We speak to Alex Bellingham, Director of IP Global on some of the most frequently-asked questions on investing in overseas property.
1. What are the five things an investor must know before investing in an overseas property?
a. Understand the market First and foremost, an investor must have an understanding of the target market. In a recent survey IP Global commissioned, we found that the biggest barrier for Singaporeans investing in property overseas was a lack of understanding of the market’s legal environment. For property, like any other investment, you need all the facts before committing capital to it.
b. Pockets of value It is not simply enough to choose a city, you need to know the ins and outs of the city itself. At IP Global, we focus on specific locations within a city that represent pockets of value. These are locations in safe-haven markets that we believe will deliver stable, sustainable yields and capital appreciation over 5-10 years as a result of rising populations, major infrastructure upgrades and economic growth.
c. Supply and Demand One of the most important indicators is supply and demand. When selecting a property to invest in, investors should compare projected demand in the local area with the future residential construction pipeline. When supply is not set to meet demand, as we are seeing in specific areas of outer London, Manchester, and Melbourne for example, it creates an imbalance which drives property prices up.
d. Strong Liquidity Regardless of the attractiveness of a property’s prospective yield, an investor’s ability to unlock its capital potential is contingent on attracting local buyers to purchase the asset. This is why we take care to ensure properties we recommend will be attractive for buyers over the longer term, and recommend different approaches in different markets – for example, while in Asia we often recommend smaller units, in Australia or the UK we’ll very seldom recommend investors purchase this type of dwelling.