The world of property has never been bigger, nor more diverse. Only a few years ago British buyers tended to look for very specific property-types in a small number of buying destinations, dominated by the Mediterranean countries, Portugal and the USA. Now, new emerging markets seem to pop up every week; as the focus has shifted from a traditional holiday-home market to a more investment-oriented one, previously unknown destinations have surged into the property limelight, each offering its own unique attractions and touting itself as the next big thing.

However, what the vast majority of these “new wave” destinations have in common is that they offer very similar products to those which previously dominated the market: holiday properties. Whether on the sun-drenched Adriatic coast, in the ski zones of Bulgaria, or as far a field as the tropical highlands of Borneo, the new markets clamouring for buyers’ attention tend to offer, essentially, more of the same – but at much lower prices than their established, familiar counterparts.

This is all well and good for those just looking for their dream getaways. But – thanks in no small part to a collapse in confidence in traditional investment options such as pension plans - the majority of buyers are now looking for homes which combine lifestyle appeal with the potential to generate significant profits, and the industry around the world has been very quick to exploit this to the utmost. Promising the perfect combination of superior capital growth and decent rental returns, agents and developers have made billions selling coastal, mountain and even rural homes in a mind-boggling succession of far-flung locations which are, in fact, immeasurably better suited for the pure lifestyle market.

This is not to suggest, or course, that profits and pleasure are mutually exclusive: far from it. Many buyers have managed to secure properties which have offered a great deal on both sides of the lifestyle/investment divide. But, similarly, many have not: the explosive growth in the industry has not necessarily been accompanied by a similar expansion in the awareness and understanding of the buyers themselves, and increasingly sophisticated marketing and sales tactics have, unfortunately, led many buyers wanting to have their cake and eat it into making purchases which end up satisfying neither their investment nor their lifestyle needs.

At Citiesinvest.com – as the name suggests – we believe that to make the very most from a property investment, a would-be buyer should look to the world’s urban centres rather than to its holiday hot spots. While appreciating that in many traditional – and emerging - lifestyle markets there is still a buck to be made, it’s away from the sun, sea, sand and snow that one can find the most profitable properties, and the most secure investments.

Consider this: for the first time in human history, over 50% of the people on this planet – in other words, well over three billion individuals - now live in urban areas. Cities are expanding at a faster rate than ever before; tens of millions of people each and every year move from rural locations into towns and cities, driven by the need for employment, resources and a better way of life.

In China alone, the equivalent of a city the size of Manchester needs to be constructed every single month to cope with the immense exodus from the countryside, and this situation is mirrored in almost every other country on Earth. Demand for urban property has never been higher – and will continue to grow for decades.

Meanwhile, the spectacular growth witnessed during the 1980s and 1990s in traditional lifestyle markets has slowed to a crawl, and in some cases has moved over into slump territory. Agents and developers have seen their cash cows grow sick; the rise of the emerging markets during the early part of this decade was driven to a great degree by the need to find alternatives to markets which had become overpriced and were reeking of stagnation. But there are only so many lifestyle buyers to go round – and for the investor, looking for a solid and relatively quick return on his or her investment, serious concerns arose over the fact that the growth in the number of buyers due to rising affluence was exceeded, significantly, by the growth in the number of available properties and in the proliferation of distinct markets.

In short, while it’s never been easier to buy a lifestyle home abroad, it’s rarely been harder to sell one at a substantial profit; there are simply too many other properties on the market, and why would one buy a used holiday home when one can pick up a new-build one just down the road (and, increasingly, with some tempting incentives thrown in by an ever-hungry developer) without having to stump up to fund a previous owner’s profit?
Of course, capital growth is only one part of the investment equation. Just as important – especially for the vast majority of investors paying for at least a proportion of their purchases with mortgages or other financing – is rental income. But here too the rapid growth in the international property market has had negative consequences. So many buyers have made lifestyle purchases with the intention of letting out their properties that there is now, in many traditional destinations and a growing number of emerging markets, a glut of rental homes available for holidaymakers to choose from.

This in turn means that marketing costs for owners have gone through the roof, while occupancy rates per unit have plummeted: in other words, it now costs a lot more to attract fewer guests paying lower rates.
Once again, it’s important to note that it is still possible to make money, in many markets, through rentals. But few in the industry would argue that owners now have to work much harder to turn a profit – and for those looking to take the easy route by taking on a rental management company, those profits then take a further hit when it comes to paying the company for their services (and woe betide anyone who doesn’t go through the small print with a fine-toothed comb to find out exactly how much those services cost).

And then there’s the spectre of an economic downturn. If the world’s leading economies take the hit which has looked on the cards for a while now, one of the first sectors to suffer will be the leisure and tourism industry. Less spending money means fewer holidays; fewer holidays mean fewer holidaymakers; fewer holidaymakers mean a substantial drop in rental income – and for those reliant on that rental income to pay a mortgage the consequences could be catastrophic.

