Owning residential property in a major world city, either as an investment or pied-à-terre, is high on the wish list for wealthy buyers, but the associated costs of purchasing, holding and selling can increase the price tag by up to a third depending on location.
In our analysis, we’ve assumed a non-resident, overseas buyer is in search of a US $2 million house or apartment in any one of 17 key cities, intending to spend fewer than nine months of the year there over a five year period. We’ve looked at local property charges, but to keep it simple haven’t factored in capital growth or relative inheritance tax burdens.
Hong Kong emerges as the most expensive of all our global boltholes. Here, overseas buyers face an additional 30 per cent stamp duty charge and there’s also a penalty of between 10 and 20 per cent for speculators who try to sell within three years. In total our buyer can expect to spend an additional 33.3 per cent above the purchase price.
Second and third spots are taken by Singapore and Tokyo with Sydney the fourth most expensive place both to buy and for overall costs. In 2017, New South Wales doubled stamp duty for foreign buyers from 4 per cent to 8 per cent in an effort to cool price rises in the city.
Moving to Europe, Berlin completes the top five – it’s actually the third most expensive city for a buyer but the exit is easier with no charge on disposal.
In sharp contrast, the cheapest option would be to head to Moscow. With no stamp duty and just a $65 registry fee, the main costs come when it’s time to sell with the 3.5 per cent agency fee paid by the vendor. Total extras amount to 4.5 per cent.
US cities dominate the middle of the table. Selling costs are high – rising to 8 per cent in New York – as are holding costs, while buying costs are low.
Brexit aside, London is one of the most accessible cities in our analysis. Although buying costs are close to 10 per cent of the purchase price, low holding (0.7 per cent) and selling costs (2.3 per cent) make it 12th overall. There is an additional 3 per cent stamp duty tax for second homes payable by domestic and foreign buyers alike.
Here’s how the costs pan out across the globe: