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Investing in property is a desire for many expats no matter where they are, and for many it proves to be a good decision.
Property prices rise and fall in the same way that markets do, the main difference being that once you have bought the property, it is much harder to liquidate your asset if you need to. Aside from that, there is a benefit that you can borrow to invest in property, something you cannot do in most other investment arenas. But this has a downside too if you end up in negative equity.
For now, property prices are relatively static in Asia, or are falling. For example, nearly two thirds of Asian cities are expecting to see falls in their luxury property prices in the coming year, according to the Knight Frank Prime Global Forecast. Prices in Hong Kong and Shanghai grew more slowly in the last 12 months, with respective price rises of 7.8 per cent and 3.8 per cent. This is not bad, but is significantly lower than the 19.7 per cent and 29.7 per cent respectively seen the previous year.
There are fears that China’s property market could fall by as much as 20 per cent next year, if the analysts are to be believed. Of course, just because you live in Asia, there is no reason to think you have to buy property here – the world is your oyster in property investing, but you need to be comfortable about where you are buying your property.
You should also think about how the rest of your portfolio is structured to ensure a property investment would work for you, and decide how long you can afford for your money to be tied up. For investment property, it’s not location location location that matters, but location, quality and price. Some markets are more recession proof than others, like London and New York City, as opposed to Leeds and Florida. This can relate to the ability to get mortgages on property, and strong laws to protect property investors.
In many Asian countries it is not possible to get a mortgage, foreign ownership is not allowed, and property laws – even where they are – are complicated. For those prepared to make an investment and hold on for some time, price falls and a general cooling in the markets at present could offer a buying opportunity. But the real trick is to get the right kind of property, in the right place – location is key, and it is not just a geographical issue.
Choosing the country you would like to invest in is just the start, and you need to get advice from a trusted adviser who has specialist knowledge in the region you are interested in. After that, you need to find the right property, and that can be easier said than done. Those new to property investing often make the mistake of trying to find a property they would like to live in. This is the wrong approach because, after all, you are not going to be living in it. Instead, you need to be looking at a property through the eyes of the person who will rent it from you.
So consider things like transport routes, whether it is close to good schools, or a university if you are after the student market, and how close local amenities are such as shops, bars and restaurants. It may not suit you to be living close to the centre of town, but for many people this is the ideal place to be. Choose your region, choose your target market, then choose the right property.
But before you try to do any of this, choose the right adviser for you, because this is a big decision and you need to get it right.
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