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Best places in Europe to buy a luxury second home, buy-to-let property

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Whether you’re looking for a vacation property when travel resumes or want to store some cash when stocks somersault, Europe has plenty of attractive second home destinations.

From delicious food and rich culture to stunning scenery, the continent has something for everyone, and property buyers are buying too.

Over the past year, Europe’s leading real estate market has grown 5.6% amid continued demand, according to new research from international real estate firm Knight Frank. Meanwhile, rental returns for the region’s most sought-after vacation destinations continue to rise.

“For second-home owners, European cities offer culture, connectivity and quality of life, and for investors, tenant occupancy,” said Kate Everett Allen, head of international housing research at Knight Frank. The rate is high and the purchase cost is relatively low,” he said.

This growth comes at a time when investors are looking for safe assets and income-generating investments as inflation surges, with interest spreading across the Atlantic.

However, like any investment, buying real estate can be a financial burden and it can be difficult to know where to start. Using Knight Frank’s data, CNBC has compiled a list of the best places to start looking for his second property in Europe.

Cities with high real estate price increases

If you’re in the market for capital growth, always consider looking to attractive Western European cities.

According to Knight Frank, Europe’s major real estate markets (which rank among the top 5% of the market in terms of value) have seen some of the highest inflation rates in the world over the past year.

Berlin, Germany saw the most price increases in the year to June 2022, with high-end properties increasing by an average of 12.6%.

According to Knight Frank, Berlin property prices are rising by the fastest click across Europe’s major property markets.

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With annual increases, the German capital’s growth rate is far ahead of other global cities such as New York (7.3%), Hong Kong (3.1%) and London (2.5%).

Elsewhere, property price gains have been strong this year in the luxury real estate markets of Edinburgh (11.2%), Dublin (10.2%), Zurich (10.2%) and Paris (8.9%).

The slowdown is most noticeable in lower end and domestically driven markets.

The region’s top cities continue to rise as growth slows across the global real estate market amid rising interest rates, a bleak economic outlook. However, Knight Frank said the slowdown has yet to be reflected in property prices, proving that the luxury sector is particularly resilient.

“Rising mortgage rates and a weakening global economic outlook have cooled some of the boom over the past two years, but the slowdown will be most pronounced in low-end and domestically-led markets,” the report said. points out.

However, buying overseas property is not without its challenges. Before embarking on an overseas purchase, prospective buyers should consider foreign exchange rates, local mortgages and taxes, ownership and sales costs, and restrictions on foreign owners.

Best place to return rental

If you’re looking for rental properties, Europe’s leading holiday destinations might just be for you. The Mediterranean coast is a perennial favorite of vacationers.

In addition to the above considerations, there are several other factors to consider when buying a vacation home for rent. Those include location in terms of both proximity to local amenities and access to international airports, year-round demand to minimize void periods, and market liquidity.

According to Knight Frank, Italy’s Tuscany and Liguria region, France’s southern coast and French Alps, and Spain’s Barcelona, ​​Marbella and Balearic Islands are among the top places in Europe to invest in properties for sale based on these criteria. It’s one.

Tuscany, Italy, with its rolling hills, excellent cuisine and one of the world’s largest collections of Renaissance art, has long been a favorite of overseas property buyers.

Slavomir Orzakki | IM | Getty Images

only in tuscany 30% YoY increase in inquiries In 2021, the region will account for two-thirds of all property searches in Italy.

According to Knight Frank, the Tuscan city of Lucca on the Serchio River is a particularly popular choice, with a quarter of buyers in 2021 alongside Pisa and Bolgheri, and a 6% annual price increase. I am recording.

The average property price sought by Knight Frank buyers in Lucca and Pisa is currently around €1.7 million ($1.8 million), well below the Tuscan average of €3.7 million. On the other hand, the average rental price per day is 471 euros.

Purchasing competition intensifies

strengthen dollar and weak Euro The European property market is overheating and Europe is becoming an increasingly attractive destination. USA vacationers As well as American real estate investors.

The euro is currently trading at roughly par with the dollar. This means that US buyers will enjoy a 15-20% discount on property prices in any of the 19 eurozone member states compared to July 2021.

And it shows. In his first five months of 2022, Knight Frank 37% increase in searches by US buyers on a property in France. Now their search pool is expanding across the continent.

US buyers are now targeting the traditional Sunbelt region, which is a departure from the norm.

Mark Harvey

International Director, Knight Frank

Mark Harvey, Knight Frank’s international director, said: “Until now, US interest has focused on cities that offer culture and connectivity, from Rome to Paris and Barcelona to Florence.

“But now US buyers are targeting traditional Sunbelt regions, which deviates from the norm,” he continued, adding interest in destinations such as Mallorca, Sardinia and southern France. He pointed out that there is an increase in

with US Federal Reserve Board Tight Monetary Policy in a clip faster than European Central Bankits dollar appreciation is likely to continue, making Europe a competitive investment destination for some time.

“Further interest rate hikes by the Federal Reserve could further strengthen the dollar against the euro, resulting in a bigger discount for US buyers,” he added.

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