Pros and cons of owning real estate abroad

Investing in real estate has always been considered a reliable way to preserve and multiply capital. This type of investment becomes especially interesting when it comes to real estate abroad. For many people it is not only a chance to diversify their assets, but also an opportunity to use the object for personal purposes - for example, as a vacation home. However, like any asset, real estate overseas requires knowledge and consideration of a number of factors. It is important to weigh up the pros and cons before deciding to buy. 

Pros of owning real estate abroad

Rising real estate values. Real estate tends to increase in value over time. The choice of location plays a key role. For example, properties located in tourist-attractive regions or developing countries can generate significant returns. For example, in 2023, real estate in Portugal and Croatia showed price growth of 10-15% per year due to increased tourist traffic. Another promising area is cities where large infrastructure projects or international companies are opening. 

Ensuring a steady profit. Renting out real estate overseas can become a stable source of income. In popular tourist destinations such as Barcelona, Bali or Dubai, the demand for short-term rentals practically does not decrease all year round. If the property is located in an area with developed infrastructure and high population density, the probability that it will be idle is minimal.

Tax incentives. Many countries seek to attract foreign investors and offer them various tax preferences. Such measures make investments more attractive and reduce the overall costs of owners.

Inflation protection. Real estate is considered one of the most stable assets against inflation. It retains its value even during periods of economic instability. For example, during the COVID-19 pandemic, real estate prices in the U.S. and European countries not only did not fall, but rose due to increased interest in private homes and remote work.

Citizenship or residence permit options. Some countries offer programs to obtain a residence permit or citizenship for investment in real estate. For example, in Portugal, through the Golden Visa program, buyers of property worth €280,000 or more can qualify for a residence permit and then apply for citizenship. This opens up many opportunities, such as free movement within the EU or access to local benefits.

Minuses of owning real estate abroad

Legal and regulatory issues. Legislation is different in every country, and ignorance of local laws can lead to additional costs or even loss of property. For example, in some countries it is only possible for foreigners to purchase real estate through legal schemes, which can be complicated and expensive. It is important to consider tax requirements, rental permits and possible resale restrictions.

Real estate requires maintenance. Even if the property is not in use, it needs to be maintained. Utility bills, taxes, repairs and maintenance can be a significant part of the budget. For example, in countries with high humidity, such as Thailand, constant protection against mold and insects is necessary.

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