Benefits of Investing in Overseas Property

Benefits of Investing in Overseas Property

In the past, investing in property was best done locally. Nowadays, with an abundance of agents and management companies and modern communication technologies keeping the world connected, this is just not the case. It is relatively easy and practical to invest in property on the other side of the country and even the other side of the world, and there are a number of reasons you may wish to do so.

Prices

Property prices around the world vary massively from one country to the next, and with so many factors at play it’s certainly not always the case that investors get what they pay for. London, for example, is a very expensive city in which to buy. Property prices there are well ahead of even the rest of the UK, let alone other parts of the world. Other major cities can offer many of the same benefits of London and proportionally similar or better yields, yet have far more affordable entry points.

Profits

Just like prices, potential for returns on property investments vary massively from one place to another around the world. Different countries offer different rental yields, different levels of potential for capital growth, and different amounts of risk attached to higher-yielding investments. Considering this along with price, extending your search for a property internationally means it is often entirely possible to find a property which is more affordable than a property in the UK yet offers similar or better levels of profit on that investment – all at a level of risk you are happy with.

Exchange Rates

While a favourable exchange rate is not, in itself, a good reason to invest in a particular market, it can certainly be an added bonus when conditions are right. This is illustrated quite well at the moment by the fact that, while for the most part the UK market is slowing down, the drop in the value of the pound has led some foreign investors to buy assets here because the exchange rate is more favourable to them and allows their money to go further. Similarly, investing in areas that use currencies against which sterling is relatively strong means that the spending power of your money is greater than its value at home, allowing you to pick up bigger or better properties without additional outlay.

Diversity

If you already hold investments within the UK, then adding assets to your portfolio that exist in a completely separate market can be an important way to add diversity. This is an important way to reduce risk, as having investments in multiple markets gives you some measure of insulation against adverse conditions that arise in any single market. If the UK property market falters but you also have overseas property investments, then if the overseas territories you have invested in are doing better it will help keep your portfolio afloat and soften the impact of the UK’s adverse conditions. This is particularly pertinent with all the economic uncertainties, instabilities, and concerns that have hit the UK following the EU referendum.

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Mark Burns

Mark Burns is a Director and Property Investment Consultant at Hopwood House. With over 10 years' experience in property investment, Mark has provided investors with a wide range of opportunities in exotic locations around the world.

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