How an ordinary person can invest in foreign real estate

Investing in foreign real estate is by no mean easy, though there are many investors with strong financial position have successfully invested in real estate in foreign country and coupled with strenthening of the currency of the country concerned, they have reaped extraordinary gain unprecedented in local real estate investment.

Investment in foreign real estate takes more than expertise in real estate investment, the invester need to be also well versed in the trend of the foreign exchange and take the necessary calculated risk as any appreciation in property value can easily be offsetted by the fall in the relevant currency.

For ordinary man in the street, investment in foreign real estate may seem far reaching as the process of acquiring property in foreign country may be very unfamiliar and the amount of fund involved may be large depending on the country that the investor wish to invest in.

However, the investment scenario of Malaysia has taken some changes since the relaxing of capital control by the Malaysian government and Malaysian are allowed to invest to a certain extent on foreign unit trusts.

Many local banks have been aggressively promoting foreign unit trusts for the past one year and some of those deal with real estate asset or real estate investment trusts (REITs) in foreign countries. Unit trust investment enable investor to invest from as low as RM1000-00 and investor can choose to incrementally increase their investment by buying additional units at various time. However investors need to take note of the initial charge that apply which can be as high as 5% of the investment, making it not quite suitable for short term investment. It is nevertheless very liquid as investor can dispose off the units rather easily. The unit trust also enable the investor to diversify as very seldom the trust deal with only a particular class of property or asset, they normally deal with a variety of properties such as commercial, hotel, residential, hospital etc.

The foreign unit trusts that deal with real estate provide local investors an additional option to invest their fund when local real estate conditions for investment is not favourable.