Protection when investing in emerging markets

Emerging markets, as a means of achieving the best possible returns from overseas property investment, are presenting some interesting and exciting opportunities in the world of foreign property investment; rapid growth rates, impressive capital appreciation and rental yields provide highly lucrative investments when compared with earnings in more traditional markets.

Security of a property venture is obviously a crucial factor when making investment decisions, and although emerging markets can present some extremely profitable returns, there are also some unique challenges and risks to consider. However, there are a number of actions that can be taken to minimise the risks involved, leaving the investor the freedom to sit back and enjoy high investment revenues.

Kevin Prior, Investment Director of Obelisk International, comments, “Research into the prospective market will help prudent investors to make the most informed investment decision, easing concerns surrounding a potential venture, ensuring full preparation, and avoiding any surprises that may arise along the way. Analysis of the stability and growth of a country’s economy, as well as government reforms and the attitude to foreign investors is highly important. Countries that welcome foreign property investment promote positive actions such as favourable tax conditions and full ownership laws.’

Full evaluation of each country’s purchase process will cover all fiscal and legal aspects, providing advance knowledge of all costs that may be involved with property purchase as a foreigner, as well as when they are due for payment and to whom. Pre-evaluation of this avoids any unexpected costs and delays that may arise once in the purchase process.

Due diligence of overseas property investment, in general, refers to the attention an investor should take before embarking on any overseas real estate investment. Purchase of a property in a foreign country can be daunting, with inherent uncertainty derived from the lack of knowledge in local practices. For this reason, it is crucial to turn to an advisor who can guide, and analyse all encumbrances on the property prior to the transaction.

For an off-plan project, comprehensive due diligence should include the review of the developers legal and financial records. The legality of the project will also be ascertained ensuring full licenses and permissions are in place. The outcome of the report will highlight anything that could affect the seller prior to completion, as well as at latter stages.

When operating in an unknown foreign market, where fiscal structures, legal systems and local companies are unfamiliar, it is important to ensure you are correctly guided and advised throughout your property purchase. Although legal representation in some countries is not a requirement when purchasing a property, it is never recommended to proceed without a lawyer who is proficient in the chosen country’s laws and processes.

Kevin Prior comments, “Using internationally recognised constructors, developers and agents who possess a visible portfolio, are experienced, and hold a highly regarded reputation within their field, can be a good indication that those companies will fulfil their obligations. This also allows a concrete insight as to final quality levels through evaluation of previous workmanship of these companies.”

Another consideration is when dealing with foreign currencies, which may carry more or less risk. Historic data of the performance of a currency will help establish its volatility and may provide some insight into the risks that may be involved. It is essential to obtain the best currency exchange advice and assistance possible, as the cost of not understanding exchange rate movements can add thousands of pounds to your initial budget.

A foreign exchange specialist is recommended when converting currency as these professional services are able to provide specialist advice more suited to individual circumstances, and can provide global property investors with a range of currency option products. One useful recommendation, especially when buying off-plan where payment is required in stages, is to forward plan by fixing an exchange rate for a specific future time, avoiding currency fluctuations.

Investment in emerging markets can be highly lucrative, with many useful strategies to ensure only the maximum profits are earned. To this end, each investment project Obelisk recommends has been through a comprehensive due diligence issued by highly recognised lawyers, as well as extensive market analysis carried out by in-house professionals. Projects are also chosen with reputable partners; it is of the uttermost importance that the collaborating companies are reputable and accountable, and have a history and reputation of carrying projects to completion with the highest possible quality standards. Where foreign currency is involved, Obelisk endeavour to recommend a foreign exchange specialist to ensure clients are correctly advised as to the most prosperous options available.

For more information on overseas property investment opportunities, visit obeliskinternational.com.