How to choose a city for real estate investment

Most pieces called “best cities for real estate investment” rank cities as if every reader wanted the same thing from a building, and as if every city produced the same kind of result. Someone chasing rent in a currency they do not earn is solving a different problem from the reader who needs a market deep enough to sell an ordinary apartment in an ordinary week.

This page is the method for that split. Name what the holding is for, then run the same checks on a short set of cities. When the desk has sourced figures that can sit beside one another, a dated ranked shortlist is a separate piece.

Name the holding before the city

Before a city name goes into a spreadsheet, say what the holding is for. Pick the purpose that matches your file.

• Income. Rent that reaches you after the real costs.
• Preservation. A market deep enough that you are not searching for one unusual buyer in the week you need to leave.
• Use. You or your family might live in the home, and you are willing to let the investment result come second.
• A currency position you accept. You are taking exposure to another currency on purpose, because you can live with that exposure. You are not collecting it by accident because that happens to be where the building sits.

Skip that choice and the comparison hides the muddle inside a table. A table is a fair form once the purpose and the checks are filled. Until then it only looks settled.

What a city means in this comparison

In this comparison a city is a bundle of conditions, and employment is where the analysis starts. Who has work, and is that work spreading across more households or narrowing toward fewer of them? Then look at the housing already permitted or already under construction. Then read the rules landlords and foreign owners have to live with, and the taxes and transaction costs of buying and of selling. Then ask whether credit is available to you. Banks in that country can be busy lending to local buyers and still be closed to you. Last, set the city’s currency next to the money you live on, and mark the gap if there is one.

A national average smears those conditions together until the city you would buy in disappears. Prefer the checklist of demand, supply, rules, yield, exit, financing, and currency.

The seven checks, in order

Run these seven checks on every city you are considering, including the ones you already like. Writing them down shows where you are leaning on a feeling, and where you have a fact.

1. Demand that can pay. Look at job growth, at how many new households are forming, and, in prime markets, at how deep the pool of outside buyers really is. A larger population that cannot pay the rent or the price is not demand for the asset you would own.
2. Supply you can see coming. Count completions. A slogan about limited land is not a supply figure. A city can be tight on a map and still have a large pipeline of the exact unit you would buy.
3. The rulebook. Read the rent regulation, the eviction process, the limits on short lets, the transfer taxes, and any approval or surcharge aimed at foreign owners. A rule you dislike is still a fact you can put in the model. A rule you have not read tends to arrive later as a bill.
4. Net yield. Begin with gross rent and take off vacancy, management, maintenance, insurance, and the local property tax. The brochure prints the figure before those deductions. What you can spend is what remains.
5. Exit. Count how many comparable sales closed in the last year, and note how long listings sat before they sold. A gain that exists only on paper, in a market where you cannot find a buyer, is a story about an earlier price. You cannot take that story with you as cash.
6. Your financing. The mortgage rate a local resident can get is not your rate. Where a non-resident cannot borrow, the purchase is an all-equity purchase, and the opportunity cost of tying up that equity belongs in the comparison with every other city.
7. Currency. Rent and the resale proceeds arrive in the city’s currency. If your spending money is a different one, the exchange rate sits beside the building as a second result. The international guide works through that second result on its own.

How to run the comparison again

Keep this pass plain so you can run it again next year without inventing a new theory to justify the cities you already preferred.

For each city, give each of the seven checks its own paragraph. Then add one line naming the purpose: income, preservation, use, or currency. If the line and the paragraphs disagree, the city is not a candidate yet. A handsome brochure yield, with nobody on the other side of the sale, is that kind of disagreement. So is a story about storing wealth, told about a thin market with very few buyers.

Stop around four cities. Past a short set, the notes get thin. A longer list can wait until each city has the same sourced figures. Come back to the purpose when borrowing costs move, when a tax changes, or when a fresh wave of supply is delivered. A conclusion you were happy with in 2024 is not a conclusion you can still use in 2026.

The roles cities play

Investors talk about cities because a city can play a particular role for a particular buyer. Naming the role keeps the conversation honest. A buyer can need more than one of them.

• Deep resale markets. These are large, established cities where an ordinary apartment can be sold without a search for a one-of-a-kind buyer. People name London and New York so often because sales there are frequent. They do not name them because the rent is generous relative to the price.
• Income markets. Here the attraction is rent compared with the price you pay. The work is getting from the gross figure to the net one, including vacancy and management, and then seeing what survives once the currency is translated into the money you spend.
• Constrained prime markets. New supply is slow in the locations buyers actually want, and capital from outside the city is a regular bidder. The price is high because of that structure. The high price, standing alone, has not paid you anything yet. The guide to reading prime-price surveys shows how to read that entry cost.
• Transition markets. These cities are coming out of a bust in credit, in construction, or in confidence. A low price becomes interesting only after the demand check has started to turn. Until that turn shows up, the low price is not yet a reason to buy.

When a city note can show the supply picture, the rules, and the liquidity, it goes under Cities and markets. Until a note can show those three things, leave it off that index.

What carries more weight in 2026

The seven checks are the same ones the desk would have used a few years ago. A handful of inputs deserve more of your attention than they did when debt was very cheap.

• Price the loan you can sign. Policy rates have come down from their peak in some countries. A buyer who lives elsewhere may still be unable to borrow, or may borrow only at a rate charged to non-residents. Underwrite the deal with the financing you can get. Keep an all-equity version beside it, so you can see what it costs to leave that cash in the building.
• Ask what is being handed over. Projects delayed earlier in the decade are being completed in some cities now. The pipeline that matters is the pipeline of your unit type. A citywide crane count mixes in offices, hotels, and apartments you would never own.
• Treat insurance, climate risk, and building condition as operating costs. In a growing number of markets those items move the net yield about as much as the management fee does. If the number is missing, label the yield as a sketch.
• Read the foreign-owner rule that is in force this year. Some countries have tightened those rules, and some have loosened them. A summary from 2021 is not a source you can still rely on. Use the current official text, or pay someone qualified in that jurisdiction to read it with you.
• Name the foreign buyers, rather than treating them as a single crowd. People who earn in different home currencies arrive and leave at different times. If a market has depended on one foreign group, that is a concentration, and it belongs next to the demand check.

How the other guides fit

The city choice is the first decision in the file. Renting out property abroad: letting rules and tax in five markets applies the same discipline when the holding is meant to pay rent, reading official letting and rental-tax rules across five markets. International real estate investing is what changes once the building, the owner, and the currency are not in the same place. Foreign and non-resident buyer rules is the matrix for whether you may own, let, or borrow at all. How to read a prime-price survey is there so a price table is not mistaken for a table of performance.

Limits

This page is a comparison method. A buy, a sale, or a loan is yours to choose, and the next price is not in the notes. Your tax residency, your debts, and whether you can look after a building you rarely see are outside it.