Sport has the capacity to elicit an unparalleled passion in many people. The thrill of the live action thrown up by the best sporting events in the world makes them sought-after occasions that attract fans from across the globe.
As any shrewd property investor will tell you, demand of any nature is good news when it comes to the future value of your property investment and the potential for it to gain in value or attract a regular source of rental income.
So, the sporting ‘demand’ around top events in the world of sport also makes for a lucrative avenue to explore for a property investor. Whether you’re looking for a base to take in the action yourself, or just after a location with potential for good returns, it pays to understand how to tap into the power of sport.
As with any investment in bricks and mortar, location is key and never more so than when it comes to sport. To get the very best from this it is important to highlight the cities around the world that enjoy more than their fair share of sporting action.
Here’s our guide to the five best places to invest and some of the factors you must consider when going into the market in each of them.
Tokyo, Japan
Tokyo is just a few years away from an exciting sporting double header. It will be one of the host cities when the Rugby World Cup comes to Japan in 2019 – they’re the next country to host the tournament after England this year – and will then host the summer Olympic Games in 2020. The city is also home to the Japan Sumo Association, with three tournaments every year to offer a flavour of the local sporting scene.
Japan is also a decent country to invest in when it comes to property.
A government bond-buying programme has helped to encourage economic growth and lower the cost of borrowing in recent years. Cheaper borrowing has gone hand-in-hand with strong demand and rising prices, meaning rental yields of about 5%.
The yen is weak, meaning foreign currency has a greater purchasing power, and investors will also benefit from the knock-on effect of infrastructure projects that go hand-in-hand with preparations for the major sporting events in Tokyo.
Writing on Japan Today, Tony Collins says most investors prefer to borrow as little as possible and pay it back as soon as possible, benefitting from sub-2% variable rates or fixed deals that hover around a similar figure.
Foreign buyers should note that there is a mortgage premium that can add a couple of per cent to the rate for investors.
Collins says: “My assessment is that it is reasonable to take an aggressive approach to the loan size, but to be conservative with the interest rate. This could mean taking a 100% loan, even capitalising loan costs, but fixing the interest rate for at least 10 years or the full mortgage term, which frees up capital for other investments.”
He adds: “It is fair to say that lenders are nervous about providing loans to foreign nationals, which makes it essential to take great care with the loan application. An important factor in borrowing is residential status, or the willingness of a Japanese spouse to act as guarantor (‘rentai hoshonin’). This is because repossessions are easier if the mortgagee has resident status in Japan. A permanent resident’s visa increases lending options.”
Lenders such as Orix Trust, NAB Asia and the Bank of China offer loans to non-residents, although restrictions or lower lending ratios apply.
Collins explains: “Understanding the requirements, underwriting processes and lending criteria of banks, as well as the reasons for rejections, can be frustrating. This is particularly so when rejections are communicated as ‘sogoteki na handan,’ which can be translated as a general assessment or, perhaps more accurately, as a decision without explanation.
The experience, knowledge and ability to interpret cultural passwords, as well as a long list of contacts at financial institutions, are invaluable advantages a mortgage advisor can bring to the table.”
The trick when buying in Japan is to think of land values, rather than specifically about property prices themselves. As this BBC article shows, new homes and condos are often rebuilt after 30 years, meaning the land they are built on takes on even more significance.
The Chuo and Chiyoda wards in particular – at the heart of the city – attract the highest prices and most interest.
Melbourne, Australia
Melbourne’s sporting credentials are almost unrivalled. It boasts five superb international standard sporting venues and is the place to be in Australia for the Formula One Grand Prix, Australian Open tennis tournament and the annual Boxing Day test cricket match.
That cricket match is played at the 100,000 capacity MCG, also home to the AFL Grand Final.
To buy a property near to the action you’ll first need to obtain permission from the Foreign Investment Review Board (FIRB) – provided you are not Australian or don’t have an Aussie spouse. This normally takes 40 days but beware that it can drag on as much as 130 days. You can get as far as exchanging contracts on the purchase of a property before getting this approval but these contracts will be conditional on actually getting this through.
Further permission is required from the board before a property can be sold.
The FIRB isn’t the only piece of red tape involved in an Australian purchase and so, as with any international purchase, it is vital to seek legal support from someone with local knowledge.
Buyers must pay income tax once they are in the country for more than six months and must pay Capital Gains Tax unless the property is to be their main home.
The suburb of Toorak is the most sought-after area in Melbourne and is synonymous with luxury and wealth, with streets such as Albany Road and St George’s Road lined with stunning properties that, on their own, make Melbourne worth considering for investment.
Paris, France
Like Melbourne, Paris benefits from being the home of an annual tennis grand slam. There will soon be added interest in events at Stade Roland Garros, however, with work due to be complete on an expansion of the famous venue. Paris Mayor Anne Hidalgo announced that the contracts had been signed to get started with this project shortly after this year’s tournament. Work is due to be completed in 2019.
