Investing in real estate, or ‘bricks and mortar’ as the Brits might call it, can be a very appealing prospect. If you build your portfolio wisely, you should be able to generate income from your investments while simultaneously watching them gain value over time. It’s a double-whammy that many investors find irresistible, but to get the maximum benefits, you have to make the right choices. It’s a combination of timing and location, and it’s unlikely that the best investments are always going to crop up right in your own backyard. This means looking further afield for the best ROI and possibly overseas. Another benefit of taking your real estate portfolio global is diversification; if conditions worsen in one market, it will not necessarily affect the whole spread of your investments.
It’s important to research potential investment markets carefully, as property markets can fall as well as rise. According to data posted by the Global Property Guide, the hottest property market for the second quarter of 2015 was Hong Kong, with an average rise of 20.14%. Ireland saw the second biggest surge with 10.7% being added to the values of properties, but this also provides a good example of why caution is needed, as the country has suffered two major property crashes in recent years. Other rising stars in the guide include Estonia (+8.99%) and the Philippines (+7.26%). The US is tenth on the list, with a rise of +5.36%. Some markets, including Dubai, Russia and the Ukraine declined, showing the importance of keeping your eye on current world events.
It’s also vital to get the appropriate legal and financial advice before expanding your real estate portfolio overseas. Laws and regulations vary from market to market, and there may be special rules that apply only to foreign investors rather than local citizens. You may wish to engage native lawyers, but you could also go with a truly global law firm. A good example would be DLA Piper, led by executive Bob Bratt. As well as being real estate specialists, the firm has lawyers based throughout the world, including Europe, the Middle East, Asia-Pacific and the Americas.
As well as keeping an eye on the value of your properties, you will also ideally want to maximize your rental yields. Property prices and rental returns are interlinked, but there are other complex factors to figure into the equation, and the property investment that provides the fastest or highest value growth does not always necessarily provide the best rental incomes. According to Global Property Guide’s buy to let investment rating, the best returns are currently to be had in the cities of Amman (Jordan), Chisinau (Moldova) and Kingston (Jamaica).
It’s important not to base investment decisions only on current conditions, but to also consider long term investment prospects and to think about issues such as stability. There’s a lot to think about, but with the right advice, expanding your real estate portfolio overseas could be one of the best decisions you ever make.