Moreover, even during the best of times almost all lifestyle destinations are seasonal, so rental profits must be generated during certain, limited times of the year. Ski properties will almost certainly not be profitable during the summer; likewise, those looking to make money on the Mediterranean coast during the winter had better hope there’s something very extraordinary very nearby that’ll keep the punters coming even during the off-season. For buyers attempting to straddle the investment/lifestyle fence, this poses a further problem: does one enjoy the use of a lifestyle property in its prime, during the best months of the year, and accept that this comes at the cost of a couple of weeks’ prime rentals?

Or does the owner compromise and visit his or her property during a quieter part of the year when the financial consequences may be minimal but when he or she simply won’t make the most of the home because there’s no snow, or it’s too cold, or the best restaurants, bars and clubs in the area haven’t opened yet?
Meanwhile, the cities just keep on growing, hour upon hour, day after day, all year round…

People looking for an urban property – whether it’s a shack in a slum or the finest Manhattan penthouse – tend to want to stay in it for a lot longer than the short-term tenants typical to a holiday destination. While short-term lets aren’t unknown in urban areas, they’re few and far between compared with longer-term stays. After all, tenants in cities are almost always looking for somewhere to live, rather than somewhere just to stay for a few days. Jobs, family, studies: all these things require a base, and whether for months or for years this base, once chosen, becomes home.

For the owner, this means a huge drop in marketing costs as tenants need to be found once every few months, or years, rather than every week. It also means, in consequence, added security (because once you’ve found your tenant, assuming they don’t suddenly have to leave, you’ve got a steady flow of income, week after week, month after month) and the great likelihood of decreased maintenance costs (because tenants who know they’re going to have to live in a property for months or even years tend to be a lot more respectful of it than those who know they’ll be leaving in a week or two and might be spending that time living it up to their hearts’ content, with all the associated damage that can produce). Of course, owners can safeguard against damage by taking deposits – but an owner looking to cram a year’s-worth of mortgage payments plus profit into a short rental season would hardly appreciate having to spend a week or two cleaning up after nightmare tenants even with a deposit safely in the bank.

Now, you may be asking: if city properties are so excellent, why is the market still so dominated by the traditional lifestyle model? There are many reasons, but two stand out as being the most important. Firstly, most buyers – however investment-minded they might think they are, or want to be – are still looking for properties they can use themselves as well as wring a profit from. And urban homes, even in the world’s most glamorous cities, don’t provide the same holiday and leisure assets as beach houses, ski chalets and the like – especially for buyers who might already spend all their lives in hectic, bustling metropolises. The get-away-from-it-all factor is still extremely important. Unless you’re looking to live in it, an urban property should be seen as an investment, pure and simple. Only when a buyer has adopted that mindset will she or he be best-placed to make the very most – the biggest profit - from a property investment.

The second key point is that it’s in the interests of developers and, to a lesser degree, agents, to sell lifestyle homes in non-urban locations. This is due to the financial practicalities: land in urban centres is extraordinarily expensive, and comes to the market much less frequently, compared with all but the most sought-after holiday hot spots, and construction costs – thanks to the increased difficulty of transportation, the need to construct taller buildings to maximise returns, fees for utility installation and a host of other factors – are similarly much higher. The profit-margins for building in cities tend to be much lower than in holiday areas – one reason why city-centre property is dominated by commercial buildings with much higher rental charges. With this in mind, the industry has, in general, reacted to the growing investment savvy and the need for profit among buyers not by shifting its focus to the dynamic urban markets of the 21st century but by touting (and unfortunately, in many cases, wildly overstating) the investment qualities of its traditional holiday market – often to the detriment of the unwary buyer.

It’s vital to bear in mind that not all cities make for good investments, despite the advantages listed above. Each city is its own market and many of these markets around the world have been sluggish for a long time, for local economic reasons, as a result of idiosyncrasies in a given location’s property culture, or because of numerous other factors. It’s not up for debate, for example, that even an unappetising, run-of-the-mill apartment in a saturated coastal holiday market feeling the effects of restricted consumer spending would still make for a safer investment than, say, a pied-a-terre in Baghdad or a villa in Pyongyang. Just because the investment fundamentals underpinning urban markets are in general much sounder than their vacation counterparts, doesn’t mean that any old urban market is a good choice.

Nor should one think that a country’s capital or largest city is necessarily its best investment market: many capitals are either saturated or stagnant while many minor city markets with their own unique drivers are booming far in excess of their capital counterparts. The cities chosen by Citiesinvest.com have been selected on their individual merits and for many distinct and unrelated reasons, but above all because they provide sensible, robust, innovative and profitable alternatives to traditional investment vehicles – and because it is for their investment qualities, and not because they offer a stretch of sandy beach or a few ski runs, that they stand out above the huge crowd of possible buying locations currently competing for your hard-earned investment capital.

