Whenever an SEO talks about geo-targeting your site to a specific region, so it ranks well on that localized version of Google they tell you to do a few things.

(1) Host in the country you want to rank well for
(2) Try to use a ccTLD for that country, i.e. domain.co.uk for UK
(3) Set the geographic target in Google Webmaster Tools

However, instead of using a ccTLD, I often see sites deploy a subdomain or subfolder to specify a different language or geographic target. A ccTLD is best, in my opinion. Of course, there are times you want to use a localized language by target the main Google – so that does apply.

JohnMu from Google replied to a Google Webmaster Help thread stating that a ccTLD is much more powerful than hosting your site on a server in that country. Specifically, John said:

Google will use the ccTLD over the server location to geotarget your site. This makes sense to me, but I do not think this has been covered here. We covered the overal topic dozens of times, but not specifically which factor is more important.

Forum discussion at Google Webmaster Help.