How To Invest Globally In Real Estate to Succeed

If you’re thinking of investing in real estate in different countries, you’ll find there are complexities to navigate as you cross borders. In addition to potential language differences, you may need to manage risks like currency fluctuations and changing markets. If you’re prepared, you’ll be well positioned to find opportunities and make informed decisions.

Follow these guidelines as you consider the intricacies of investing globally in real estate:

Research the Market Dynamics

When I interviewed Tal Peri, head of U.S. East Coast and Latin America at Union Investment, on my podcast, “The Insider’s Edge to Real Estate Investing,” he emphasized the importance of focusing on key indicators in different markets. Tal has more than 20 years of industry experience across markets and product types, and has closed more than $5.5 billion in real estate transactions. Union Investment is the largest open-ended real estate fund in Germany with a global real estate assets under management of $60 billion.

Consider past data about a region, as well as current events. You can look at factors such as rent growth, population trends, and job creation. These metrics can be helpful when determining the long-term outlook of a real estate investment.

Tap Into Local Expertise

When navigating a foreign market, you’ll want to understand the nuances in a particular region or city. Reaching out to brokers in the area, as well as property managers and market analysts, can allow you to access on-the-ground insights. Tal discussed building relationships with local experts and how that has enabled him to identify opportunities and understand a region’s requirements.

Be Aware of Cultural Differences

Every market has its unique cultural and business customs. Tal, who has managed investments across diverse regions, stressed the importance of cultural adaptability. Understanding how business is conducted in each country can assist you during the negotiating process. You’ll be able to adapt your style and business practices to align with local norms.

Navigate Tax and Regulatory Complexities

Global real estate investments often involve intricate tax and regulatory frameworks. You’ll want to make sure you understand local tax laws, or work with a professional who can help you navigate them. To avoid surprises, you can consult with legal and tax professionals familiar with the specific regulations in your target market. Structuring your investments correctly can also help you optimize tax efficiency and compliance.

Consider High-Quality Assets in Growth Markets

One strategy for global investing involves targeting core or core-plus assets in growth markets. These properties can potentially offer stability through long-term leases with creditworthy tenants while benefiting from market appreciation. For example, Union Investment acquired office buildings in developing areas like Boston’s Seaport District. By investing in high-quality properties within improving markets, you could position yourself for higher returns and lower risk.

Build Strong Networks

You’ll want to have connections in different regions, and taking the time to develop an extensive network can be worthwhile. In my book, “The Insider’s Edge to Real Estate Investing,” I discuss ways to develop relationships and build trust. You can start by attending industry conferences, joining professional organizations, and reaching out to key players in your target markets. Over time, these relationships can give you the Insider’s Edge, as you learn valuable information that might not be widely available.

Be Prepared for the Long Game

Global real estate investing, like all forms of real estate investing, tends to require patience, due diligence, and a long-term perspective. Markets fluctuate, and unforeseen challenges—such as regulatory changes or geopolitical events—can arise. However, if you have a long-term approach, you can adapt to stay in the game for the next years and decades. I interviewed Ric Clark on my podcast, who was with Brookfield Asset Management from 1984 to 2020. He served in various senior roles, including chairman and CEO of Brookfield Property Group, Brookfield Property Partners and Brookfield Office Properties. Under his leadership, the property group expanded from less than $5 billion of assets under management to more than $200 billion. In addition it expanded beyond office to include multifamily, industrial, hotel, and retail sectors. Ric is now managing partner of WatermanClark, a vertically integrated real estate investment and operating company, and founder of Burnside Investments.

Investing in global real estate offers plenty of potential for returns, though you’ll also want to be aware of the complexities involved. If you understand the cultural differences and are able to adjust as needed, you could find key opportunities that allow you to expand your portfolio. By understanding market dynamics, leveraging local expertise, building networks, and keeping a long-term view, you can better position yourself to achieve your investment goals.