When chatting over the dinner table you often hear ‘yeah, property in Portugal is doing great’, or ‘you really should be looking at the UK now’. But how do we as South Africans enter the offshore market? And are the opportunities that we hear about really worth it?
It’s impossible to know how true most of these ‘facts’ are and you shouldn’t stake too much on what you hear at dinner parties. There are, however, some well-researched opportunities that should pique your interest – for example, those presented on IP Global’s site.
Take the city of Manchester. With a population now standing at 2.8 million (an increase of 6.8% since 2015), the property market is predicted to increase by over 22% between 2018 and 2022. And, in Lisbon, there’s a prediction of a 19.2% capital appreciation along with a whopping 27.3% rental growth over the 2018 to 2022 period.
Holding property in London for any period of five years or more in the last two decades would have put you into profit, even taking into account the Global Financial Crisis.
That’s really impressive, but understandably not quite enough information on which to base an investment decision. The international property market can be complex and there are many factors to consider, including:
• the financing options available for international buyers
• tax and legal requirements (when buying or selling)
• supply and demand in the chosen city
• political situation
• rental growth
• capital growth
• options for managing your property remotely.
Despite the complexities, many South Africans are taking their investments offshore and using the international property market to their advantage.
What’s driving South Africans to move their investments offshore?
Surveys can give very different results, depending on the questions asked and how the respondents are chosen, but the recent IP Global Investor Sentiment Survey included a diverse group of 5,000 participants. Of the respondents who indicated that they are looking to invest in international property, the three top motivators, which came out with
equal strength at 57%, are to:
• secure future accommodation – buying to let now with the option of emigrating later
• create funds for retirement – supplementing a local retirement fund with an international income
• leave a legacy – building wealth for your family.
In addition, 43% of respondents indicated that they were motivated by perceived economic volatility in South Africa. These responses are not surprising, as we know that the economy is not doing well. Many feel despondent when looking at the negative
returns on their retirement funds, and there is a lot of discussion about international diversification. Local politics, rampant corruption and the current Eskom crisis are also cause for concern.
How to make it happen
As South Africans we don’t usually brag about our green passport. It’s not that we’re not proud to be South African – it’s more that our passport doesn’t offer the same easy access and travel options as, for example, an American or EU passport. These travel limitations can sometimes make us feel that investing internationally is beyond our reach, or that it is simply too complex to be worth the effort.
But investing in the overseas property market can be daunting no matter what passport you hold. And it’s easy to be misinformed, or to simply misunderstand international law, which is why it’s important to partner with a property investment company that can help you navigate through it all.
IP Global is a property investment company that provides straightforward access to overseas real estate with strong capital growth and rental yield potential. From initial research and acquisition through to management and exit strategies, they assist throughout the entire investment process. They understand the power of leveraging, and help you to structure your investment optimally, including the nitty-gritty tax implications.
Unlike an estate agent who simply points you to a potential investment opportunity, IP Global actually invests alongside their clients in the developments they identify. This is based on thorough and meticulous research – it also shows the level of confidence they have in their own research, and proves that they have the required local expertise in the cities in which they operate.
If you’re considering an offshore investment property, it’s best to partner with a company who understands the market, local conditions and international laws and considerations.
Take a look at how IP Global can help you to expand your investment portfolio across borders.