They say the worst thing is a perfect date where everything goes according to plan, and then suddenly you get ghosted. However, as my life experience shows, investing in overseas real estate in 2025 can be more painful than unexpected ignoring. Because they promise you 20% per annum, you dream of a balcony with an ocean view, you imagine morning coffee under a fig tree, and then dreams collide with reality and you don’t get the ROI (editor’s note: Return on Investment – an indicator of investment payback, which shows how much profit or loss the invested money brought), because the area was chosen incorrectly. Or you buy for rent, and the tenants are only seasonal.
Approximately 70% of investors in “profitable” real estate, according to my analysis, lose money or do not receive the expected profit. The reasons are trivial: incorrect location choice, unreasonable expectations, weak demand analysis, and underestimation of costs. So this column is a cold analytical filter for hot real estate markets and an attempt to answer the question “How do the 70% of unsuccessful investors differ from the 30% of investors who have a stable expected profit?”
The real estate market can be divided into 3 categories: stable leaders, potential stars, and old-school properties losing popularity. Let’s start with the stable and reliable ones.
Portugal
Portugal takes first place in this category. It’s like an ex who still looks good and flirts, sending flowers on holidays. The most active investor demand is observed in Lisbon and Porto. This is not surprising, as these cities are the most visited in the country by tourists. So the direction of real estate here is obvious – for short-term rental to tourists. Among the “pitfalls” to pay attention to are restrictions in the “golden visa” program and Airbnb regulation in some municipalities. So, when buying real estate in Lisbon or Porto, keep in mind that the program that allowed foreigners to obtain a residence permit in Portugal in exchange for investments has not been working since October 2023. Moreover, there may be inconveniences with renting out housing. After all, in the country’s tourist cities, there is a moratorium on registering new short-term rental properties. This means that property owners cannot legally rent out an apartment through Airbnb or Booking if they do not have an Alojamento Local license.
Spain
In second place is Spain. A clear and stable market, demand among Europeans for short-term rentals is growing in Costa Blanca, Malaga, and Valencia. The latter, by the way, has become one of the most popular cities for Ukrainians to live in since the beginning of the full-scale invasion. However, there are risks here too. Firstly, in most coastal areas, real estate prices are inflated; secondly, one should be more careful with investments in Barcelona. After all, the local authorities have declared “war” on short-term rentals and plan to cancel all rental licenses by 2028. This is to “free up” housing for the local population due to the rapid increase in rental costs. So this direction is not for “beginners” but for “sharks” of investment real estate.
UAE
Another prominent leader among countries for real estate investment is, of course, Dubai. Among its strengths: tax-free income, a 10-year “golden visa,” large-scale development, attractiveness for relocators from Europe and the CIS. However, when investing in the Dubai real estate market, prioritize projects with a guaranteed rental rate and avoid overcrowded areas where purchase prices have increased by 20-30%, but this has not been reflected in rental values.
Another player that is gradually but confidently emerging from Dubai’s shadow is Abu Dhabi, the capital of the UAE. This market is strategic and more mature than it seems. Unlike dynamic and glossy Dubai, Abu Dhabi is about stability, strategic planning, and less speculation. There is less “hype” here, but more long-term projects focused on mid-range and premium housing, as well as residential areas for residents and corporate clients. In addition, square meter prices here are lower than in Dubai, by approximately 20-25%. However, rental yields remain at 6-7% per annum.
Next, we move on to areas that are just gaining popularity among investors. They are like new flings – promising, but one must be cautious.
Greece
After the economic recovery and GDP growth of 2.2% in 2024, Greece has become a noticeable player in the real estate investment market. Athens and Thessaloniki are suitable for long-term rental properties, and the islands for seasonal rentals. Also, when choosing this direction for investment, pay attention to the updated rules for obtaining a residence permit: if previously it could be obtained for an investment of €250,000 in real estate, now this threshold has increased to €800,000 in popular regions (Athens, Piraeus, Thessaloniki, Mykonos, Santorini, and islands with a population of over 3,100). It is also important that the investment amount is not split into several objects, but must be invested in a single property.
Cyprus
Another country now called a “new bright star” in the real estate investment sky is Cyprus. Currently, there is stable demand from investors from Ukraine, Israel, and the Middle East, especially among IT specialists, entrepreneurs, and freelancers. The most popular destinations are Limassol, Nicosia, Paphos, and Larnaca. New buildings, apartments in residential complexes with a closed territory, parking, and a swimming pool are popular. At the same time, the profitability for short-term rentals is observed at 6-8% during the high tourist season, and 3.5-5% for long-term rentals. However, please note that in 2024, Cyprus abolished the “non-domiciled” status, which exempted foreigners from taxation on dividends and interest. The new conditions for taxing rental income are 15%, after deducting expenses. In addition, there is a defense contribution of 3% on income and an annual local municipal fee of ≈ €200–600/year, depending on the region.
Japan
If you are less interested in residential real estate for rent, I recommend paying attention to Japan, especially Tokyo. Where capital investments in office real estate increased by 23% in 2025. The market there is stable and constantly growing. Property rights are clearly regulated, and corruption risks are minimal. Among the disadvantages: complex bureaucracy for foreigners and high documentation requirements – however, this can be solved by working with local lawyers and financial consultants.
However, not all directions justify high expectations. Among the markets where investment romance collides with harsh reality are countries that were recently considered “golden classics.” But today they increasingly resemble relationships where you stay only out of habit, not out of prospect.
Great Britain
Among the lovers who no longer warm the heart, London can be singled out. Currently, the market is experiencing a collapse in luxury sales of -37%, property taxes are rising, and strict rules for non-residents are in place. However, if you do not plan to abandon this direction – pay attention to less “branded” areas. As Americans have been doing recently, investing money in a market that is falling into an abyss, hoping for a quick recovery in the future.
Germany
Another less promising direction for real estate investment recently has been Berlin. Among the problems: limited supply in the market, low rates of new construction, and strict regulation of rental relations. And the ROI itself is often below 3%, which essentially does not justify the investment risks.
So, investing in foreign real estate is something similar to choosing a man in a suit and a leather jacket: both can turn out to be abusers and traitors, with both there can be differences in tastes and needs. But at the same time – both can well turn out to be those who will carry you in their arms, support you in difficult times, and justify every expectation invested. So, when choosing, listen not only to numbers and analytical forecasts, but also to your heart and intuition.
But seriously, the key to breakthrough is strategic thinking, understanding local nuances, and cautious risk management. I advise choosing those directions that correspond to your goal: whether it is rental income, tax benefits, or residency or citizenship.
Olena Sosedka
AloJapan.com