Are you looking for greener pastures overseas because local properties are still quite unaffordable? While the local property market has cooled down in the last year after the Singapore government introduced cooling measures to moderate demand, some property buyers are still going overseas to look for better yields. In fact, Singapore remains the top country in the region for outbound real estate investment, topping China and Hong Kong.
However, the Consumers Association of Singapore (CASE) recently released a warning to consumers regarding foreign property investments after receiving several complaints. While buying real estate in other countries, especially emerging countries, could bring on better yields compared to similar investments locally, there are definitely higher risks that investors should look out for. Here are two things that we at GET.com think you should keep in mind before buying property overseas.
- Do Your Research
As with buying property locally, proper research is required, especially since an overseas market may be less familiar to you.
You should understand the restrictions on foreign ownership, as this differs from country to country. They may require you to pay extra taxes (such as Singapore’s Additional Buyer Stamp Duty), or post limits on resales.
The country you are going to invest in may have a very different political climate than Singapore, and that can affect the property price substantially.
Their property regulations can take a sudden turn and affect your returns, or there could be anti-foreigner sentiments that may become a danger to your assets.
Also consider the probability of natural disasters – be sure to have a comprehensive insurance to cover all these issues.
You should also check out the reputation of the property developer. You do not want any shabby work on your property – it can pose dangers to whoever lives there!
Be aware that issues can even plague developers from developed countries such as Australia and UK, so always do your own research on yields instead of relying purely on the developers’ advertised rates.
Increasingly, developers are setting up property investment seminars locally to attract potential investors. You should ensure any salespersons from these developers are registered with the Council for Estate Agencies (CEA).
A prudent approach is to visit the property site you are planning to buy instead of relying on sketches to have a look at the location and property surroundings.
- Financing
You should find out about the total financial commitment you need in order to buy that overseas property you are eyeing.
This includes the cost of financing the home loan, legal fees, valuation fees, property tax, capital gains tax, insurance premiums and building management fees. Buying real estate overseas also heightens your exposure to currency risks.
You can choose to either take out a loan locally for an overseas property or choose a bank overseas. Some of the banks here which offer international property loans include UOB (view the best UOB home loans here), DBS (here you can see the best rates for DBS home loans), ANZ (check out the best ANZ home loans here), OCBC (see the best OCBC home loans here) and CIMB (see the best CIMB home loans here).
Buying a property overseas can be riskier than buying local property due to unfamiliarity with the market and regulations. Exercise due diligence and carefully consider your needs and financial commitments before jumping on the bandwagon.