Have you ever asked yourself whether you should invest in property and if so, why? Through the ages people have traditionally viewed the buying of property as a safe and prudent investment that provides diversification with long-term capital growth or income generation, or both.
At Carrick we are constantly asking ourselves and our clients such questions to help improve our understanding of how we can best help them achieve their investment goals. Of course, we also strongly believe in the wisdom and value of diversifying one’s portfolio with a significant offshore component forming part of it. And in this regard we view investing in international property as an excellent value-adding option that will also add geographical diversification, spreading risk over various markets.
Why do investors buy property?
Recent research revealed some interesting but not altogether unfamiliar reasons why investors believe in putting their money into property. Seven major themes emerged from this research.
1. A generator of income and wealth
The majority of respondents shared the long-held popular view that investing in property creates a reliable and ongoing source of income while at the same time increasing one’s net worth.
2. Preserving wealth for one’s family and the future
The next most popular reason given by investors was that property related strongly to the future wellbeing of one’s family in that it was a tangible, appreciating asset that could be passed on to future generations. It is also an asset that provides benefits during retirement.
3. Security and stability
The third most popular response was that property is viewed as being safer and less volatile than other asset classes such as stocks and shares for instance. In addition, diversification through investing in stable offshore property markets is seen as adding another layer of security and sound growth prospects to one’s portfolio. Such offshore diversification would be of particular interest to, for example, people living in South Africa at present, which is experiencing high levels of political, economic and currency volatility.
4. Independence through income
Many investors view a successful property investment portfolio as a means to independence and self-sustainability because of the alternative source of income it creates, which over time lessens one’s dependence on employment as a main source of income. In this regard it can also add significantly to one’s retirement income from other savings options like a pension or retirement annuity.
5. Passive income with little direct involvement
A high value is placed by property investors on the fact that investment in select property will provide a reliable and largely hassle-free source of income that mostly will require less active management, direct involvement or worries than many other asset classes.
6. A sense of personal achievement
A sense of personal achievement is also listed by many investors as another reason for investing in property. They value a goal-oriented approach to achieving success with a properly constructed and successful property investment portfolio. Buying properties or even just a single property, is seen as an important life milestone that provides a sense of pride and achievement.
7. Being part of exciting global development
Whether investing in rising niche property markets such as Lisbon, Porto or Leipzig, or in more established ones such as Berlin or Birmingham, for many investors it’s something of a passion, and also a source of excitement to be part of the development of some of the world’s most vibrant and revolutionising cities.
To find out more…
If you have wondered whether you should diversify into offshore property and/or identify with any of the above reasons why people invest in property, or if you simply want to learn more, Carrick can assist you. We will help you to further explore the exciting possibilities and opportunities in a variety of excellent international property markets. To set up a meeting with one of our investment specialists, contact us at [email protected].