International Property

10 things to keep in mind when buying an overseas property

Conducting research, consulting with experts and practising common sense can help guard against shoddy deals and bad developments

PUBLISHED : Monday, 26 September, 2016, 4:23pm
UPDATED : Tuesday, 27 September, 2016, 1:34am

Real estate experts agree that there’s no way to eliminate risk entirely. But there are steps you can take to keep yourself safe when investing in property overseas.

1. Use a reputable agent. A reputable agent should carry out due diligence - although they can’t protect you against all the risks

2. Research the developer. If you plan to purchase off plan, check the project developers track record to ensure they completed several large projects in the past. They are more likely to complete a project within budget and on time if they have sufficient experience

3. Look at the volatility of the foreign exchange market. You could end up making less money than you thought once you convert the profit back into your local currency

4. Be careful when buying off-plan. Investigate what recourse you may have if things go wrong, and what exactly the developer has promised to deliver

5. If it sounds too good to be true, it probably is. It’s human nature to get excited by large possible profits and forget about due diligence. Investor Education Centre’s general manager David Kneebone cautions that if you’re going to bed worried about your investment, that in itself could be a sign it’s too risky

6. Hire a lawyer to look over the contract and don’t sign away your rights. British lawyer David Ho says solicitors can ask difficult questions of the developers and look into the development, but often Hong Kong investors unintentionally sign away their rights, meaning solicitors don’t investigate the development on their behalf

7. Do your homework and get a good understanding of the local property market, including borrowing rules, stamp duty tax and capital gains tax. Also, make sure you know your legal rights

8. Keep an eye on the political environment If there’s a groundswell of support for different property laws, these changes could end up affecting you

9. Know what legal protections you have in Hong Kong. If you’re investing in a collective investment scheme, you may be covered by the SFC’s ordinance. But if you’re buying a house by yourself, you may have no protection in Hong Kong

10. Check out the Investor Education Centre’s publically funded The Chin Family website for more tips on what to look for when investing in overseas property

Sources: JLL international director CK Lau, Investor Education Centre’s general manager David Kneebone, British lawyer David Ho, Hong Kong Police