What was the highest yielding property in 2014
Tranio.com has released a ranking of cities that are the most popular among global investors, and which in 2014 had the best housing and commercial property yields. We calculated total returns on properties by adding rental yield and capital growth.
Offices: the best yields are in US cities
San Francisco ranks
Office yields in 2014Figures from CBRE, Colliers, Cushman & Wakefield, JLL
Los Angeles is lagging a bit behind San Francisco. It has a higher rental yield of 5.5% and prices rose by 22%, which is less than a third, but nevertheless still represents a substantial increase. The total return is 27.5%, up from 8.40% in 2013, and the annual increase in the lease rate is 6%.
The Barcelona market is rebounding after the crisis of 2008. JLL reports a 21.6% increase in city office prices, while the total return is 27.1%. Madrid is ranked two places below, with a total return of 24.5%.
Office prices saw
The total return in London was 14%, compared to over 21% in 2013. Despite the fact that the market is gradually slowing, office space in the UK capital is still considered the most expensive in the world. Knight Frank reports that the cost per square metre averaged EUR38.6 thousand in Q3 2014. According to CBRE, the rental price in the West End
Hong Kong appears towards the bottom of the rankings, held back by low rental yields (2.9%) and an almost zero change in capital value (0.3%). However, high demand and low risks mean that commercial property is a reliable investment in the city.
Office prices fell in Zurich, Prague and Moscow, resulting in zero or negative total returns.
Housing: Istanbul, Berlin and San Francisco lead the way
Out of all the cities ranked, the largest increases were seen in apartment prices in three cities: Istanbul (by over 21%), and Berlin and San Francisco (both over 12%). Total returns amounted to 27%, 16% and 15%, respectively.
The total return in Berlin went up from 14.06% in 2013 to 16.02% in 2014, while in San Francisco an opposite trend was seen: returns fell from 16.39% to 15.36%.
According to Reidin, in November 2014 prices for apartments in Istanbul rose 21.58%
Apartments yields in 2014
Figures reported by the Canadian Real Estate Association, CBRE, Global Property Guide, Idealista, Knight Frank, Laforêt, Realty Track, Reidin, Savills, WohnungsBoerse.Net, Zillow
2014 total returns also exceeded 10% in Tokyo, Los Angeles, Toronto and Washington.
Over the past year, apartments in some cities, such as Beijing, Paris, Vienna, Madrid and Zurich, have become cheaper. Prices in Zurich depreciated by 8%, and the total return in all the above cities was zero or negative.
The lowest rental yields are to be found in Chinese cities (Beijing, Shanghai, Hong Kong), where total returns are less than 3% due to the high population density, high demand for housing, low vacancy rates and, consequently, low risks for investors. Housing prices in these cities are stagnating, as steps are taken to cool the real estate market and avert property bubbles.
George Kachmazov, CEO at Tranio.com, comments, “My recommendation to all who are interested in buying
Yulia Kozhevnikova, Tranio.com