Rental income leaders: top 5 countries with high profitability

In today's world, investing in real estate remains one of the most popular and reliable ways to preserve and increase financial resources. The issue of rental yield is especially relevant, which can vary in different countries due to economic, cultural, and geographical features. So, in which countries can you gain the maximum income from property rental? Let's explore the top 5 countries where renting out property provides the highest income to owners.

Date: 11 October

According to the information portal Numbeo, the top 5 countries for gross rental income in the city center (annual rent divided by property price) as of mid-2023 are:

1. Puerto Rico

Puerto Rico, the gem of the Caribbean basin, is gradually becoming a hotspot for real estate investing. According to 2022 data, the average housing cost in the capital city of San Juan fluctuates around $150,000, while in less populated areas, this figure can drop to $90,000. The rental rate per square meter in downtown San Juan reaches $15, which is 7% higher than the previous year.

According to research, Puerto Rico attracts over 3.5 million visitors a year, boosting demand for short-term rentals, especially in beach areas. Estimates indicate that short-term rental incomes have increased by 12% over the past two years.

The Puerto Rican government, recognizing the market's potential, offers various tax incentives to attract foreign investors. For instance, new construction projects can anticipate a tax concession of 10% for the first five years.

However, investing should be approached with caution. Despite economic growth, the island is still recovering from Hurricane Maria in 2017, and some areas require substantial renovation. Nevertheless, the mix of culture, nature, and economic potential makes Puerto Rico one of the most attractive markets for investment in the Caribbean region.

2. South Africa

 

South Africa, known for its diverse cultural heritage and rich nature, is becoming increasingly attractive for real estate investors with each passing year. The country's economic growth, market stability, and favorable conditions for foreign investors make South Africa a place with significant potential.

According to research, the average housing cost in major South African cities like Cape Town and Johannesburg increased by 8% in 2022. The average cost per square meter in these cities ranges from 15 000 to 25 000 ZAR.

Over the past five years, foreign investments in real estate have increased by 20%. The South African government offers perks to foreign investors, including reduced taxes and the possibility of acquiring citizenship with significant investments.

Commercial real estate is also drawing investors' attention. The rental rate for office spaces in downtown Johannesburg averages 200 ZAR per square meter per month, and the return on investment in this market segment reaches 10%.

Forecasts speak of a continuation in the growth of the real estate market in South Africa. Considering the government's plans for infrastructure development and improving conditions for business, an increase in demand for residential and commercial real estate can be expected.

3. Ethiopia

 

Ethiopia, being one of the fastest-growing countries in Africa, garners the attention of numerous global investors. Its unique geographical location, extensive natural resources, and a population of over 114 million people make Ethiopia appealing for investments across various sectors, including real estate.

In recent years, real estate prices in Ethiopia have been steadily climbing. According to statistics, the average cost of an apartment in the capital, Addis Ababa, has surged by 12% over the last year. The price per square meter in the city's central districts now stands at around 30,000 ETB (Ethiopian Birr).

Demand for commercial real estate in Ethiopia is also on the rise. The rental rate for office space in Addis Ababa can reach 250 ETB per square meter per month.

The government actively attracts foreign investments by providing favorable conditions for foreign investors. In 2021, the volume of foreign investments in real estate increased by 15% compared to the previous year.

Despite the current growth, Ethiopia’s real estate market faces some challenges, such as difficulties with property registration and a lack of transparency in some transactions. However, it is anticipated that governmental reforms and an improvement in the business climate will facilitate further market development.

4. Georgia

 

Georgia, over the past decades, has become one of the most attractive regions for investors interested in buying and renting real estate. Scenic mountains, historical monuments, and a rapidly growing economy are drawing more and more foreign investors.

From 2015 to 2019, real estate prices in Tbilisi, the capital of Georgia, increased by more than 30%. The average cost per square meter in the city center in 2020 was approximately $1,000.

Thanks to the increase in tourist numbers (over 9 million in 2019), demand for short-term rental housing has also risen. This has created favorable conditions for investors looking to earn rental income on platforms like Airbnb.

The Georgian government is actively attracting foreign investors by offering straightforward property registration procedures and tax incentives. In some cases, even a citizenship-by-investment program might be available.

Not only Tbilisi is of interest to investors. Cities like Batumi and Kutaisi are also drawing attention due to their tourist potential and low property prices. In Batumi, for instance, the price per square meter can start at just $500.

Georgia presents a unique opportunity for real estate investment, combining beautiful landscapes, historical culture, and growing economic potential.

5. UAE (United Arab Emirates)

 

The UAE has long remained at the forefront of the global community as a strategic partner in real estate investment. Gigantic skyscrapers, luxurious residential complexes, and a strategic location make this country exceptionally attractive to investors.

In 2023, the UAE invested approximately $500 million in digitizing the processes of buying, selling, and renting real estate, making this process simpler, more transparent, and convenient for foreign investors.

Considering global ecological trends, 'green' projects are actively developing in the UAE. Investments in environmentally sustainable real estate reached $1 billion this year.

In 2023, the average cost per square meter in downtown Dubai reached $7,500. However, in other emirates, such as Ajman or Umm Al-Quwain, prices are much lower, providing excellent opportunities for investors with various budgets.

The UAE is solidifying its position as one of the main destinations for real estate investment on the global market. Investors are presented with splendid opportunities thanks to the country's fortunate geographical position, innovations, and progressive strategy.

The top 5 countries presented in this review demonstrate that investment opportunities can be found in various corners of the planet. From the Caribbean Basin to South Africa, from the Caucasus to the Arabian Peninsula, the diversity of markets provides investors with a broad spectrum of opportunities. However, amidst all the variety of choices, the key remains in a detailed study of each market, as well as understanding the local economic and cultural peculiarities.

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