You might be considering investing in properties in foreign markets, but there are some reservations investors may have about investing internationally.
Investing in itself comes with a lot of work and due diligence that would need to be looked at to ensure you are not throwing your money away. We have also found growing data that shows that investors show bias for investment in their locality as compared to international investments.
This bias informs the local property investment over international even with compelling evidence of the contrary. The reasons for this bias include
1. Imbalance Information
The imperfection of the real estate market and lack of efficient information flow is a major reason, where locals have been found to have access to more information than international investors. People prefer to invest in what they know, and due to the difficulty of access to foreign markets information most investors prefer to invest locally.
2. Currency hazards
Global markets are dominated by the Dollar, Euros, Pounds and Yen. But locals are not as critical of currency fluctuations especially if investments are not transferred across borders. An investment may be good in a particular market but when converted to a foreign currency may become a loss to the investor.
Familiarity goes beyond access to more information by locales, they have the advantage of being able to leverage relationships to get better deals and attend to challenges that may come. These are certain luxuries not readily available to international investors.
In the case of investments like real estate, nearness or ease of access to the investment is important as all property are local and requires active management. It is possible to outsource the management of such property, however, there are some advantages that can only accrue to an investor in close proximity to the investment.
With an understanding of the position of investors and various markets, the decision on how to invest rests in the hands of the investor. However, having the best advisers when making such decisions can be key to investment success. At A.F. Olowokure and Associates we pride ourselves in being able to provide vital and contemporary information on local investments in Nigeria.
If you require consultancy services on your next real estate investment, do reach out to us on any of our channels and we will be glad to offer our professional service.