Not only will Paris enjoy a rejuvenated tennis showpiece, it will also be a major host city as France stages the Euro 2016 football tournament. Five games will be held at Parc des Princes while the Stade De France in the Paris suburb of Saint-Denis hosts seven matches, including the opening game, final and a quarter final.
Buying a property in the French capital involves a series of fees and charges set by the French government. It’s worth noting that new build properties are subject to VAT of just under 20%, whereas those older than five years are not subject to any.
While many English investors might be tempted to rely on their school-learned and holiday-honed language skills, this would be a bad move. All property purchases should be handled as serious legal transactions and it’s important to understand the details of every aspect of a purchase. For that reason it makes sense to pay for transaction services, both in terms of documents that you need to read and correspondence that you need to draft yourself.
Once this is secured a purchase should be fairly straightforward and not too dissimilar to those in the UK – and the pound’s strength against the euro should ensure that a Parisian property is a shrewd investment.
The city itself is split into 20 numbered neighbourhoods or arrondissements. The numbers get higher as you get further away from the centre and, in general, the more spectacular properties are in the more central, lower numbered arrondissements. The 3rd and 4th are particularly attractive, being home to the fashionable Marais and Ile-St-Louis. Try the 6th if you like medieval streets, bookshops and restaurants and a cool atmosphere.
Minneapolis, Minnesota
Perhaps not the most obvious place in the United States, Minnesota is, nevertheless, about to be thrust into the global sporting spotlight.
Golf’s premier team tournament, the Ryder Cup, will be held at the Hazeltine National Golf Club in Chaska, Minnesota from 30 September to 2 October 2016. The 41st Ryder Cup pits the best golfers in the USA and Europe against one another and will be a special occasion for the midwest state.
That alone will increase the interest in the region but Chaska’s very-near neighbour Minneapolis is also due to host Super Bowl LII in February 2018. The event will take place in the yet-to-be-built US Bank Stadium, the new $1bn home for the Minnesota Vikings.
The stadium also hosts the NCAA basketball Final Four the following year, making it a sporting trio for Minnesota and well worth a property investment.
There are no restrictions to buying houses in the USA as a foreign national but there are a number of things you must be aware of. Remember too that you’re investing in Minnesota, not the United States as a whole. Bear the federal nature of the country in mind and ensure you are following the laws of the individual state.
Minnesota has a fairly thriving economy – with the headquarters of big national firms such as Target, 3M and Best Buy all based there – and a progressive tax system with income tax bands ranging from 5.35% to 9.85%. Investors also pay a property tax to their county, municipality, school district, and special taxing districts.
Buyers will need to find a realtor (an estate agent) to get help and should be aware that most mortgage firms will want a 20% down payment from a non-US national when it comes to buying a house.
Anyone investing in the USA also needs to look into visa and residency requirements. You can stay for 90 days under the Visa Waiver Program or you can opt to apply for a B-2 Tourist Visa, which can last for up to six months.
If you’re staying longer you’ll need to become a permanent resident – the famous Green Card – and that will mean you’ll need an immigration lawyer’s assistance. Owning a property will not, in itself, be enough to sway your application.
Minneapolis is broken down into 11 communities and 81 different neighbourhoods. In general, the nearer you are to one of the three lakes, the greater the value of your property. Calhoun-Isles is the best place to search for property – while it’s best to avoid Phillips.
London, England
British shoppers shouldn’t ignore the fact that one of the world’s most attractive sporting cities is in fact the English capital.
Those looking for a sound sporting investment would be best advised to look to the south west of the city. Not only is this the home to the famous Wimbledon tennis grand slam tournament but it is also the part of the city that is home to Twickenham, home to international rugby encounters.
Being close to those two will put you in a nice part of the city – and will still leave you handily placed to take in action at one of London’s five Premier League football teams or test match cricket at Lord’s – the Home of Cricket itself – or The Oval.
London, we mustn’t forget, is actually the site of some of the most stunning properties in the world. Anyone doubting that fact need only search the pages of FT Property Listings to see what it actually has to offer.
Just because London is in the UK, it’s not a cue to be complacent. Any sensible property investment involves the input of experts and legal documents, frankly, feel like a different language anyway.
The green spaces and good schools in and around Wimbledon make it attractive and have seen strong growth in property prices. John Collard, director of Robert Holmes and Co estate agents, told the FT: “Wimbledon Village is where town meets country. You have a common to walk on, nice pubs, and it is not crowded or built up. There is a golf course, a riding stable, and at the same time you can probably be at Waterloo station within 25 minutes.”
Sounds like the perfect location once the sporting element is added in.
It’s clear that several factors are common throughout all cities. Their sporting pedigree is often a sign of economic strength and the investment in infrastructure that surrounds a big tournament or event adds much to a city’s attraction. People do not, frankly, build test match cricket grounds or $1bn American Football stadia in run down areas.
By spotting which cities have the strongest credentials you’re able to consider the best places for investment. These investments have rich rental potential and good scope for price growth – as well as giving yourself a handy base if you fancy a slice of the action. Just buying a house to take in one event might seem costly – but realising the long-term potential for a city or area that hosts such an event can actually lead you to a lucrative investment opportunity.