Each year, millions of Americans get into the real estate business for the first time. Whether they are simply purchasing their first home or looking to begin investing, this leap is always filled with uncertainty. The real estate market is constantly changing, but has shown rewards and comeback in recent years.
Many investors are claiming that 2016 is the “year of real estate,” and with 11% in returns on global property investment in 2014, it is easy to see why going global may be your best bet. Gone are the days of moving abroad simply to backpack around Europe, the time has come to begin traveling with a lifetime portfolio in mind. Included here are a few reasons it might be time to grow your investment portfolio diversity with a few pieces of property abroad.
While international investors have begun to find places to buy in the U.S., with hotspot cities being Los Angeles, New York and San Francisco, Americans may be looking to broaden their investments in Europe. 43% of investors are finding property in London, 19% in Paris and 14% in Frankfurt. The top three investment centers in the U.K. are shopping centers, offices, and luxury retail spaces.
Asia, Japan and Australia Promise
Roughly a third of investors say they will be allocating funds for Asian cities in the coming year. Some of the hottest investment areas include Japan, Asia and Australia. Hong Kong, China and Singapore show promise of growth in the coming year. The hottest cities for investment are Tokyo, Melbourne and Sydney.
In Asian markets, Beijing and Shanghai are making progressive upward movement. In this area, the most promising investment properties include logistics, residential and office space.
South American Potential
If you lack the millions of dollars necessary to purchase high end properties around the globe, consider investing in smaller markets that are greater in risk but may also have the highest pay outs. Some condos in north-east Brazil have been capable of selling for 60% more than their buying price in less than two years! That is incredibly fast turn-around on equity for a potential property.
Protect Your Capital
For individuals who have stored up cash, investing in property may be the best way to put your money to work. Real estate is in finite supply, and there will always be a demand for properties to live on. Utilizing your American money to buy in countries that benefit the exchange rate, could land you with more money in your pockets over time. You will also have security in this financial investment, as land will only grow to be in higher demand.
Buy Up Beachfront
The beauty of beachfront property is that it is always in demand. With vacation home owners, resort builders and other developers, you will have a hard time not selling properties. Buying beachfront internationally can be a great way to create an incredibly valued and diverse portfolio.
In the case of undeveloped beachfront, you can look at even more profit in the long term. For example, a small beachfront lot in South America may be bought for less than 50% of its potential value. Your equity will be built into the sale price and you will have valuable income for years to come.
Alternate Currency Cash Flow
Another benefit of international real estate investment is that you are generating income in an alternate currency. This means, should your home country experience an economic crash, think devaluation of the dollar, you will still have alternate funds that hold value. Granted, the flip side is also possible — if the dollar gains in value against the other currency, you could stand to lose significant value. To minimize risk, one strategy is to hedge your currency bet through strategic forex trades. Make sure you consult an expert in forex trading analysis before conducting such a hedging strategy. Additionally, you can become an expat and move to another country while retaining your business and income potential.