: Testaccio has been redeveloped in recent years and is known for its vibrant food scene and authentic Roman atmosphere. Properties in Testaccio offer good value for investors looking for future growth potential.

When investing in Rome, it is important to research similar properties in the area to set a competitive price. Additionally, consider the regulations and requirements for foreign property buyers in Italy, such as obtaining a fiscal code (codice fiscale) and understanding the applicable taxes and fees.

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