The two cities might be worlds apart but they do share similarities. Not least, they are both seeing property prices rise at a furious pace this year. It is also a close run thing deciding on which of them offers the most potential for an investor.
(PRWEB UK) 22 November 2012
For investors looking for a fast return on property, it all comes down to two locations in 2012 – Miami and Istanbul according to Colordarcy who highlight the release this month of statistics on the performance of both cities.
Loxley McKenzie, Managing Director of Colordarcy comments, “The two cities might be worlds apart but they do share similarities. Not least, they are both seeing property prices rise at a furious pace this year. It is also a close run thing deciding on which of them offers the most potential for an investor.”
Analysts at Colordarcy have taken a bird’s eye view of Istanbul and Miami average to see how one city offers compared to the other and which one comes out a winner based on the following criteria:
Property Price Growth
Analysts were saying it would never last, some people were saying it would never happen. Well it did. The Miami property market finally bottomed in the third quarter of 2011. Miami has since become the second fastest growing market in the Knight Frank global prime cities index. Prices in the city have risen a spectacular 19.1% year-on-year.
In Istanbul meanwhile prices climbed 14.% year-on-year in comparison (Source: Gyoder). Not a bad effort, but if investors had bought a year ago in either country they would have a 5% bigger smile on their face in Miami.
Average Rental Yield
Property price growth is very much about short-term thinking. What investors should be looking at is achieving the highest rental yields possible according to Colordarcy.
Supply in Miami is restricted after years in the doldrums which means healthy rental yields and strong growth in the value of property. The average net yield of a rental property in Miami is around 7%, and depending on location, the yield can be at least 1% or more higher.
Istanbul property, however, just edges it with an average yield of 8% in the best areas of Istanbul. Again in areas close to the city centre, there is a shortage of available property which is increasing the pressure on price and rents. So when it comes to property that pays for itself, Istanbul just edges it overall according to Colordarcy analysts.
Stage In The Investment Cycle
Other factors that can influence the decision to invest include the stage the market is at in each city. Both Istanbul and Miami are in an expansion phase, but given the length of time Turkey has been growing it is further along that curve than Miami.
However unlike the mature market in Miami, the price of property is significantly less at $4,569 per square metre in Istanbul compared to $6,300 per square metre in Miami. As long as there is room for several more years of growth in Istanbul – which is still in a developing phase – there is no real difference between the two cities in this area.
Winner: Miami and Istanbul
This brings us to another factor, reliability. Turkey is making great strides in terms of the transparency of its real estate market, but it is not at the same stage as a prime world city like Miami. So for reliability it is hard to see past Miami for those investors who shun risk.
Finally investors might be looking at accessibility. This can make a huge difference in the choice of investment. If an investor happens to be based in Europe, the flight time to Istanbul can be five hours less than making the trip to Miami.
On the other hand Canadian or Brazilian property investor will find that Miami is far more convenient. Finding a reliable property agent can remove any inconvenience related to travel, therefore again there is little to choose between each location.
Winner: Miami and Istanbul
So with each of our investment considerations taken into account, Miami just shades it by 2 to 1.
Notes to the editor:
Colordarcy is a leading property investment company that specialises in finding positive cash flow investment properties worldwide. Colordarcy investment property portfolio includes some of the best properties for sale in Brazil, Florida, Turkey and the United Kingdom.
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