Any realty expert operating in a developing country would agree that mere speculative investments in certain cities have resulted in escalating prices of properties when there is no fundamental reason for the same. This has made properties unaffordable for a considerable population in various countries like India, Turkey, South Africa, etc.
In countries like India, the government’s housing for poor schemes and reduction in interest rates has kept the market momentum in spite of slide in rupee’s value and absence of foreign investors.
Notorious property developers spreading fake news
The real estate lobby, as well as developers, often plant newspaper stories about the benefits of investing in cities where they have multiple projects in developing stages. Even Google search results for property related searches can be manipulated with hundreds of promotional articles written in favor of specific projects in the selected cities.
Finding genuine advice for investment in lucrative real estate market has become difficult. You need to develop the skills necessary to read between the lines and find the information that can help you select the house you are looking for. Location is the factor that deserves utmost importance compared to other aspects while finding properties.
When you are investing in a property, you are willing to put your leveraged capital and saved money at risk. So, as mentioned earlier, sponsored advice can be damaging. Having basic knowledge about the sector is crucial. You must develop the necessary skills that would help you focus on the factors that can trigger the demand for real estate at the selected location. The ROI factor entirely depends on the market for real estate in the given area.
Every city has micro-markets as well as hot investment corridors when it comes to residential properties. The latter always remain the most attractive. Besides learning about these areas from the selected town, you must also check the numbers for price growth, infrastructure creation, and the city’s employment generation capacity.
Usually, the financial capitals of the states in any developing country, as well as the nation’s IT hubs, industrial hubs, manage to attract most of the domestic and multinational investments. Along with such cities, even small towns with better real estate affordability rates can prove to be a good investment option. Towns that are home to multinational company offices and top educational institutions can also be considered suitable for buying a house.
If the given city has good educational institutions that can create highly-intelligent graduates, the IT firms, service sector, and manufacturing industries would absorb them. Wherever there are jobs, people would have the capacity to buy houses. This is how the demand for property is often linked with the city’s colleges and exposure to the service sector.
If you do not have enough capital to invest in the selected town’s top investment corridor, you can consider putting your money on the micro-markets. Large commercial players develop both, residential and commercial properties these days.
While buying a commercial property, make sure that area is close to private societies or at least has excellent connectivity to them. The ROI is often good after investing in such commercial space. You won’t have much of a headache while giving it out on rent. The common factor that needs the attention while investing in both, commercial and residential spaces, is the property’s proximity to industrial hubs.
Regulations for foreign investors
Some of the world-wide locations that attract investors internationally are Algarve(Portugal), Ambergris Caye (Belize), Cayo (Belize), Granada (Nicaragua), Puerto Vallarta (Mexico), Panama City Beaches (Panama),Samaná Peninsula (Dominican Republic), Abruzzo (Italy), Medellín (Colombia), and Istanbul (Turkey). Other developing countries offer investment opportunities. However, their regulations for foreign investment keep on changing. Take New Zealand and Australia as examples. Their governments have recently put restrictions on the sale of individual houses to foreign nationals. It is advisable to buy a property only from a trustworthy construction company that has earned an excellent reputation amongst international buyers. The company must have all the necessary clearances required for selling real estate to foreign buyers.
Check your finances and currency conversion rates applicable to the deal
After selecting the property, the buyer should consider waiting for the local currency to stabilize if he or she is using local money to make the payment. Sliding local currency means additional gain for the foreign buyers. To get an insight into the selected currency’s volatility, you can opt for tools developed by the bollinger bands.
Seek legal opinion on the applicable government and local taxes on the property
Construction companies have their own set of lawyers to support them in transactions involving international buyers. However, these experts won’t bother to explain loopholes, and clauses regarding owner responsibilities and other legalities. So, the buyer also needs to opt for independent legal advice before signing any agreement or paying advance. Legal expert offers suggestions when it comes to confusing clauses and negotiates with all the parties involved.
In developing countries, the property taxes charged by some of the municipal corporations happen to be bizarrely high compared to the services offered. Plus, there are other monthly charges that the property owners need to pay to the residential community associations, etc. Such taxes may vary from one property to the other. It is essential to consider these taxes because they may cause a hole in your pocket resulting in loss of rental income. An excellent legal expert would find all the information for you and suggest whether the property best suits your interest or not.
Check the residents’ opinion about their city
As mentioned earlier, Google search results, newspaper articles, and even municipality ratings given by the government can be manipulated by the real estate lobby. The best way to check the city’s viability is by interacting with multiple residents. Join community groups formed by the people from the selected locality on Facebook. Interact with locals and double check if the buzz created around the property exists on the ground and if the city offers growth prospects for investors.