What to watch out for in overseas property investments

Owning a piece or property in a city of your choice is becoming more of a possibility than a dream. But what risks do these overseas property investment harbour?

Investing in property overseas has its pros and cons

While the yields from a sterling investment can be substantial, so can the downfalls from a bad one, even if it may not seem so at first glance.

Grenfell Tower fire Picture: Wikipedia

Take the recent Grenfell Tower fire tragedy in June last year for example. Fire hazards, often unbeknownst to foreign investors, is but one growing concern. And a rather big one for that matter.

Should the property be found to lack the necessary fire features or be using unsuitable building materials, landlords may be left to foot the hefty repair and maintenance bills. It might also affect rental and future sales potential.

Scams hard to detect from a distance

The expression “too good to be true” also applies to many overseas real estate developments. There have been cases of overseas property investments going awry for Singapore investors.

In 2014 for example, a London-based firm EcoHouse promised 20% on social housing in Brazil. Sadly, many investors did not receive their money and the Monetary Authority of Singapore (MAS) placed them on their investor watch list. In 2001, the developer for Villa Temasek in Bintan also took 90 investors for a spin after disappearing before the works were completed.

The Advertising Standards Authority of Singapore has issued guidelines disallowing misleading information and exaggeration of properties’ location, physical nature, legal titles and developers’ financial position. But the language and legal barriers that come with a foreign property purchase can increase the risk of an international investment. Currency exchange and tax rates can also eat into profits.

Experienced industry players and analysts advice investors to consider the full investment cycle instead of jumping on the bandwagon simply because prices are low.