Find out which countries experts are recommending for the second half of 2010.

Some part of report...

Every year we look at property around the world, and select locations for potential property purchases which make good investment sense. Our criteria have little to do with the locations' aesthetic attractions. Some would say our criteria have little to do with common sense! That's because we narrowly focus on how much appreciation in value a property in a certain location is likely to see, and the stream of future earnings it will yield. These are guesses, but based on our data.

Introduction
The world looks a much happier place than 12 months ago. The world'seconomies are recovering, and housing markets are recovering. Which parts of the world are most attractive for property investment today? The Global Property Guide looks through the options and has some suggestions.

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Our recommendations

Governments around the world have responded to the crisis by lowering interest rates. That's pushing many property markets up again - temporarily. But eventually, things will return to normal, when sensible interest rates return.Conclusion 1: Don't buy in parts of the world which have just come out of housing boom (except in the US). In countries where prices have not fallen, they will fall (in real terms) as interest rates rise. Where prices have fallen, no need to hurry. Housing market recoveries tend to start slowly. The housing market is not the stock market. There is time. Yields are low so there is little out there that's so attractive.

In our view, the US is an exception, because in some part of the US, residential prices have fallen so much, that there is value

Conclusion 2: Buy in Latin America and other high-growth economies. The leading emerging economies are experiencing another kind of boom - a productivity boom, a growth boom. But property cannot be bought in China, India or Vietnam, so that leaves only some parts of the developing world Many Latin American countries are seeing the sort of institutional reforms that grew the mortgage markets in Eastern Europe, and raised valuations so much. These reforms will encourage the growth of the mortgage markets, encouraging the mass purchase of housing.

Conclusion 3. Buy where yields are good, preferably where high GDP growth is
to be expected....

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HOW WE RATE COUNTRIES' PROPERTY INVESTMENT POTENTIAL
The Global Property Guide's mission is to conduct impartial research into residential property markets, with a view to investment returns, on the basis of the well-known principles of 'fundamental investing' which, as applied to the residential property markets, may be summarized thus:

We believe that gross rental yields, like P/Es on stocks, are good indicators of whether house prices are fair value (even if people are not 'buying for yield'). High transaction costs, high income taxes, high capital gains taxes, are all strong negatives, lowering the prices which are appropriate. High local interest rates, too. Strong GDP growth is a very important factor pushing house prices up. However, it is hard to forecast. Even the OECD forecasts only stretch 2 years out. Governance matters. Inefficient and corrupt governments hamper GDP growth. Watch for negative news stories, high inflation, and balance of payments problems. Where there is good government, we prefer to know this will continue, i.e., are reassured if there is a visible successor government/president of good quality. Attractive countries with beaches, historical monuments, and peace and order tend to do well, long-term....

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