How US Tariffs and Economic Shifts Impact on the Global Holiday Home Investment Market

US Tariffs and Global Economic Impact

In April 2025, the United States reintroduced sweeping tariffs on imported goods, including a blanket 10% levy. These measures — part of a broader push for economic protectionism — have triggered ripple effects across the global economy. For countries reliant on the US supply chain, the cost of goods and raw materials has surged. Let see how US Tariffs impact on Global economic market and what is happening in holiday home markets.

According to data from CBRE, the US tariffs could push global GDP growth down to 1.3% while simultaneously driving inflation upward past 3%. Many international property markets, especially those sourcing construction materials or furniture from the US or Asia, are seeing price hikes across the board.

From a property development perspective, US builders have already reported an estimated $9,200 increase in the cost of constructing a new home due to tariffs. Extrapolated globally, this means that both new developments and renovation projects are being repriced to reflect increased material costs. For example, timber, steel, electronics, and smart home systems have all become significantly more expensive.

Meanwhile, uncertainty around global monetary policy has introduced volatility in mortgage and financing rates. While early 2025 saw interest rates dip due to investor shifts to safer assets like US Treasuries, experts warn this may be short-lived. Laurence Kotlikoff, an economics professor at Boston University, has suggested that if trade tensions continue, long-term rates could rebound, potentially reaching double digits.

Global Holiday Home Market Resilience

Despite the macroeconomic pressure, the global holiday home investment market remains surprisingly resilient. According to the UN World Tourism Organization, international travel rose by 18% in 2024 and is expected to grow another 12% in 2025. This growth is largely driven by pent-up demand post-pandemic and the widespread adoption of hybrid or remote work models.

Investors are now targeting lifestyle destinations where second homes can serve dual purposes — as a retreat and an income-generating asset. The proliferation of flexible rental platforms such as Airbnb, Vrbo, and boutique holiday lettings has made it easier than ever to monetise holiday properties.

Moreover, the digital nomad phenomenon continues to influence buyer preferences. Destinations that offer favourable digital visa programs, modern infrastructure, and good quality of life are seeing increased property demand. Countries such as Portugal, Greece, and Mexico have all introduced or expanded residency incentives to attract remote workers who can contribute to the local economy.

Investment Hotspots for Holiday Homes in 2025

Southern Europe

Spain, Portugal, and Greece remain dominant in the holiday home investment landscape. Spain’s Costa del Sol recorded a 17% year-on-year increase in transactions during Q4 2024. Buyers are drawn not only by the climate and lifestyle but also by beneficial visa and tax schemes. However, investors must act quickly — Spain’s Golden Visa program is set to be phased out by the end of 2025. Portugal remains attractive due to its low cost of living, safety, and stable rental yields. Greece has seen a surge in interest across islands like Crete, Santorini, and Paros, thanks to competitive pricing, strong tourism growth, and the country’s Golden Visa program.

Turkey

Turkey is emerging as a surprise leader in value-for-money investments. Strong tourism recovery, government-backed infrastructure development, and a competitive exchange rate are pushing Antalya and Bodrum into the global spotlight. According to Knight Frank, property values in these cities increased by 11% over the last year.

United Arab Emirates & Malta

Luxury markets like Dubai and Malta are experiencing strong demand from high-net-worth individuals. Dubai, in particular, saw a 15% surge in property prices in 2024, fueled by visa reform and tax-friendly policies. The city offers a stable regulatory environment and world-class amenities — making it attractive not just for holidaymakers but also for expatriate families.

Italy & Eastern Mediterranean

Italy saw a 4.5% increase in residential property prices in 2024, with Sicily, Puglia, and the Amalfi Coast leading the charge. Croatia and the Greek islands also continue to thrive, boosted by easier EU mobility rules, low property taxes, and booming summer tourism. Cyprus is also gaining traction among British and EU investors. With English widely spoken, low tax rates, and an appealing lifestyle mix of beach, nature, and historic towns, Cyprus presents a strong case for mid- to long-term investment.

Asia — Thailand

Thailand is becoming a hotbed for holiday home investments, especially in destinations like Phuket, Chiang Mai, and Koh Samui. The country’s real estate market remains relatively affordable while offering high rental yields, growing digital infrastructure, and favorable long-stay visa options. Thailand’s government is also actively courting foreign buyers through incentives, including extended lease terms and simplified ownership procedures for certain property types.

