The Growing Trend of Buying Property Abroad
August 7, 2024 · Residency by investment · 10 min read
What began as a way to support children studying or settling abroad has grown into a broader strategy of portfolio diversification and wealth building. A growing number of investors are now buying property abroad, particularly in developed markets.
What began as a way to support children studying or settling abroad has grown into a broader strategy of portfolio diversification and wealth building. A growing number of investors are now buying property abroad, particularly in developed markets.
In 2009, a prominent Vietnamese businessman’s acquisition of part of a shopping center in California gave a significant boost to the real estate market. Today, high-value cross-border deals are no longer limited to corporations and conglomerates: individual investors are also increasingly drawn to property abroad.
A global investment strategy
According to Than Thanh Vu, Standing Vice Chairman of the Vietnam Tourism Real Estate Association, around 2.5 million Vietnamese people have settled abroad over the past two decades for study, work, or marriage, creating demand for housing in their new countries. Beyond the need for a home, investing in international real estate for returns has also become a notable trend. Mr. Vu argues that if foreigners can invest in real estate in Vietnam, people in Vietnam can equally invest in international markets where they see potential returns. He sees this as one of the most effective ways to allocate and preserve wealth while limiting risk.
Driven by the desire to preserve and grow wealth for the next generation, investors are looking beyond their domestic holdings to developed markets with clear legal frameworks and strong liquidity, seeking security and stable long-term growth.
The United States, Canada, Australia, and the United Kingdom have long been popular destinations for their education, residency, and investment opportunities. Since 2018, however, observers have noted a shift toward European countries such as Cyprus, Malta, Portugal, Spain, and Hungary, whose residency-by-investment programs offered more favorable terms and more accessible investment thresholds.
The dual benefit of owning property abroad
Owning property abroad is more than a financial investment strategy; it can also shape the long-term future of an investor and their family. Through residency-by-investment programs based on real estate ownership, investors can hold a property asset while gaining long-term residence rights and, depending on the program and local rules, access to healthcare, education, and social welfare, as well as the living standards and infrastructure of the host country.
Many IMM Group clients have chosen residency-by-investment programs in European countries such as Portugal, Spain, Cyprus, and Malta, because these programs meet several goals at once: diversifying their portfolio, adding a potential source of passive income each year, and opening up future options. Overseas residence rights allow them to live, study, and, depending on the program, work abroad, while permits issued by Schengen member states also allow short visa-free stays (up to 90 days in any 180-day period) across the Schengen Area.
One IMM Group client, Mr. N.T.T., says property has always been a dependable long-term investment, which is why his family holds most of its wealth in real estate. Beyond his home market, he also owns several apartments and houses in European countries. “With property abroad, I hold freehold title. It is not just a place to live or a business asset, but wealth set aside for my children’s future. European property yields may be lower than at home, at only around 4–5% a year, but the value is held in euros, a hard currency.”
In many countries, the law allows foreign buyers to hold property on a freehold basis, which gives investors greater confidence in this store of wealth. Prices may rise more slowly than in Vietnam, but growth tends to be steadier and more sustainable. Overseas property is also transacted in hard currencies, which helps diversify an investor’s currency exposure.
In addition, with residence rights, investors and their families may be able to access healthcare and education in the host country. Residence permits issued by Schengen member states also allow visa-free travel across the 29 countries of the Schengen Area for short stays of up to 90 days in any 180-day period. Investors and eligible family members who meet the residence, language, and other naturalization requirements may be able to apply for citizenship of an EU member state, further expanding their travel freedom and opportunities.
At the time of writing in August 2024, Spain was regarded as a leading destination among European residency-by-investment programs, offering a reasonable investment threshold relative to its benefits and strong growth potential in major cities such as Madrid and Barcelona. IMM Group was also introducing investors to commercial properties with long-term leases already in place with major tenants such as supermarkets, gas stations, and EV charging stations, which may add value to the property over time.
Investors may also consider other European programs that offer residency through real estate investment, such as Greece, Malta, and Cyprus.
If you are considering a real estate investment program for European residency, contact IMM Group or leave your details below. Our experienced advisory team will provide detailed guidance and help assess your application’s prospects. We keep your personal data confidential and use the information you provide only to advise on your family’s case.
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