A key consideration of investing in another global market is not just the price of the property you’re buying, but the associated costs of buying, holding and then selling that property.

For a buyer looking for a $650,000 property, Vancouver tops the list as the most expensive city in which to invest. A buyer would be expected to pay 36.6 per cent of the purchase price in costs, with the bulk of this cost (28.6 per cent) at point of purchase. In 2016 Vancouver introduced an additional property transfer tax of 15 per cent for foreign nationals, which has been subsequently raised to 20 per cent.

Likewise, foreign buyers purchasing in Hong Kong would expect to pay 32.0 per cent in buying costs, 15 per cent of which is an overseas buyer stamp duty. And in Sydney, foreign buyers incur an additional 8 per cent surcharge on buying costs.  

With that in mind, the 2 per cent overseas buyer Stamp Duty Land Tax surcharge being introduced in the UK from April 2021 means that London remains a competitive market for international investors. And this is despite the 3 per cent surcharge that was introduced in 2016 for those buying an additional home.

While most of the cities on this list have the majority of costs associated with buying, New York is the only market where costs are more weighted to holding and, particularly, selling. Buying costs are only 2.7 per cent of the purchase price, whereas the proportional cost of selling is the highest of these 10 cities at 7.2 per cent. This is because sellers pay the transfer tax in the US and the agency fees (at approximately 5 to 6 per cent) are the highest of all these cities.

While this highlights that there can be key differences in costs between geographic regions, the maturity of more local markets can also impact these costs.

For example, the total cost of buying, holding and selling in Hong Kong (at 35.3 per cent of the purchase price) is considerably higher than buying in Shanghai at just 7.5 per cent (see table below). Hong Kong is a more established and affluent market which has traditionally seen higher levels of international investment and as such now has that 15 per cent overseas investor tax. Shanghai, on the other hand, is a more emerging market for global investment as it has stricter requirements for foreign buyers.

As such, Shanghai is bottom of this list, with the lowest associated costs of buying, holding a selling a $650,000 property as an overseas investor. 

Note: Our scenario assumes a non-resident overseas buyer purchasing a $650,000 property (which in the UK equates to approx. £500,000). This is for use as a second home for less than nine months of the year over a five-year hold. No capital growth has been applied, avoiding the complication of having to forecast that for each city.

Further information

Contact Savills World Research