All this may sound pretty self-evident, but these are vital concepts for anyone looking to place money in bricks and mortar. If that stretch of sandy beach, or those ski runs, are what you really want, then take the lifestyle option, lie back (or strap on your skis) and enjoy – and you may well glean a profit into the bargain. But if it’s profit you’re after, whether through capital growth, rentals or both, the flourishing and rapidly expanding cities of the world are the logical choice for the modern investor. That choice is yours: and you’re already well on your way to making the right one just by coming to Citiesinvest.com

Or does the owner compromise and visit his or her property during a quieter part of the year when the financial consequences may be minimal but when he or she simply won’t make the most of the home because there’s no snow, or it’s too cold, or the best restaurants, bars and clubs in the area haven’t opened yet?
Meanwhile, the cities just keep on growing, hour upon hour, day after day, all year round…

People looking for an urban property – whether it’s a shack in a slum or the finest Manhattan penthouse – tend to want to stay in it for a lot longer than the short-term tenants typical to a holiday destination. While short-term lets aren’t unknown in urban areas, they’re few and far between compared with longer-term stays. After all, tenants in cities are almost always looking for somewhere to live, rather than somewhere just to stay for a few days. Jobs, family, studies: all these things require a base, and whether for months or for years this base, once chosen, becomes home.

For the owner, this means a huge drop in marketing costs as tenants need to be found once every few months, or years, rather than every week. It also means, in consequence, added security (because once you’ve found your tenant, assuming they don’t suddenly have to leave, you’ve got a steady flow of income, week after week, month after month) and the great likelihood of decreased maintenance costs (because tenants who know they’re going to have to live in a property for months or even years tend to be a lot more respectful of it than those who know they’ll be leaving in a week or two and might be spending that time living it up to their hearts’ content, with all the associated damage that can produce). Of course, owners can safeguard against damage by taking deposits – but an owner looking to cram a year’s-worth of mortgage payments plus profit into a short rental season would hardly appreciate having to spend a week or two cleaning up after nightmare tenants even with a deposit safely in the bank.

Now, you may be asking: if city properties are so excellent, why is the market still so dominated by the traditional lifestyle model? There are many reasons, but two stand out as being the most important. Firstly, most buyers – however investment-minded they might think they are, or want to be – are still looking for properties they can use themselves as well as wring a profit from. And urban homes, even in the world’s most glamorous cities, don’t provide the same holiday and leisure assets as beach houses, ski chalets and the like – especially for buyers who might already spend all their lives in hectic, bustling metropolises. The get-away-from-it-all factor is still extremely important. Unless you’re looking to live in it, an urban property should be seen as an investment, pure and simple. Only when a buyer has adopted that mindset will she or he be best-placed to make the very most – the biggest profit - from a property investment.
The second key point is that it’s in the interests of developers and, to a lesser degree, agents, to sell lifestyle homes in non-urban locations. This is due to the financial practicalities: land in urban centres is extraordinarily expensive, and comes to the market much less frequently, compared with all but the most sought-after holiday hot spots, and construction costs – thanks to the increased difficulty of transportation, the need to construct taller buildings to maximise returns, fees for utility installation and a host of other factors – are similarly much higher. The profit-margins for building in cities tend to be much lower than in holiday areas – one reason why city-centre property is dominated by commercial buildings with much higher rental charges. With this in mind, the industry has, in general, reacted to the growing investment savvy and the need for profit among buyers not by shifting its focus to the dynamic urban markets of the 21st century but by touting (and unfortunately, in many cases, wildly overstating) the investment qualities of its traditional holiday market – often to the detriment of the unwary buyer.

It’s vital to bear in mind that not all cities make for good investments, despite the advantages listed above. Each city is its own market and many of these markets around the world have been sluggish for a long time, for local economic reasons, as a result of idiosyncrasies in a given location’s property culture, or because of numerous other factors. It’s not up for debate, for example, that even an unappetising, run-of-the-mill apartment in a saturated coastal holiday market feeling the effects of restricted consumer spending would still make for a safer investment than, say, a pied-a-terre in Baghdad or a villa in Pyongyang. Just because the investment fundamentals underpinning urban markets are in general much sounder than their vacation counterparts, doesn’t mean that any old urban market is a good choice.

Nor should one think that a country’s capital or largest city is necessarily its best investment market: many capitals are either saturated or stagnant while many minor city markets with their own unique drivers are booming far in excess of their capital counterparts. The cities chosen by Citiesinvest.com have been selected on their individual merits and for many distinct and unrelated reasons, but above all because they provide sensible, robust, innovative and profitable alternatives to traditional investment vehicles – and because it is for their investment qualities, and not because they offer a stretch of sandy beach or a few ski runs, that they stand out above the huge crowd of possible buying locations currently competing for your hard-earned investment capital.

All this may sound pretty self-evident, but these are vital concepts for anyone looking to place money in bricks and mortar. If that stretch of sandy beach, or those ski runs, are what you really want, then take the lifestyle option, lie back (or strap on your skis) and enjoy – and you may well glean a profit into the bargain. But if it’s profit you’re after, whether through capital growth, rentals or both, the flourishing and rapidly expanding cities of the world are the logical choice for the modern investor.

That choice is yours: and you’re already well on your way to making the right one just by coming to Citiesinvest.com