18 Jun 2016
Popular destinations among Singaporean investors include Melbourne, Iskandar, London and New York. Last year, Singaporean investment in Australian properties reached $3.8 billion, just behind investors from China and the United States.
Buying an overseas property is not a decision to be made in an instant. Buyers should only decide after careful thinking. Like any investment, buying an overseas property is not without risk. Buyers should be aware that ruling parties can change overnight. With the change in government, there is a possibility that foreign property investment rules might be tightened, and this poses a risk to foreign property investors. Overseas properties are also exposed to currency risk. As a property’s value is tied to the currency of the country it is in, any appreciation or depreciation of the currency will have an impact on property values.
5 tips for first-time buyers of foreign property
- Enlist the aid of a qualified salesperson
Are you unfamiliar with the rules and regulations surrounding a country’s properties? Consult a real estate salesperson who is experienced with overseas property transactions. There are some who specialise in certain countries. Benefit from their expertise.
- Know your risk appetite
This will help you shortlist the countries which you want to invest in. Generally, developed economies tend to be safer choices due to their transparency. However, the property returns will also tend to be lower. Conversely, investing in a developing country may reap high rewards, but there may be a higher amount of risk.
- Location, location, location
Be familiar with the location of the property they are purchasing. If you are not, arrange for a visit prior to the purchase. See the development’s actual location and knows the surrounding area to get a “feel”.
- Have an exit plan
Don’t make the mistake of thinking a property can simply be sold off anytime. Properties are “lumpy” and illiquid. Before you purchase any property, consider if it will be easy to sell. Some factors to consider include the level of resale demand and whether most people can afford the property.
- Know the dispute resolution avenues
Find out what legal rights you have under the relevant laws in the event of any dispute. You should know the dispute resolution mechanisms available. It could be useful to be aware of the jurisdiction which handles disputes.
