For those buying a property abroad, a key consideration 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 $2 million property, the top three cities with the highest overall transaction costs are Vancouver, Hong Kong and Singapore. Here, an international investor would be looking at costs relative to the purchase price of 38.0 per cent, 33.9 per cent and 25.1 per cent respectively.

In all three of these markets the majority of the costs are associated with the buying process rather than holding or selling the property. And all three markets have particularly high tax surcharges for overseas buyers ranging from 15 per cent to 20 per cent.

By contrast, markets across the US such as Miami, San Francisco and Los Angeles have the lowest costs to purchase the property, with costs less than 1.0 per cent of the purchase price. However, New York stands out amongst its neighbours with a higher purchasing cost at 4.0 per cent. This is due to the 'Mansion Tax' introduced in the city in July 2019 which saw a change from a flat 1 per cent surcharge on properties over $1 million to a progressive rate starting at 1.25 per cent on homes between $2 million and $3 million and up to a maximum of 3.9 per cent for homes above $25 million. 

This is in contrast to cities such as Berlin and Madrid which see a flat rate of purchase tax, at 6.0 per cent and 0.75 per cent respectively, irrespective of the purchase price.

In terms of holding costs, Miami and Tokyo are most expensive with occupancy taxes over a five-year period running at more than 6 per cent of the purchase price. At this price point the holding cost in Paris also increases with an annual progressive rate of wealth tax when net personal wealth exceeds €1.3 million. Whereas in Chinese cities such as Shenzhen, Guangzhou and Beijing, as well as Bangkok and Dubai, holdings costs run at 0 per cent.

Indeed, these Chinese cities along with Moscow have the overall lowest costs of buying, holding and selling a property. Shenzhen, where the associated costs of investing are just 3.9 per cent of the purchase price, is almost 10 times cheaper than buying a similar property in Vancouver.

Note: Our scenario assumes a non-resident overseas buyer purchasing a $2 million property (which in the UK equates to aproximately £1,585,440). 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

The cost of buying, holding and selling a $650,000 residential property

The cost of buying, holding and selling a $10 million residential property

Contact Savills World Research