Migration Trends and Property Demands
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.