Offshore Property Investment Tactic

One might be able to use known relationships between income and value to derive interesting new real estate investment strategies — using fundamental value drivers, rather than the supply/demand estimators typically used by real estate investors.

Real estate investors typically use interest rates and supply forecasts (building permits, etc.) in their trading decisions. But these measures don’t forecast demand. Here is a thought on how to do that, and what it might suggest as an income investment tactic.

Economists agree that, in the long run, rents rise at about the same rate as GDP per capita. If this is true, then it the best real estate investments should be located in places with rapidly rising GDP.

This certainly proved true with recent success stories like Ireland, where property values exploded after admission to the European Union.

Obviously all the commonly known factors still apply: interest rates, supply, etc. Moreover, you have the implicit requirement of defensible property rights.

Thus a good investment tactic would be to find income property in countries that have recently joined the EU, such as Poland and Lithuania. A necessary condition would be to verify that such countries have stable real property rights.