Be aware of the risks involved

SINGAPORE - Overseas property investments do not come without their fair share of risk.

The allure of owning a home at a fraction of the price here, in some depressed markets, might seem like an attractive proposition.

But experts stress that investors must be aware of any hidden costs and other risks that might be associated with buying a property in an unfamiliar foreign land.

These can include currency risks, political risks, capital gains, property or inheritance taxes, legal fees and restrictions on selling the unit in the future.

In Australia, for instance, foreigners can buy only first-hand property, which means either under construction or just completed. The property can be resold only to Australian citizens.

Foreign investors in Britain also need to be aware of the various taxes that they may have to pay.

For example, there is stamp duty, a tax on the property based on the purchase price. Another tax is the council tax levied by the local authorities. This depends on the area in which the house is built. Together, these two taxes - which local buyers also have to bear - can be costly.

International Property Advisor chief executive Ku Swee Yong said that more exotic and emerging markets typically may have higher returns due to the higher risks attached to them.

"The laws there are not the laws that we're familiar with here. The further the property is, the higher the holding costs might be as well, if an owner needs to fly up to physically check on the property," he added.

Apart from doing research, Mr Ku added that investors should also consider appointing a buyer's agent for unfamiliar locations to help them with the due diligence and to get peace of mind.

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