There’s No Place Like a 2nd Home: Best European Investments

real estate

| LAST UPDATE 08/03/2022

By Rose Fairchild
Berlin Luxury Property Investment
Haddenhorst/ullstein bild via Getty Images

When it comes to investing in a second home, there are a lot of factors that must be taken into consideration. Due to the inflation of Europe's "prime real estate markets," the value of these properties in this region is within the top 5% of the market. Still, few destinations stand out from the others, perfect for a second home as well as investments. Here they are.

Of course, Italy is always within reason for quick round trips over the weekend. Famous for its "renaissance" aura, luxury couture, and Mediterranean-style concrete villas, the value of this location has completely upscaled. According to Knight Frank, Tuscany and Liguria are the prime locations for a vacation home. Due to popular demand for homes in Tuscan cities like Pisa and Lucca, a quarter of buyers interested in these locations represent the "6% price growth" and 30% increase in inquiries in 2021. With luxurious landscapes and surrounding vineyards, these homes hold rental value for their money, costing 1.7M Euros ($1.8M), substantially less than Tuscany's high regional home prices of 3.7M Euros. With any property purchase being a substantial financial commitment, the safer options include vacation homes on France's south coast, Marbella, and the Balearic Islands, where they are still ranked heavily as valued properties.

Tuscany Vineyard Holiday homes
Frank Bienewald/LightRocket via Getty Images
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If the purpose of the purchase is for future property investment and its price growth, then start looking in Berlin, Germany. While Berlin offers "high-end" properties, the city has witnessed immense price growth within the past year. As the city is categorized as "the most international city in Germany" with upscale architectural high-rise properties, these are attractive factors for investors. Due to the fast-growing population and influx of foreign and U.S. residential and commercial buyers, apartments can sell for as much as 3.8M Euros. With luxury properties increasing in value by at least 12.6% on average, Germany takes the lead in capital growth, followed by "New York (7.3%), Hong Kong (3.1%), and London (2.5%)." Still, when purchasing properties in these cities for a second home, proximity comes at a cost. So, it is essential to consider locations.

Also, the dollar is strengthening while the euro is weakening within the property market. Due to exchange rates, buyers from the states currently face a staggering 15-20% discount on upscale properties. These discounts look more attractive by the minute, and this has caused a 37% increase in U.S. buyers interested in European - specifically French - properties. Whereas before, property investors were more focused on the luxurious aspects, they have swapped their searches towards cities with substantial cultural value. As these European cities continuously grow in traditional interest, American investors will likely see high potential from the discount rate...

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