What is an emerging market investment?
It seems that nowadays “emerging market” has become a buzzword attached to any overseas investment; to convince the investor that they are the first there and huge returns are simply a matter of course. However it is not that simple.
We define an emerging market as “An unproven investment area in its first (emerging) property cycle”.
They can, if made astutely, provide you with returns well beyond anything you may be able to achieve elsewhere. However research, choosing investments carefully and working with trust worthy partners is essential.
These investments are not a guaranteed way of getting rich and your clients should not be led to believe so.
Planning and research is key.
Why emerging markets?
There are a number of ways that a new property market can provide you with above average returns.
Undervalued Assets
Property and land will be undervalued before a true understanding of tourist and investment appetite has been established. If you invest first and demand grows then your investment will grow accordingly.
High Yields
Any property asset should always achieve a good yield. Its current and ongoing capital value demands so. Capital appreciation is process that follows demand for high yielding assets and therefore the greater the projected yield the greater the project capital appreciation of that asset.
Emerging market investments will hold good yields, as the asset market is immature in comparison to the rental market it exists in. Be it in a city or a tourist destination this situation should help maintain solid income for longer than traditional markets.
Government Incentives
To attract tourists and investors governments will often offer tax breaks and other incentives to encourage growth. By taking advantage of these you can significantly reduce your UK tax liability in both capital gains and inheritance tax.
This should always be explored thoroughly and we advise you to contact us so we can put you in touch with a qualified international tax specialist.
Reputable Developers
Growing demand for more risky and exotic investments means badly built investments are becoming a thing of the past. Any developers responsible for below par housing will quickly be found out and are not worked with. Quality is key if you want to stay in business as these areas grow.
High growth potential
GDP growth in emerging market economies is running about three times as fast as in advanced economies, which makes investing in property an attractive prospect with potentially high returns.
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