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5 Reasons to Invest in Emerging Markets

September 29, 2017Article by Paul Avery

A question we’re often asked by our clients is, ‘should I keep my money in the UK or look abroad to emerging markets?’.

There is no correct answer to this as everyone’s investment strategy is different, however emerging markets can sometimes seem intimidating or an alien concept to many investors.

So, what do we consider the top five reasons to invest in an emerging market?


1. Take advantage of their soaring growth

Data from FocusEconomics shows emerging economies growing an average of 4% per annum, compared to developed economies, which sit just below 2% per annum. Furthermore, 70% of global growth over the next few years is expected to come from emerging markets (Forbes). Emerging markets accounted for just 20% of the global economy 25 years ago. Today they have doubled their share and are amongst the largest economies of the world (IMF). This trend is driven by increased domestic and foreign investments, the creation of new industries, more jobs, and thus a growing population of massive middle-class consumers

2. Diversify into a new, increasingly stable, part of the world economy

These new economic engines are also becoming more reliable investment targets, with better laws and land rights, better ease of doing business rankings, and more sophisticated, diversified economies. Looking at the World Bank ease of doing business index shows some emerging economies rank even higher than traditional markets – i.e. Thailand comes in at #46 and Italy sits at #50, just slightly above Rwanda at #56.

3. Leverage the rising affluence of those in emerging markets

Emerging markets are seeing disposable incomes steadily increasing amongst their populations. Standard Chartered reports nearly two thirds of the emerging affluent have seen their incomes rise in the past year. The growing population of middle-class consumers are often ambitious and mobile, but not to the extent that they can afford mortgage deposits, and so represent a huge cohort of potential renters, and a great opportunity for buy-to-let investors

4. Housing is aspirational

Home ownership is an important goal for populations in emerging markets. Buying property is a top priority for the emerging affluent in the next five years, and tops the list of their 10-year wealth goals (Standard Chartered). As more people enter the property market in emerging markets, prices will increase as well as create a safety net for an easy exit once the investor is ready to sell up.

5. Your own piece of paradise

Depending on which emerging market you intend to invest in, you can also reap rewards other than the monetary kind. Both buy-to-let and hotel room investments in emerging markets have the potential to include annual personal usage. This can save you a lot of money if you’re a regular tourist in the Philippines, Thailand or even Zanzibar!

>> Click here to view our exclusive emerging market investment – Fumba Town, Zanzibar

>> For detailed information into the exciting, emerging market of Africa, download our Africa Market Report

 

The emerging markets of Tanzania and South Africa

Author

Paul Avery

Paul joined us in 2016 to lead our in-house research efforts, producing reports and guidance for clients as well as the strategic market analysis behind our new project launches. His background is in sustainability in the construction sector, and he is currently being trained in property valuation to further bulk up his investment creds.
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