An Overseas Property Investment Would Be A Great Addition To Your Portfolio
We have previously looked at how foreign investors, mostly from Asia, are taking advantage of the prosperous UK property market and a recent report from CRBE found that in the last quarter of 2017, a record-breaking £3.2bn out of the £4.8bn invested into London properties came from Asian property investors.
This isn’t anything new – in 2017 the transactions completed by Asian investors in the nationwide private rented and commercial property sector was at an all-time high. During the first half of 2017, in London alone, there was a total of £5 billion pumped into the capital’s property market from Chinese investors. Not to mention the investors from Hong Kong, Singapore and Malaysia who are making serious investments in the UK property market.
But how about UK investors expanding their horizons into overseas property investment? Is an overseas property investment as profitable as one in the UK? How difficult is it to own a property abroad and still receive an income? These topics are covered in today’s article.
Firstly, one will need to understand what ‘overseas property investing’ is. This is a fairly broad term and it will mean something different to everyone depending on their situation. For instance, to property investors from, or living in, the UK – an overseas investment would mean anything outside of the country. Clearly, if you are not from the UK but you are from Spain investing in UK property it is also considered an overseas investment. This article will be referring to UK investors looking at investing in foreign properties.
International Property Investment Can Be A Lucrative Market For Many Investors
It is important not to overlook other emerging and well-established property hotspots, even if it means they are across the globe. Where the UK property market has its limitations and tensions, it is just another opportunity for hungry investors to expand their horizons.
Thousands of people from the UK choose to buy a property abroad each year – whether it is for business or leisure – and this is down to the growing accessibility of overseas property markets, primarily through the internet. As the traditional buy-to-let UK property market becomes more unpredictable and profits fall, investors feel that they might get a better return on investment if they look to the alternative property markets. As well as purpose built student accommodation, care home and hotel room accommodation investments, investors also have the option to invest in a property from highly-developed markets in overseas locations.
Is Property Still A Good Investment If It Is In A Different Country?
Our clients sometimes ask us, “is property still a good investment with Brexit around the corner?” We believe it will always be a good investment in the UK, but that doesn’t mean to say you can’t look abroad too. At Sterling Woodrow, we already know how successful and lucrative the investment model of international property investment can be.
Here are the 5 most important tips an investor should follow when they are investing overseas. Use these as a guide to make sure that your overseas property is a good investment.
- Look into the area’s tourism industry.
Many overseas investments will be in holiday locations and therefore the best places to invest in are those that have a booming tourism industry. Usually, countries that are holiday destinations, popular amongst holiday-goers with years of success, are the areas most investors will consider. For savvy investors, you may want to look at up-and-coming destinations that have increased in tourism activity substantially in the last year or two. Getting in early will mean less competition and more demand for your property and therefore more profits.
- Think about the management of the property.
Many investors looking to increase their capital in order to save for retirement or their children’s education. Not every investor will be able to travel back and forth just to check-in on their overseas property. Every property will need to be managed, so whether you want to do it yourself or get a professional to do it is up to you.
Conveniently, our overseas investments are fully-managed for our investors as part of the investment contract, so although the investor has everything done for them, there are no ongoing maintenance costs or any landlord responsibilities. It is all done by a local, reputable and experienced management company.
- Understand how you will receive the income.
For most investors, receiving the rental income is the most important part of any investment. As well as the yield, you will need to know how you are going to get paid and in which currency. Sterling Woodrow’s overseas investments pay in GBP, so there is no confusion for our UK clients.
- Ask about the ownership and title deeds.
If you are investing it would be nice to know that you have some control and that you legally own the property. Many overseas investments can be ‘fractional’, meaning that you own part of the property and will receive a percentage of the returns. The advantage of this is that you don’t need huge amounts pf capital to get started – you can get involved in overseas property investment for as little as £10,000. In a fractional investment make sure that you know who will be on the title deed (if it isn’t you) and how much of the asset is yours, so upon selling you know your options.
Our overseas investments are completely owned by the investor, so whether it is a fractional ownership or an outright ownership, your name will be on the title deed. You may also qualify for the personal use option, which entitles you to use the property as a holiday home.
- Know the exit strategy options.
At some point you may want to sell the property for a profit. Some investors are looking for a quick profit, whilst others are geared towards a long-term investment. All Sterling Woodrow’s investments are fully-managed investments and will have a set term of a number of years until the initial contract runs out. This will all depend on the developer and the incentives they choose to offer investors. Similar to a UK property investment, there are 3 main options for exit in our overseas developments;
- retain the property and hire a different management company (or manage it yourself),
- renew the contract with the developer to negotiate another term with similar incentives,
- or resell back to the company for a quick profit.
Whatever you decide to do with your property, the team at Sterling Woodrow are knowledgeable and ready to help you achieve your property investment goals.
White Sands Hotel & Spa in Cape Verde – Sterling Woodrow’s Overseas Investment
Our overseas investment is in Cape Verde, a beautiful archipelago just South of the Canary Islands, off the coast of West Africa. This collection of islands is best known for its Creole Portuguese-African culture and multiple white sand beaches, with clear blue water. We chose this location because of the booming tourism industry, that is vital to the local economy, demonstrating a spectacular growth of 115% since 2000. In 2018 there is forecast to be a further 5% growth. For a low-entry price, you can enjoy 7% NET yields, and possibly the chance to use the property as a holiday home.
Our overseas property investment works in a similar way to our UK investments, in that it will be a fully-managed investment with assured NET yields. This will make it accessible to any investor, where ever you may reside. The flexibility and potential of this investment create an opportunity to build an existing portfolio or even start one.
To book your complimentary property investment consultation with one of our senior portfolio managers simply click the button below and complete the short form and we will call you back at the appropriate time.