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The Fine Print Investing in overseas property is like the properties themselves — wildly varying and worthy of serious investigation | Text : Elizabeth Kerr | Photo : www.depositphotos.com | Judging by the number of property road shows that hit Hong Kong any given weekend, it would appear investing is something everyone does and is really easy to do. In some cases it is. London properties — the most frequent visitors — have few restrictions to worry about for anyone. “Under English law there are no restrictions as to who can purchase freehold property. The legal process is the same regardless of the nationality of the purchaser,” notes UK-based lawyer Ardeshir Matini. That’s the case with most states with mature markets and strong legal frameworks. Canada, the United States, New Zealand, Singapore, Japan, Argentina, South Africa and most parts of Europe allow freehold purchases by international investors. But freehold property is prohibited for overseas investors by Thai law, though Thailand is a popular investment spot. South Korea allows foreign freehold ownership but it isn’t called the Hermit Kingdom for nothing: it can be broadly unwelcoming to foreigners. Many parts of the world restrict freehold land to below a certain amount (12 acres in New Zealand) or slap a sale with a stiff tax (Sri Lanka’s 100 percent transfer tax). Very often, taxes and other protectionist measure are viewed as restrictions, but that’s not necessarily accurate. Hong Kong’s recent cooling measures were designed to control prices for residents, not to keep foreign buyers away. It’s a fine line. The first step is determining how important freehold ownership is — which is not very in all cases. “If the price is cheap enough and your horizon is short, leasehold can be a good deal,” begins property writer Christopher Dillon, whose latest book, Landed Global, comes out in June. “But the value is almost always in the land, not the building. If your house burns down, is levelled by an earthquake or devoured by termites, the land will always have value.” The upshot is that structure ownership is sometimes the better investment for short-term speculation or income in the form of rental yields. But if land is part of an ideal investment package, locations like the US, Canada and the UK are the only way to go for easy freehold investment. Not so says Dillon. “It depends on how you define ‘easy.’ For example, Australia welcomes non-resident foreign investors as long as they buy a new home. Canada withholds 25 to 50 percent of the sale proceeds until … tax bills are proved paid, a process that can take months,” he says. Even investment-friendly UK has its limits. Investors with unoccupied flats are being penalised with council tax increases and it is getting hare rot buy through companies. “Today, there are fewer hurdles for a foreigner buying in Japan — a market that is notorious for being closed to outsiders — than in Singapore or Hong Kong,” Dillon adds. Australia has a slew of other regulations, some of which demand approval from the Foreign Investment Review Board. Malaysia’s overheated market prompted cooling measures, one being a minimum purchase price of MYR1 million (HK$2.4 million) as of this year. Overseas Property Investments 36


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