Is it a wise move using overseas exposure to balance a property portfolio?

There was once a belief that using overseas exposure to balance a property portfolio was not the correct thing to do and before the world became a smaller place as a result of the internet, keeping a track on the property markets abroad was difficult and costly.

However, over the last 20 years, things have changed and now information is available at the click of a button. This still leaves the question – is it worth balancing a domestic property portfolio with overseas exposure?

Limiting the Risk

This is dependent on the way in which the property exposure is increased, whether this is through investment that is direct, property shares, investment trusts or even the size of the investment pool. Purchasing shares that are tradable in collective investments is quite simple and this will give you instant exposure to many property markets throughout the world. Many people find that this is the easiest way to increase exposure, however, there are potential issues that have to be considered such as the cost.

You may be an involved investor

Many people prefer the hands-on approach when it comes to choosing their investments and strategies as opposed to purchasing shares in a collective property fund. Once again, the internet has made it even easier for property investors to research and find exactly what they need from their own home, enabling them to purchase assets and increase their portfolio.

Exposure Abroad

Is there a real requirement to look at investing overseas because this has to be considered before thinking about the risks that come with it when compared to a domestic property investment. Regardless of the country, the main property market will consist of a large number of subsectors and most countries will give you the exposure needed in the area of the market that appeals the most. Therefore, even though you may be trying to limit the risk involved with your property portfolio, it may not be a requirement to look overseas because the domestic property market and the subsectors within that could offer many advantages.

Unique Circumstances

Many will think that they have found the next property hotspot, that they believe will bring great returns in the future, such as Dubai. This was an untouched location only a short time ago and it reached it heights before the financial crisis struck. The real estate market in Dubai has recovered considerably since but this shows the risks of purchasing abroad without having the required knowledge.

Purchasing property overseas comes with a number of additional risks and this includes the currency, regulations that are in place and not enough knowledge. However, this does not mean that overseas property investment will not work but perhaps a direct investment in a property abroad could be too much to take on for many people.

Author Bio

The Overseas Investor are international property experts, with a large portfolio of overseas investment properties for sale in Thailand, Dubai, Egypt, The US and across Europe.

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