While there is no doubt the Internet has educated investors to the benefits of overseas property, there are still a number of factors to take into consideration. It really does depend on which area of the world you acquire property as to the risks and the potential rewards. Let’s not forget, the acquisition of property should be seen as a long-term investment.
While many people may be attracted to holiday locations such as Thailand and Malaysia, economic stability should play a major role in your decision-making process. For example, the Thailand economy is under severe pressure due to the trade war between China and the USA. The ripples of the conflict have also been felt in the Philippines, Indonesia as well as South Korea. On the other hand, the UK economy is more stable than and nowhere near as volatile as some of the more exotic countries of the world.
There is an argument to suggest that economic and political stability go hand-in-hand but this is certainly an important subject to consider in isolation. The UK has a well-defined democratic system which has been in place for hundreds of years. If we look towards Turkey for example, this is a country which is currently led by dictatorship with many suggesting it is only a matter of time before democracy regains control. Those in the UK and other developed countries often take political stability for granted but it is something to consider when looking towards overseas property investment.
Unfortunately, many people automatically assume that when investing overseas they will be investing within the same regulatory structure as their homeland. It is fair to say that the UK property market benefits from a defined regulatory structure which is often tweaked but rarely undergoes major change. If you compare the free market philosophy of the UK to countries such as Thailand, where overseas ownership of properties is restricted, there are significant other issues to take into consideration.
There are many tourist destinations around the world, again taking Thailand as an example, where extreme weather conditions can seriously impact your investment returns. Large swathes of Bangkok, the capital of Thailand, are susceptible to flooding which can often leave large areas of the city underwater for weeks on end. This also brings into play the subject of property management and the level of services available.
While all currencies around the world will have shown periods of volatility at some point, this movement can have a significant impact on overall returns including the exchange of regular rental income. It is therefore sensible to consider the likes of the UK which has in the longer term experienced relative stability compared to many other overseas markets. When investing in property you should have a long-term timescale in mind which should ideally be complemented by a relatively stable currency.
Political and economic stability will dictate the relative wealth of countries around the world and attractions to investors. You also need to appreciate local property and investment regulations not to mention the land/property ownership restrictions which many countries have in place. When you add extreme weather conditions and volatile currencies, it makes sense to focus on stable countries and stable property markets such as the UK.