Is it worth investing in foreign real estate: benefits and risks

Financial markets demonstrate volatility, currencies lose stability, and traditional instruments bring less and less profitability. In the conditions of global instability, interest in real estate outside one’s home country logically grows. But is it worth investing in foreign real estate when both capital growth prospects and potential difficulties are at stake? The answer requires a comprehensive assessment: from property management structure to nuances of taxation and transaction logistics.

Geography of Interest: Where Capital is Most Often Invested

Defining the direction is the first point on the strategic investment map. The potential of each country depends on market dynamics, legislation, demand, and infrastructure. European resorts, UAE, Thailand, Turkey, North America are the main vectors. But before deciding whether to invest in foreign real estate, it is necessary to consider local specifics.

Segmentation by demand type:

1. Investment interest: UAE, Germany, Spain.

2. Residential apartment for rent: Turkey, Portugal.

3. Comprehensive purchase of real estate abroad for permanent residency: Greece, Cyprus.

4. High-yield resort hotel: Indonesia, Croatia.

Each direction requires analysis of liquidity, exchange rate stability, transaction language, and tax norms. It is not possible to compare housing in Barcelona and a studio in Phuket using the same criteria—economic models are completely different.

Currency, Income, and Buyer Logic

Preserving capital in a stable currency has long been a motivator for investors. Considering inflationary trends, foreign real estate creates a hedge against devaluation, especially in countries with high credit ratings. In practice, investments in real estate abroad generate an average annual return of 4–8% in currency terms.

In Portugal, renting a tourist studio in Lisbon yields 6.2% annually, in Dubai—up to 8.4%. Markets with dynamic development (such as Bali or Tbilisi) offer 10–12%, but require active owner involvement in management. Therefore, before deciding whether to invest in foreign real estate, one must assess their readiness not only to invest but also to manage, control, and adjust the strategy as conditions change.

Simplifying Logistics through Residency Permits and Legal Integration

Investing in square meters is increasingly becoming a pass to a restricted area—resident status. Under certain conditions, a purchase activates the path to residency in several countries, including Spain, Portugal, Greece, and Malta.

Conditions for obtaining residency through real estate:

1. Spain: property from €500,000, without the right to employment.

2. Portugal: property from €280,000 (in low-density areas), residency with work permit.

3. Greece: from €250,000, simplified renewal program.

4. Cyprus: from €300,000—with accelerated permanent residency.

Thus, the decision of whether to invest in foreign real estate not only involves diversification issues but also opens up alternative paths to legal movement between EU countries and expands access to medical, educational, and tax environments.

Risks and Weaknesses: Should You Invest in Foreign Real Estate

Every deal contains hidden nuances. Risk analysis is a mandatory stage. The local market can quickly overheat, the tax system may change, and tenants may disappear along with seasonal demand.

Key risk factors:

1. Changes in laws (e.g., rental restrictions in Amsterdam).

2. Increase in taxation on secondary real estate.

3. Exchange rate difference: 10% income loss with currency fluctuations.

4. Management difficulties—lack of a local partner.

5. Registration errors—loss of rights to the property.

To minimize losses, a detailed analysis of each cost, commission, legal, and service expenses is necessary—insurance, security, utilities, taxes, technical management.

Commercial Rental: When a Home Works Like a Business

One of the main directions for which investors decide whether to invest in foreign real estate is a stable cash flow. With proper positioning, the asset turns into a self-sustaining model.

In practice, renting a studio in tourist zones shows the following parameters:

1. Barcelona (tourist license): €1200–1400 per month.

2. Dubai (income-generating apartment with management company): $18,000–24,000 per year.

3. Tbilisi (city center, long-term rental): $450–600 per month.

4. Phuket (seasonal rental with 70% occupancy): $1300–1800 per month.

Conclusion: the property pays off on average in 10–13 years. Return can be achieved in 7–8 years at peak demand. However, it is necessary to carefully choose the format (apartments, house, hotel) and adapt it to market preferences.

Choice Factors: Should You Invest in Foreign Real Estate

The decision to buy property abroad should not only rely on numbers. Practice shows that emotional arguments play no less of a role. Climate, infrastructure, mentality, language environment, legislative stability, and business development opportunities are among the reasons influencing motivation. That is why it is worth considering why to buy property abroad not only from the perspective of capital but also lifestyle.

Soft parameters shaping preferences:

1. Climate: year-round sun in the Canaries or the Mediterranean coast improves quality of life and increases tourist flow.

2. Infrastructure: stable energy supply, healthcare, transportation.

3. Legal protection: transparent rules, property protection, judicial system.

4. Eco-environment: sea, nature, low pollution levels.

5. Civil integration: quick legalization, benefits, access to local investment programs.

Motivation goes beyond profitability. Behind every investment is a story: investment for children’s future, crisis insurance, a reserve zone in case of deteriorating political situation.

Legality, Taxes, and Property Rights Protection

Financial efficiency is closely related to tax transparency and regulatory level. Understanding the tax burden becomes key to understanding whether to invest in foreign real estate, especially with long-term ownership or subsequent resale.

Examples of tax systems:

1. Spain: purchase tax—6–10%, annual property tax—starting from 0.4%.

2. France: capital gains tax—19% + social contribution 17.2%.

3. Portugal: rental tax—28% (fixed rate).

4. Turkey: registration tax—4%, rental tax—15% after expense deduction.

An important aspect is legal protection. In the EU, property rights are protected by directives and international norms. In developing jurisdictions, special attention should be paid to document verification, transaction chain, and registry presence.

Should You Buy Property Abroad—Case Studies

Figures obtained from specific cases better illustrate whether buying property abroad is worth it for specific purposes than any theories.

Real examples:

1. Greece: purchase of an apartment in the Koukaki area (Athens), price—€210,000, rented daily through Booking, occupancy 82%, annual income €18,000, payback—11.6 years.

2. Dubai: acquisition of a studio in JVC, price—$165,000, rental income $1200/month, return—9.6 years, price growth in 2 years—17%.

3. Portugal: house in Algarve, €460,000, rented through a management company, income—€2500/month, tax benefits through NHR status.

   

Such cases illustrate that foreign real estate can provide stable income, act as a reserve asset, and create a platform for expanding personal freedom.

Conclusion

Each investor relies on their own goals, risk tolerance, investment horizon, and asset expectations. With a systematic approach, the question of whether to invest in foreign real estate ceases to be a matter of opinion and becomes a mathematical model. On one side of the scale are income, stability, value growth, residency, freedom of movement. On the other side are risks, management complexity, currency fluctuations, legal barriers. Only by considering all these variables and specific examples can an informed and balanced decision be made.