FINANCIAL
Wealth protection through
foreign real estate
Secure a higher return on your
investment
SIDIMA MFEKU
I
nvesting offshore is seen by many as a means to
ensuring that one’s government doesn’t make or
break the investor’s success. Offshore real estate
investment offers diversified and modern invest-
ment opportunities and strategies. International
offshore investment strategist and entrepreneur,
Andrew Henderson believes that investing off-
shore offers a great deal of financial benefits.
Higher returns with international real
estate
Of all the offshore investment benefits, Henderson
said “the number one reason why people want to
buy international real estate is to get higher returns
on investments. Returns on investment vary from
one jurisdiction to the next.” Henderson says in
Australia, investors known to him personally often
received 2% returns on their properties each year
in 2018. While some in the Kingdom of Cambodia
made approximately 7 – 10% in rental yields of their
property with 10 – 15% earnings in property value
appreciation each year. It is extremely important
that investors do extensive research for “excellent
emerging markets”, like Cambodia.
Asset protection
Property isn't just a random asset that can be disposed
or given away. It is a fixed asset that many are more
than eager to own and make money out of. The safety
and protection of this asset is extremely important,
especially if it is a source of income. According to
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Henderson, “by owning a property outside of your
country of citizenship you insulate yourself from all
kinds of economic issues or economic instabilities
that may arise from home.”
Rules & Laws of Engagement
The real estate sector is broad and even broader
when extended to other jurisdictions and
taken abroad. Therefore, it’s important for real
estate investors who are hoping to enter a new
jurisdiction to pay attention to the benefits
offered by some of the possible offshore
investment destinations. While enjoying the
benefits of investing offshore, it is also wise to
keep cognizance of the rules and laws concerning
the jurisdiction investors choose to invest in.
Factors like ownership rules, borrowing and
payment restrictions, and local customs in most
countries make it extra difficult for foreigners to
buy in their real estate sector.
It is important to note that the global real estate
sector has almost the same checklists to consider
prior to investing offshore. However, the specifics of
the laws and rules of engagement in each country
vary according to the countries’ legal structure.
Investing in Australia
Australia has one of the most sought-after real estate
investment jurisdictions. This country has placed
regulatory measures to supervise the domination
of foreign investors in the country. Post 2015, the
Australian government introduced new laws to
make it more challenging for offshore investors to
purchase property in this jurisdiction – whether
for investment or residential purposes. Offshore
investors are welcome in Australia. However, there
are certain restrictions overseen by the Foreign
Investment Review Board (FIRB) to be obeyed. It is
important to note the following when intending to
invest in Australia: Investing in Canada
Before investing in the Australian property sector,
foreign investors are expected to apply through
the FIRB for any residential property investment
and/or purchase in the country. It is only through
the application that foreigners can invest in this
jurisdiction. A contract can also be prepared before
obtaining approval from the F.I.R.B – as long as there’s
a special clause in the contract that states that the sale
is subject to approval by the F.I.R.B’ within a specified
period. Regulations in Canada differ from city to city, so it’s
essential to perform your due diligence to ensure you
choose the right city based on your investment goals.
For instance, taxes vary from province to province,
which can greatly impact your decision. An example
of this can be seen in Vancouver having a foreign
buyer’s tax of 15%, whereas Toronto has no such tax.
However, that shouldn’t be your only consideration.
You should also look at annual property tax rates
and whether the market is growing or contracting to
ensure you’re getting a high ROI.
Like other banks around the world, many Australian
banks generally loan up to 80% of the property’s
value to foreign investors. Legal Procedures require
you to be represented by a lawyer should you decide
to purchase an Australian property. Your lawyer
in Australia will assist in reviewing the Contract of
Sale, sending over the documents to you and being
your legal representative in matters regarding your
Australian property.
In Canada there is no residency or citizenship
requirement for buying and owning real estate. Even
if you only occupy a temporary residence, you can
still purchase property there. However, you must
follow the rules and comply with all of the appropriate
immigration requirements. If you’d like to buy a
property strictly for investment reasons, non-residents
can also hold rental properties if they file annual tax
returns with the Canadian Revenue Agency.
The good news is if you plan to invest in Canadian
real estate, there are several legal structures available.
These include a general partnership, limited
partnership, co-ownership, corporation, trust,
personal ownership or a combination of the above.
This gives you a lot of options in comparison to other
countries that might only allow you to form a joint
venture with a national investor.
SOURCES Nomad Capitalist, Medallion Capital
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