Mi­gra­tion Trends and Prop­erty De­mands

Premier Magazine (South AFrica) - - Contents - Text: Ge­orge Radford, Africa Head of IP Global Im­ages © istockphoto.com

The world is no longer a vast ex­panse of un­ex­plored land; routes have been opened up that reach to all cor­ners of the globe, and these routes are be­com­ing busier and busier with peo­ple in search of new homes.

Peo­ple are in­creas­ingly on the move for a va­ri­ety of rea­sons – from po­lit­i­cal and eco­nomic fac­tors, to ca­reer op­por­tu­ni­ties, re­tire­ment, life­style, and fam­ily con­sid­er­a­tions. Sta­tis­tics show that there are over 240 mil­lion peo­ple liv­ing in coun­tries they were not born in, many of whom have had to re­pur­chase prop­erty in new na­tions.

Prop­erty is pre­dom­i­nately seen to be a pru­dent in­vest­ment as it pro­vides an in­di­vid­ual with a solid in­come, in­creases their net-worth, and en­ables port­fo­lio and ge­o­graph­i­cal di­ver­si­fi­ca­tion. It is char­ac­terised as a sta­ble and re­li­able as­set – when com­pared to more volatile al­ter­na­tives like stocks and shares – and brings a sense of pride and se­cu­rity, be­ing a tan­gi­ble, phys­i­cal as­set to pass on to fu­ture gen­er­a­tions.

Mo­bil­ity is also driv­ing de­mand, and in­creas­ing val­ues and rentals on

prop­erty in­vest­ments in at­trac­tive re­lo­ca­tion des­ti­na­tions.

In an in­creas­ingly un­cer­tain world there has been an in­crease in the num­ber of en­quiries from peo­ple who are con­sid­er­ing re­lo­ca­tion. The United States has the most in­ter­na­tional mi­grants, but sta­tis­tics in­di­cate that a large num­ber of peo­ple are also re­lo­cat­ing to Ger­many, Rus­sia, and the United King­dom.

When pur­chas­ing over­seas, it is im­por­tant to un­der­stand the en­tire pur­chase process as there are many fac­tors that con­trib­ute to the re­lo­ca­tion de­ci­sion. These in­clude le­gal and tax im­pli­ca­tions for for­eign in­vestors as well as how and when to ap­ply for a mort­gage, as the pro­ce­dure changes sig­nif­i­cantly as per the ju­ris­dic­tion of each coun­try. En­list­ing a trusted mort­gage ad­vi­sor can help guide you through the process.

As a for­eign in­vestor, it is also im­por­tant to con­sider the ex­change rate and how cur­rency fluc­tu­a­tions may af­fect the in­vest­ment in the medium to long term.

When look­ing at coun­tries in which to in­vest, peo­ple look at safe-haven mar­kets as op­posed to high risk/re­ward ter­ri­to­ries. So while Trump and Brexit may cause some un­cer­tainty, the United States and United King­dom re­main safe havens, con­tin­u­ing to at trac t in­vest­ment. Many in­vestors are tak­ing ad­van­tage of the op­por­tu­nity pro­vided by a softer ster­ling and buy­ing in the United King­dom.

Once the pur­chas­ing lo­gis­tics have been con­firmed, po­ten­tial in­vestors also need to con­duct due dili­gence on their part­ners on the ground, as­sess­ing the cre­den­tials of all in­volved, from the de­vel­oper to the prop­erty man­age­ment teams. Ad­di­tion­ally, they must un­der­stand the lo­cal rental mar­ket to en­sure there is a strong de­mand and fu­ture saleabil­ity prospects.

Choos­ing a buy-to-let prop­erty can en­able in­vestors to re­pay their mort­gage via the pro­ceeds of their rental in­come. IP Global ad­vises clients to plan their exit strat­egy from the be­gin­ning, and be pre­pared for a five- to seven-year min­i­mum hold on to an in­vest­ment prop­erty.

At IP Global, we have seen cus­tomer buy­ing be­hav­iour change in the last 18 months, with some be­com­ing more cau­tious due to re­cent world events. Our clients do not tend to buy tro­phy prop­er­ties out­right, but use their bud­get in­stead to buy mul­ti­ple prop­er­ties in mul­ti­ple lo­ca­tions – us­ing mort­gage fi­nance as lever­age to max­imise their re­turns and en­able their money to go fur­ther.

Ac­cord­ing to IP Global, cities at­tract­ing in­vest­ment based on re­lo­ca­tion in­clude Manch­ester, Liver­pool, Berlin, Vi­enna, and Chicago.

In the United King­dom, for ex­am­ple, “north-shoring” has be­come a grow­ing trend as busi­nesses move some of their op­er­a­tions from Lon­don to at­trac­tive des­ti­na­tions like Birm­ing­ham.

In On­tario, sig­nif­i­cant in­creases in prop­erty taxes on for­eign­ers are caus­ing prop­erty in­vestors to look else­where. New South Wales is con­sid­er­ing sim­i­lar in­creases in tax on for­eign prop­erty buy­ers.

Once in­vestors have bought their prop­erty, it is im­por­tant to con­stantly asses the value and pro­gres­sion of their port­fo­lio and, if nec­es­sary, re-eval­u­ate their strat­egy while si­mul­ta­ne­ously man­ag­ing tenants and prop­erty up­keep.

Even though the world is no longer the undis­cov­ered ad­ven­ture it once was, the in­ter­na­tional prop­erty mar­ket is still an ex­cit­ing place to in­vest.

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