Property investors from all over the world are becoming increasingly bold in their pursuit of real estate dreams and are no longer bound by territory.
Individuals that invest in property have become a force to be reckoned with when it comes to investing in overseas properties, and the availability of financing facilities from banks for buyers that are planning to invest in overseas properties are expected to lure more property investors to consider investing in foreign countries.
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You can invest in almost any part of the globe and reap substantial benefits upon successful planning.
Investors must be adequately informed and have a clear investment strategy in order to make successful ventures and to tap the vast spectrum of opportunities available within the foreign real estate market or risk being trapped in fraudulent deals.
The following tips highlight the benefits and necessary guidelines for investors to consider before embarking on the exciting journey of investing in overseas real estate markets.
Benefits
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Wouldn’t it be grand to enjoy the magnificent views of a landmark like the Sydney Opera from your very own overseas investment!
1) Offers excellent diversification of assets
Investment in international real estate offers portfolio diversification through low correlation with the domestic real estate market which enables an investor, to take advantage by reaping returns from their overseas real estate investment, even if the domestic real estate market is facing a slowdown.
2) Returns enhanced through currency exchange
Property investments made in countries with appreciating currencies will enhance the profit margin of investors through the cash flow of rental returns.
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3) Offers long term growth prospect
Investment in real estate provides a hedge against inflation and as such investors investing in foreign properties will benefit from the appreciation of the property’s value in the long run while at the same time will be able to enjoy the property as a personal retreat or vacation gateway.
Tips
1) Do ample research and evaluation before deciding on a foreign property
Visit property exhibitions and the property itself to make a sound investment as it gives an opportunity to potential investors to judge the property based on factors that may affect the value such as the neighbourhood and accessibility to public transportation, while minimising the risk of being deceived into entering a fraudulent transaction.
This ensures that the property meets all the requirements and purposes of the investment.
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2) Attain assistance from a reliable consultant
The laws and regulations pertaining to foreign investing may differ according to country, thus it is advisable to seek assistance from local professionals such as lawyers and real estate agents that are familiar with the laws and procedures that are involved in real estate transactions in the area that you have chosen to invest.
It is pertinent to ensure all the legal requirements are fulfilled as per the particular country’s property law in order to avoid any legal dispute in the future that might affect the returns from the investment.
3) Currency Exchange Risk
One of the vital factors that potential investors should look into before considering buying a foreign property is the risk associated with currency exchange.
An investor must identify the volatility of the foreign currency of the country that is being considered for investment against the domestic currency of the investor as the investor may risk losing the value of his/her investment should the value of the foreign currency erode regularly from the day of the property purchase.
Drastic fall in the value of the foreign currency will affect the investment returns even if the property appreciates in value due to the greater fluctuations in the currency value.
This article is contributed by Zerin Properties head of research & consultancy Roja Rani
Roja Rani is a graduate from the University of Malaya with a Bachelors of Estate Management (BEstMgt) in 2010. She joined Zerin Properties in September 2010 as a research analyst.
She is involved in conducting research and market studies pertaining to the property sector as well as actively participating in feasibility studies for high profile clients comprised of the Malaysian Government as well as private entities.
Roja is a Registered Probationary Valuer with the Board of Valuers, Appraisers and Estate Agents and Property Managers (BOVEAP), Malaysia.
(By Roja Rani, 29th July 2019)
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