No one can deny that overseas property investment has been badly damaged by the dreaded credit crunch. From 2004 onwards overseas property investment was a massive growth sector, with emerging market property investment seeing the fastest growth in popularity.
The properties that were available to overseas investors in emerging markets, tended to be off plan properties, which carried the highest risk. Because the potential profits were so great, people were blinded to the risk and poorly advised by shady agents got their fingers burnt.
This has badly damaged the public's confidence in overseas property investment. But what they were saying was true; off plan property in emerging markets is potentially one of the most lucrative of all property investments, and accessible to a wider range of people because of the low prices, you just have to be careful and do your own research.
I would never advise people to pay any more than the initial deposit without making at least one trip to the country to meet with the developer and see the development work. I would also be looking to find out about the developer's background; how many developments have they successfully completed, are they financially sound etc.
This is to make sure that the financing to complete the development is secured before off plan units are being sold and work commences. If the proceeds from off plan sales are being used to fund any portion of the work don't touch it.
When you do your own research you are minimising the risk and increasing the potential reward. Though the downturn has scuppered property price growth for this year and possibly next year as well, the growth people were being promised by decent agents will still be realised in most cases, when the recovery is underway.
If you choose carefully and do your research, the potential gain on an off plan property investment in an emerging market is 100% in the first five years, and 200% in 7-10 years.
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