When it comes to investing in real estate, the most important questions to consider are "Where to invest" and "What will be the income from leasing?" So, if you plan to buy-to-let, what is the average income from leasing you can expect? Now, income from leasing is affected by a variety of factors, such as economic conditions, demand, supply controls, and so on.
Let’s take an example, if the UK has an inflation rate of 6.1% and interest rates are around 5%, you can't expect to earn a good income from leasing. The UK property market is currently experiencing high housing rates, which are expected to fall by the end of 2023. However, based on the current situation, you could earn around 6.21% per year in the moderate-to-good range.
However, cities such as Medellin, Amman, and others may contribute 10% to 15% of annual lease yields. We've listed some cities with yearly lease yields and income brackets below.
This section will provide a summary of the cities with lease returns on buy-to-let property. So, let's get going!
It's safe to say that many well-known and up-and-coming investors are drawn to London because of the city's energy and diversity. It's also no secret that landlords in the London area won't see the highest lease returns. Because of this severe housing shortage, the average price of UK buy-to-let properties has risen by 1.2% in the past month alone.
Harrow is another neighborhood located within the city of London. The average income from leasing is 5.5%, while the average dwelling price is £368,791 here. The areas of Harrow, Stanmore, and Pinner each have exceptional local facilities and provide excellent value for money for their tenant populations.
However, the UK property transactions take 8-12 weeks to complete as the process is still old-fashioned, initial reports and due diligence can take weeks, and the final land registry is now taking up to 2 years as per the backlog at HMRC. Nonetheless, the UK real estate market appears to be attracting as many eyes as possible while providing an acceptable to better income from leasing.
There is a wide selection of potential buy-to-let investments to be made in India's sizable real estate market. However, lease returns aren't created equally across the board. Although Mumbai is on the list of India's priciest cities, your investment there may not yield the results you were hoping for.
Even if you invest heavily, the average lease income in Mumbai is only 2.44%. Low lease income in Mumbai can be attributed to a number of factors, including intense competition in the real estate market and sky-high property prices.
The Global Property Guide found that the gross rental yields for flats in Shanghai ranged from 5.4% to 7%, which represented a return that was significantly less than excellent. The majority of rental returns on apartments in Shanghai were lower than 3.2%.
In addition, by the end of the year 2023, Shanghai anticipates a growth in property investment of approximately 5%. It is possible that this will have a substantial impact on the way landlords and other investors view the real estate market in Shanghai.
The rental yields in NYC may no longer appear to be as impressive as they once were. There are several issues, including housing shortages and rising mortgage rates. The New York City rental market will not provide you with the desired rental yields. Investors are interested in the buy-to-let market, which can yield 2% to 3%.
Because of the low inventory of houses, the lease revenue is insufficient. The address itself, particularly in Manhattan, becomes an official document. A one-bedroom flat in Manhattan can house two people, demonstrating how desperately people want to live in Manhattan and New York City and the city's housing shortages.
Investing in Dubai real estate can be a smart move for both residents and investors around the globe. Mostly, the place is known for its high rental yields, which turn this region into an attractive investment place. There are several places that may give you the desired income from renting.
With a return on investment of 5% per year, Jumeirah Village Circle takes first place. The location is well-known for its reasonably priced rents, numerous recreational facilities, and excellent connectivity. The Downtown Dubai area ranks in second with a yearly yield of 5.4%. It has garnered a lot of praise for its tourism. In addition to this, it provides the exhilaration of having a view of the Burj Khalifa in front of you. The Palm Jumeirah comes in at number three with an annual yield of 5.3%. In last place, but certainly not least, we have Business Bay, which has an annual yield of 5.3%.
While pricing in Dubai is opaque since much of the market is controlled by a few top developers and local financiers, there is virtually little market for resales because new complexes are constantly being built. In addition, the Dubai real estate market is rarely regulated. It has inadequate anti-money laundering measures, which can negatively affect landlords' reputations and contribute to significant investment fraud. It is always advisable to invest before considering any real estate purchase.
Miami has a total population of 6,265,000 people, and around 32.20% of those people live in rented housing. In Miami, the typical weekly rent for a house is $855, and the average income from renting a property is around 2.96% of the property's value.
In addition, the median asking price for a property is currently set at $700,00, which is an increase of 11.28% in comparison to the same time period the previous year. Real Estate Investar reports that the normal amount of time a unit spends on the market before to being purchased is 83 days, and that the median amount of rent for a property in Miami is $695 per week. The resulting lease revenue is 5.16% as a consequence of this.
The city of Seoul is so stunning that no one can take their eyes off of it. A location that combines the beauty of nature with the most recent advances in technology and a riot of colour all in one. It is the city with the most people in the world, and the value of its real estate market is projected to reach 305 billion USD in the year 2023. Concurrently, it is anticipated that growth will reach 564.18 billion US dollars in 2028. 13.7% of the annual expansion can be attributed to the market for real estate in Seoul.
When discussing the lease revenue in Seoul, you might not be aware of the fact that the average individual salary in this city is so low that it is only a dream for many people to be able to afford housing facilities in the city. In addition, the monthly rent that must be paid by the tenants in this location ranges anywhere from $350 to $1,000. It is 54% less expensive than New York City. In other words, the gross lease revenue in the city centre would be somewhere around 1.18%, whereas the gross lease revenue outside of the centre would be 1.39%.
Tokyo is consistently ranked as one of the most technologically advanced and innovative cities on the planet. Since the beginning, this area's real estate market in particular has been a magnet for investors interested in the region's other industries as well.
The yield that was anticipated in Tokyo was 4.5 percent. In the early 2010s, it had reached a high of around 6% in the middle of that range. A one-point increase from the survey that was conducted in April 2022 brings the total number of respondents who indicated they intend to make new investments in real estate to 95%.
Brazil is one of the leading economies in the world because of its abundance of natural resources such as oil, timber, minerals, and other things. People have the impression that Brazil is the best country in which to live and retire due to the country's pleasant climate, robust infrastructure, and relatively inexpensive housing prices. Houses in the city centre typically sell for a price of 8,535.71 Brazilian reals per square metre, which is equivalent to $1,695 in American currency. The markets in Sao Paulo are where it is most expensive.
Paulo saw a reasonable house price increase of 5.06% over the course of the year, which is more than its competitor, Rio de Janeiro, saw in the same time period. The annual rental return on an apartment with one bedroom is 6.52%. In addition, the annual return on investment for a set with two bedrooms is 4.80%. Alternatively, the lease revenue for the three-bedroom set will be 4.27% per year.
Rental yields in the top cities around the world continue to be an important consideration for investors looking for opportunities to make a profit. As of 2023, these cities have demonstrated varying degrees of performance with regard to rental yield. London continues to be a leading contender due to its robust rental market and high level of property demand.
The city also offers attractive rental yields. Due to the robustness of their economies and the robustness of their rental markets, other global cities such as New York, Tokyo, and Japan also have rental yield prospects that are very promising. However, in order to make well-informed decisions and maximise the rental yield potential in each city, investors must first carefully examine the local market conditions, rental regulations, and economic trends.
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