What investment issues need to be considered when investing in international real estate?

Before considering investing in international real estate, clients need to know what the purpose of the purchase is. Generally it’s either for personal use or otherwise for investment purposes and often both.

If the reason is to buy for personal use then all the emotional considerations come to the fore such as: what’s the view like; how close is it to the sea; how picturesque is the building and surrounds; has the property got privacy; what type of person lives nearby and who is your neighbour; what size are the rooms; what finishes are installed; etc.

If the reason is to buy for investment reasons then the personal consideration should be less important and primary drivers for purchase should be capital appreciation as well as net yield off the property.  Focus shifts to discount off market value when purchasing; potential value to be added; income streams; desirability to potential rentees; cost of purchasing and maintaining the property; positioning relevant to key tenant drivers such as universities, tourist amenities, local industry etc.

Often the best performing investment properties do not meet the same criteria as the ones bought for personal use. The biggest hurdle in advising property investors on their selection is getting them to remove their emotional decision-making considerations from the selection process.  Remember, should the purpose of the property selection (investment or personal use) change and the property does not meet the new purpose, it’s generally very easy to sell the property and purchase a new one that does.

We help clients to define their intentions and assist in making the best property selection to suit their requirements.