Don’t just talk foreign

Private Property South Africa
Monarch and Co

Purchasing an international property is an excellent way for investors to diversify their current property or investment portfolios, provided that the necessary considerations are taken into account. This is according to James Bowling, CEO of Monarch & Co, a leading citizenship and foreign property investment facilitator.

He notes that many investors are looking for ways to either diversify their specific property market exposure by disinvesting from their current country of residence into different prime property destinations, or to diversify into property from equities to create a more balanced portfolio.

“Investors who want to purchase property overseas may acquire numerous benefits from purchasing through a residency or citizenship programme, particularly in countries within the European Union (EU),” says Bowling. “There are a number of countries in the EU that welcome foreign property investment and are in fact encouraging it through the introduction of such programmes.”

Join the programme

“These programmes have, in uncertain economic times, boosted the property markets of those countries by pushing up capital appreciation as well as strengthening the countries’ economies – a mutually beneficial factor for both the country and the investor. Investors are also eligible, through many of these programmes, to enjoy the advantages of becoming an EU resident or citizen.”

Bowling says that while there are several benefits to investing in international property, there are a number of key considerations before taking the step forward. “The first thing to determine is what you want to achieve through the investment,” he says. “Investors need to know what the purpose of the purchase is, whether it’s for personal use, purely investment returns, or both.”

Investment vs personal use

Bowling says that if the reason for the purchase is predominantly for investment returns, personal considerations will carry less weight in the decision-making process. “An investment decision will be based on the primary driving factors that determine the property’s capital appreciation value as well as the potential net rental income. The focus of the purchaser will be around the property’s marketability and its potential to attract desirable tenants. Other considerations will include the costs of maintaining the property and its positioning to the relevant tenant drivers such as universities, tourist amenities and local financial hubs,” says Bowling. “Often the properties that are the best investment choices are not the ones that the investor would have chosen if he had purchased the property for personal use.”

But where?

A vital consideration in international property investment is selecting which country to invest in. “Again, this decision will largely be determined by the purpose of the investment. If it is personal use, then the investor will need to decide where he would like to spend his time and what country appeals to him the most. It will be a far more emotionally-driven decision. There are several countries to choose from that offer residency and citizenship programmes, including St Kitts & Nevis, Mauritius, Malta, Greece, the USA, Portugal, the UK and Cyprus,” he says.

“From an investment perspective countries that offer residence and citizenship programmes often use their attractiveness for tourism to aggressively market their programmes. Another approach that many of these countries have taken to unlock their potential economic growth is to develop themselves as financial service centres by creating a low tax jurisdiction and making it attractive for individuals and corporates to make the country their new tax domicile,” explains Bowling.

Tax advantages

He notes that high tourism-interest coupled with low-tax benefits will make purchasing property in these jurisdictions a very sound investment. There is often good capital growth potential as well as an attractive rental yield to be enjoyed.

“Purchasing an international property can be a viable and highly beneficial endeavour as long as the investor has a clear understanding of his objectives and knows what he hopes to achieve with the investment. Investors who are unsure of anything should seek the counsel of a professional who deals with foreign property investment on a daily basis.”

For more information contact:

James Bowling at Monarch & Co on 011 883 9018 or visit www.monarchandco.com

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