by Ivan Doherty, Chief Operating Officer & Investment Advisor, IFG Asia
Buying real estate in any country can often be time consuming and nerve wracking. If you are based in the country of purchase this can make it a lot easier, but cross-border purchases can be fraught with difficulties.
Most expats, because of their location, often find it easier and more convenient to buy-off plan property rather than second-hand property, the main reason being that it is often packaged and easy to transact the deal. In addition, with new property, in many countries, building guarantees are often included which reduce risk and the ongoing maintenance costs that may be associated with older properties. If you are living 4,000 miles away, you don’t need the headaches!
There have been far fewer off-plan developments around since 2008 due to the financial crisis and lack of liquidity for developers, but they are now slowly but surely coming back and being marketed to potential buyers and I would like to comment on some of the issues that have arisen for investors who have bought off-plan property outside their country of residence:
Why are you buying this unit?
This is a difficult one to rationalize, as we are all emotional and tend to buy property that fits our personality. Are you buying the property to be able to live in one day, or purely for investment? Or both? Try and separate your feelings and look at the objective of the purchase. All off-plan property in glossy brochures look attractive.
It would be worth looking at the property cycle statistics in the country where you intend to purchase – ideally you would not want to purchase at the top of the cycle. You can also aim to buy currency at a favourable rate by looking at historical trends. This does not take too long to research.
You need to thoroughly check out the developer and who is building the project and what experience they have. If this is their first project, I would advise caution. It is always advisable to choose a developer with a solid track record. They know the pitfalls and likely have a good source of financing in place, allowing the project to complete.
If the developer is using a real estate agent to market the project, check out, question and clarify all the points raised in their marketing literature and sales pitch. Ask how they will help you transact the business from start to finish...
Read more at Expat Focus: Money