The star rating system – what do the stars mean? How does the Global Property Guide rate countries as residential investment destinations?
We judge the “investibility” of a country′s residential property market for capital gains and buy-to-let purposes in terms of rental yields, round-trip transaction costs, rental income tax, capital gains tax, landlord and tenant law, and over-all investment climate (GDP growth and country risk particularly). Country ratings are based on a five point grading system;
- Grab your bags and buy now
- Excellent
- Good
- Indifferent
- Risky or poor returns
- Burn your money instead
A country with a 5 star rating
- has high yields
- has low capital gains taxes
- has low roundtrip transaction costs on property purchase
- has a pro-landlord rental system
- has no or very low effective rental income taxes
- has a history of strong economic growth
- is low risk, politically and economically
On the other hand, a country can get a very low rating if
- Yields are very low
- There are very high transaction costs
- Very high rental income taxes lower the net rental yield
- Very high capital gains taxes lower the potential gain
- Property owners faces serious expropriation risks
- Tenants can get effective security of tenure over the rental unit
- It has a troubled political or economic history, and is therefore high risk
The ratings should serve as an over-all guide. The situation may widely differ between cities and even between particular districts within a city – and our earnings figures are for desirable upper-end districts in the premier city. The ratings are also based on current conditions and conditions may change remarkably within months. In very small markets, a completion of a single building or development can suddenly swamp the market with new supply. Or the closure of a foreign firm or embassy may suddenly lead to a glut in demand.
