Why are foreigners investing in real estate overseas?

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Why are foreigners investing in real estate overseas?
Published on 2nd March 2020
(4min read)

Besides factors like immediate profit, rental income, or housing appreciation, in 2019, several economical reasons also motivated worldwide investors to purchase real estate overseas: 

  • Brexit;

  • The Trump Administration;

  • The trade war between the US and China that led Chinese buyers to seek other investment destinations;

  • The growing interest in countries like Spain and Portugal that offer lower property prices and good quality of life.

Geopolitical concerns related to Brexit slowed down Eurozone’s growth (from 50% in 2018 to 37% in 2019), rising trade tensions and decreasing short-term investment plans (from 35% in 2018 to 27% in 2019). Despite this downfall, Europe still is the world’s most attractive region to establish business operations and for investing in real estate overseas. Investors’ perception towards Portugal follows the same pattern, but Portugal’s attractiveness remains strong (52%) and the number of investors interested in purchasing in Portugal is among the highest in Portugal - totaling 25%. Brexit is equally having a positive impact on Spain as a country, thanks to foreign buyer interest rising significantly there.

Source: ey.com

The U.S has also seen an overall decrease in investment interest, particularly from the Chinese market due to trade policies implemented by the Trump Administration. Studies indicate that this market’s interest has shifted to countries like Canada and the UK.

 

 

Regarding Portugal’s situation, the Lisbon city continues to be at the top 10 targets for real estate investments in 2020. However, the perception of the country’s attractiveness among investors is gradually shifting, as the surrounding cities are competing for the deserved attention. This shift is emphasized by established investors, for whom these regions are starting to look more promising.

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Portugal is also nurturing a culture of innovation that opens doors to the country’s digital transformation. More and more businesses are being established in the country because there is a higher value-for-money for developments in Lisbon than in other major cities, as well as cheaper office and house prices, compared to other European cities. As a result, investors realize that there are still several types of real estate investments available in sectors such as Hotels, Residential and Retail. 

If you’re looking to invest in these sectors, you will want to consider getting the return of your investment. How much profit a building generates depends on its size, income and how much money you have invested in the property. Property management will also be an intensive process if the property has more than four units. At Portugal Homes, we can provide you with market reports on the property type and potential returns, through our After Sales Department, which is solely committed to satisfying clients’ needs post-purchase, ensuring any and every matter is addressed.

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