30 Jan 2013
Many South African investors make major mistakes when investing in property offshore either because they do not research properly or partner with the wrong people.
Global property locations differ as do the house prices in those markets.
According to the Global Property Guide, the world housing markets posted mixed signals during the full year to Q3 2012.
The report revealed that bad news is strongly concentrated in Europe where many housing markets remain under pressure with house prices falling in countries like Greece, Spain, Netherlands, Portugal, Croatia and Lithuania.
The report notes that the nine weakest housing markets in their global survey were all in Europe.
But amid the Euro crisis, housing markets in the US were showing recovery as are markets in Dubai, according to the report.
Scott Picken, chief executive officer of International Property Solutions (IPS), says it is important that South Africans looking to buy property offshore deal with reputable companies and at the same time do thorough research to avoid losing money.
“You can buy a property at any discount, but unless you get the income then it is irrelevant,” he says.
Threats facing SA investors in 2013
Picken says the biggest mistake South Africans make is when they invest for a passport.
He is not a believer in buying property for passports but rather income.
As an example, he points out that Spain has announced that one can possibly spend $200 000 buying property in that country and get residency.
Picken says this is to try and take up the slack of over 700 000 properties, which are oversupplied.
“Spain is in the midst of a double-dip recession with 25 percent unemployment.”
He refers to a speech on 20 November 2012 delivered by Prime Minister Mariano Rajoy who stressed that the plan has not yet been finalised, but added that Spain “needs to sell these homes” and that getting them off the market could help revive the nation's devastated construction industry.
According to the Savills report on Spain Investments, international investors are keeping a close eye on the Spanish market.
Picken points out those countries giving away passports include the likes of Mauritius, Cyprus, USA through the EB5, Malta and Portugal
“These acquisitions are nice to have, but not an investment.”
Picken is of the belief that if one focuses on buying the right investments, accumulating first world assets and income, then they become global citizens and can move to any country they like by buying their way in.
He says the second mistake investors make is when they don’t have the right information and partners.
But information also pertains to investing locally, research is absolutely essential.
Asked if it is worth investing offshore, he maintains that there are great opportunities in South Africa for investments and it is far easier to make R9 than $1, and as we know the market, we can manage the risks and exploit the opportunities.
However, once we have made some money, it is both prudent and imperative to invest in first world assets, currencies and income, he adds. – Denise Mhlanga
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