Skip the road and dare to invest abroad

23 October 2017

Affordable prices and advantageous taxation ... it is often more interesting to turn to a foreign country to make a good investment in stone.

Our advice to choose your project, all the precautions to take before launching and a selection of five countries where it is good to invest in real estate.

With the Schengen area and globalization, investing in real estate abroad has become much more accessible. And the French are among the first to enjoy! "For twenty years, and especially since the beginning of 2010, the French are very inclined to invest internationally," says Thibault de Saint-Vincent, president of the network of prestigious real estate agencies Barnes.

Paris, one of the most expensive cities in Europe

It must be said that, in the Hexagon, between ever higher land prices and a heavier taxation than in most other countries, "individuals are discouraged to invest," continues Thibault de Saint-Vincent.

For example, where there is almost € 9,000 per square meter to buy an old apartment in Paris, the cost of real estate is nearly half as high in Lisbon and almost three times less in Barcelona. But, beware, not all destinations are equal. More than ever, it is essential to respect the "three golden rules": the location, the location and ... the location. In order not to be deceived in the choice of its housing, it is obviously recommended to go on the spot.

Passez le cap et osez l'investissement à l'étranger

Local specificities to watch

Especially since the legal rules, the cost of acquiring a property and taxation vary from one country to another. Worse, in the same country, all these data differ from one region, even from one city to another. This is the case in Spain. Since there is a tax treaty with France, property income is, in general, taxed in the country of investment.

To find the countries with which France has signed a tax convention, go to the website, then in the section "International".

Some countries then appear as tax havens. If the purchase of a property is not subject to wealth tax in Mauritius or Portugal for non-residents, in Barcelona a wealth tax applies to all property properties whose price exceeds 500.000 €.

In the same way, several rules exist for the tax on the surplus value. In Germany, it disappears on the resale of housing after ten years of detention. In Belgium or Italy, it is non-existent if the property has been acquired or built more than five years before its resale.

Surround yourself

Before embarking on such a project, it is better to surround yourself with a notary or a firm specialized in wealth management.

For those to whom a real estate investment seems too complicated, there is always the stone-paper alternative. Several companies invest in foreign offices, businesses or hotels through civil real estate investment trusts (REITs), particularly in Germany. You will be able to forget the worries related to the management.

EXPERTISE: the alternative of stone-paper

In many cases, individuals have the reflex to turn first to an investment in local real estate. However, it is important to diversify your wealth strategy. Indirect real estate investment abroad, via civil real estate investment companies (REITs), appears as a good asset.

Before embarking, it must be ensured that the management of the investment will be controlled, especially in terms of costs. It is also necessary to choose the interlocutor who will accompany you throughout your project.

The management company always assesses the economic interest of the investment abroad. Especially since, where a direct investment in real estate involves management risks, an investment via SCPI reduces costs. With the latter, you can indeed spread your money between a hundred properties, against a single home with a direct investment in real estate.

It only takes a budget of € 1,000 to invest via SCPIs. Count on average 10% of entry fees for a good management company and an average yield served between 4.5% and 5%. At best, your investment can generate a profitability of nearly 6%.

Also, it is advisable to turn, abroad, to SCPI which are placed on desks. A rule indeed prevails during a real estate investment: the location. For example, "thematic" SCPIs - such as those investing in health, and in particular Ehpad - are often located in parks located on the outskirts. On the contrary, new offices are often created in city centers. A more interesting location to ensure the rental of the property.

Germany, with the concentration of several large companies, is a very fashionable country among managers. And, more and more, the Netherlands is emerging as another destination of choice.

Beyond the economic interest, an investment in foreign real estate offers many tax benefits. With SCPI, property tax is paid directly by the company, without being subject to French social security contributions (17.2%).

Bertrand Tourmente, Althos Heritage Managing Director

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