Buying land abroad can be an excellent investment option. However, just like any other investment, land investment also needs to be done with due diligence. Let us first look at why investment in land is such a good idea.
Land is limited in availability. In practical terms, land is not something that you can create. As demand for land goes up, it will have to be met with existing availability and this means that prices will go up.
The issue before land investors is to select property in areas where demand is likely to go up fast. Not all land will meet this criteria. For example, in areas where population is declining, demand for land is not likely to go up much. Similar is the case for areas where significant economic development is not likely to take place.
Once you have identified an ideal location for land investment you have to start the due diligence process. Key issues to consider are:
- Does local government laws and regulations allow foreign citizens to get freehold title to land property?
- Are local land records maintenance system foolproof enough to identify each piece of property uniquely?
- Does the records maintenance system ensure that ownership and other charges such as mortgages can be clearly identified without dispute?
- Are there any prior charges on the piece of land you are planning to buy?
- How will you arrange to manage the property overseas till it can be sold at a profit?
- If you plan to add value to the property, how will you manage this exercise in a cost-effective manner?
As land is not mobile, you cannot take it with you and will have to organize its management remotely unless you plan to move house to the country where the property is located. Hence reliable agents and facilities must be available for managing it from where you are.
Provided you do the due diligence properly, buying land abroad is an investment that can produce exceptionally high returns to investors.
