Investing offshore

THE GREATER THE LONG-TERM REWARDS

When reviewing your retirement portfolio, it’s wise to consider all the available asset classes – including offshore property. The key is to ensure you’ve done your homework and sought expert advice.

IP Global’s head of Africa, George Radford, says this “gap” makes it an opportune time to take advantage of the steadier rand and to diversify offshore.”

“Buying offshore property presents double advantages of global growth, owing to appreciation in another currency; and passive income, via rental yields.

This investment is best secured through a company with an end-to-end offshore property investment service. The advantages of offshore property, as an asset class, are extensive – especially for clients in Africa who often feel more comfortable with its stability and tangibility. Radford cites four other benefits:

its ability to generate long-term wealth;

how it can be leveraged in tierone markets with historically low interest rates;

the exposure it allows to other currencies; and

higher levels of consumer protectionism in developed markets.

With 12 years of experience and global offices in Asia, the Middle East, Europe, Africa and most recently Mauritius, Radford says IP Global’s biggest market is the UK, followed by Germany, and lastly a burgeoning market in Portugal.

“I find the offshore property market incredibly exciting,” says Radford, “for its growth potential and passive-income generation within a retirement portfolio, as well as how well hedged it allows our African clients to be when they invest in more politically and economically stable markets in the UK and Europe.” Because there are tax considerations to investing in overseas property, it is a good idea to do your research and to seek professional advice, so these laws do not act against you, he adds.

In South Africa, for example, R11 million per person can be invested offshore – a R1 million discretionary and a R10 million nondiscretionary allowance.

When it comes to buying property abroad, South Africans should investigate whether a double taxation treaty applies. Other considerations include being aware of transfer or stamp duty percentages, capital gains tax, income tax, as well as inheritance tax.

Once the purchase has been made, buyers stand to benefit from an investment that is essentially paid off, in terms of monthly bond and levy costs by the tenant, whilst benefitting from a rental income.

“Of course, the sooner a buyer starts growing their offshore property portfolio, the greater the long-term rewards – especially if financial stability in retirement and leaving a legacy for loved ones is front of mind,” Radford says. – Moneyweb