FIVE FACTORS MOTIVATING GLOBAL INVESTORS Is the prospect of a great return what drives all investors? When the investment is real estate, this is certainly one important factor, but far from the complete story. Like other major life decisions, people enter real estate transactions with their own unique set of needs and wants. Here are some of the major factors driving today’s global transactions. visas designed to woo international investors. Some programs Global investors often look for are structured to attract specific more than an investment vehicle types of investors, for example when choosing a destination for entrepreneurs, while others seek their money. The right to stay cash flow into sectors the governand travel in a country for exment most wants to encourage. tended periods is a powerful Countries may require applicants motivator for certain individuals. to meet net worth requirements, Many countries recognize this others require certain standards and have created visa programs of language proficiency and that offer additional benefits to management experience. foreigners investing in properties A particularly attractive incentive or businesses in their countries. in many Eurozone countries is the ability to travel freely in the The EB-5 Visa Schengen Area, created in 1995 Many foreign-born investors under an agreement signed in would like to live and travel in Schengen, Luxembourg. Twentythe U.S. for extended periods, six European Union countries but can’t because of visa refunction as a single country for strictions. The EB-5 visa is a pow- international travel purposes, erful tool for attracting foreign- creating open common borders. born entrepreneurs and investors Of the Eurozone countries, only who are looking for a fast path the U.K. and Ireland have opted toward U.S. citizenship and the out of the agreement. Several ability to live here on a condiEuropean nations seeking intertional permanent basis. national investment in their deThe program’s central focus is job pressed property markets have creation. Foreign-born individuals leveraged their rights under the Schengen Agreement to attract who can invest $1 million, or as global funds. Latvia, Spain and little as $500,000 in some instances, in commercial enterprises Portugal, for example, either that generate at least 10 Ameri- have or are in the process of can jobs over two years can re- announcing programs that dictate ceive a green card. In addition to minimum investments in residential job creation, the program bene- properties for attainment of a visa good throughout the fits the U.S. real estate market because EB-5 card holders must Schengen Area.
1. Investment Visas
maintain a U.S. residence. Investment Visas in Other Countries Many other countries also offer
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sports, health or education; or invest in a new or existing Irish business; or invest in a low-return five-year immigrant bond; or in residential property and a government bond. However, because Ireland is not part of the Schengen Agreement its visa only offers travel to Ireland and the U.K.
year Cambodia received more FDI per person than did China. As China’s wages have risen and the labor force has begun shrinking due to the “one child” policy, multinational companies have shifted manufacturing further south to reduce labor costs. People in the Mekong Delta are being lifted out of poverty as employment has grown.
Australia’s investor visa program is more similar to the U.S. model. In return for a sizable investment in the nation’s economic growth, investors gain residency so they can enjoy the Australian lifestyle and quality of life.
“Phnom Penh is hot right now,” reports Herb Jahnke, a real estate attorney and broker with China United Global Real Estate Group who is seeing large companies snap up space in the center of the city. Cambodia’s rising GDP, expected to grow 7.2 perReturn on Investment cent in 2013, and inflow from Most investors expect to achieve foreign investors is driving supply some level of return on the mon- and demand in the city’s office ey they commit. For some, realiz- center. Most space in the city has ing the greatest return for their been Grade C, but developers risk preference is the primary are working on increasing Grade purchase driver. Markets across B space and will soon introduce the globe offer many choices. prime Grade A properties.
2.
ROI-driven buyers often look for opportunities in residential properties they can rent year-round including single family homes, condos and townhomes. They may be interested in properties in distressed markets which provide appreciation over short- or medium-term timeframes. Commercial office or retail space in hot or up-and-coming urban areas can offer great returns. Hotels and restaurants may appeal to investors with deeper pockets.
Other countries maintain higher requirements in return for fewer benefits. For example, to earn an Cambodia, for example, has Irish visa you must contribute to a seen huge increases in foreign public project benefiting the arts, direct investment. In fact, last
Appreciation and income potential are not the only factors determining ROI. Exchange rates can greatly affect expected return depending on which currencies are exchanged between the buyer and seller, and the strength of one currency versus another. In Turkey, it’s common to transact in multiple currencies like euros, dollars, pounds or the Turkish lira.
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September 2013 | San Gabriel Valley Connection