UK

The UK presents a complex picture. While London remains a premium market, regulatory tightening — such as the elimination of the non-dom tax regime and higher Stamp Duty for overseas buyers — may deter some. That said, foreign investors are taking advantage of currency arbitrage. The British pound remains volatile, and US-dollar-based investors find themselves able to purchase prime London property at a significant discount compared to a decade ago.

Key Opportunities for Holiday Home Investors

Falling Interest Rates: Several central banks are starting rate-cutting cycles to stimulate flagging growth. This may create a window of opportunity for buyers to lock in cheaper borrowing.
Currency Leverage: With the British pound struggling and the US dollar strong, buyers in the US and Middle East can stretch their budgets further in European and UK markets.
Tourism Demand: The resurgence in tourism is boosting demand for short-term accommodation, driving up rental yields and occupancy rates in tourist-heavy locations.
Work-from-Anywhere Flexibility: The continued rise of remote work is making lifestyle destinations more appealing — properties in scenic, connected locations now serve dual functions as holiday lets and remote offices.
Portfolio Diversification: Investing in international holiday homes can serve as a hedge against inflation and domestic market volatility.

Risks and Considerations

Global Economic Uncertainty: Prolonged trade disputes or interest rate hikes could push major economies into recession, impacting disposable incomes and property transactions.
Financing Volatility: Even if interest rates fall initially, inflation could drive them up again. Investors should stress-test their financing models for both scenarios.
Construction Costs: Ongoing disruptions in supply chains are increasing renovation and development budgets. These costs must be factored into ROI calculations.
Policy Shifts: Governments can alter visa rules, foreign ownership laws, and tax regulations quickly. Investors must remain vigilant and seek expert legal advice.
Currency Risk: A weakening pound or euro may benefit some foreign buyers now, but currency swings could also erode returns if not managed with hedging strategies.

Expert Insights

Industry experts urge investors to focus on fundamentals and maintain a diversified approach. Let learn more about their insight on US Tariffs and Global Economic Impact.

Camilla Dell, founder of Black Brick Property Solutions, highlights London’s ongoing appeal to dollar-rich buyers. “We are seeing increased demand from US and Middle Eastern clients,” she says, “driven by relative affordability, education, and long-term capital growth potential.”

Additionally, Goldman Sachs‘ latest global real estate outlook warns that while short-term turbulence will affect some markets, long-term demographic and lifestyle trends favour continued demand in the holiday home sector.

Property consultant James Dearsley advises investors to focus on “future-proof” assets — homes in areas with long-term tourism appeal, good infrastructure, and stable political environments. “Investors should be looking at markets that combine lifestyle appeal with resilient economics,” says Dearsley. “Avoid chasing short-term trends and instead seek areas that offer a sustainable ecosystem for tourism, rental income, and long-term appreciation.”

Sophie Chick, Head of Research at Savills World Research, adds that second homes are now increasingly viewed as multi-use investments. “The lines between primary residences, second homes, and rental properties are blurring,” she notes. “With remote work here to stay, more investors are seeking out properties that can flex with their lifestyle — whether that means using it seasonally, renting it out, or even relocating for part of the year.”

According to Tom Bill, Head of UK Residential Research at Knight Frank, currency strategy is another underappreciated lever. “We’re seeing dollar and dirham-based investors using current FX rates to pick up discounted UK and European assets, particularly in the prime and super-prime brackets. They’re not just buying property; they’re making a long-term bet on currency recovery.”

Conclusion: Holiday Homes Still Offer Strategic Investment Value

Despite macroeconomic uncertainty, the holiday home investment market continues to offer attractive opportunities in 2025. Investors who keep a close eye on trade policies, interest rates, and tourism trends can still find value in lifestyle-driven destinations.

Whether you’re a first-time buyer or a seasoned investor, navigating the global holiday home market in 2025 requires strategic thinking, a tolerance for change, and access to trusted, on-the-ground insights.

Looking to invest in global holiday homes?

At Castleking, we specialise in identifying high-potential property investments across Europe, the Middle East, and the UK. Whether you’re interested in coastal retreats, city apartments, or luxury villas, our team of experts can guide you through sourcing, due diligence, and portfolio planning.

👉 Explore our curated investment opportunities at CASTLEKING and start your holiday home journey with confidence.

📩 Contact us today for a personalised consultation and market brief tailored to your investment goals.