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Justina Saveikytė 2019-10-11

Investing in property abroad – all you need to know

If you have fallen in love with a destination overseas, you may have wondered what it would be like to live there. You’re not ready to take the leap and move abroad full time? Then the thought of investing in a vacation home or using it as an investment opportunity may be appealing. Here we’ve explored some beautiful destinations that are well worth the investment and what you need to think about before you begin your exciting property journey overseas.

Before you buy a property abroad

We’re sure the number one question is how to finance your property abroad. We recommend talking to an expert in this field. Whether you are buying the property outright or looking to secure an overseas mortgage, be aware of any language barriers that come alongside signing and looking through legal documents. Employing the help of an international property specialist and a translator can help make this part of the investment process easier.

Once you have your finances and destination in mind, consider how you are going to transfer funds if you aren’t physically in the destination. Research a convenient way to send money abroad and use a trusted company that offers a favorable rate. Western Union allows you to send up to €50,000 in one single transaction, which makes paying and financing your overseas destination a more seamless experience.


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How to find your overseas property

Are you looking for a way to invest your money or simply somewhere to escape to during the summer or winter months? How often you are going to be staying in your property and what you expect from it are all questions you’ll want to think about. If you need inspiration from a German overseas property expert, then check out Immonet to begin your search.

Investing in the European property market

Here are our top five destinations for vacation homes that are not only great places to live but also fantastic investment opportunities.

1. Zagreb, Croatia

Croatia’s capital has seen prices for condos increased by 20% in 2018 compared to 8.5% for the rest of Croatia. Demand for Airbnb properties is also on the rise with a 30% increase in homes listed for rent in Zagreb; a great indicator of investment potential.

2. Lisbon, Portugal

Ever heard of Portugal’s “golden visa” system? If you’re looking to invest in a business or in property, you can gain a fast track to citizenship as well as a favorable tax rate. More than 4,200 “golden visas” have been given out since 2012, which equates to more than €2.5 billion investment in the country. As a result, property prices increased by 20% in just the past year.

3. Plovdiv, Bulgaria

Price trends in Plovdiv are consistent with the capital city of Sofia, where mid-priced homes saw an increase of about 9% last year. If you’re looking for a luxury property however, these are growing at a slightly slower rate of 6%. Plovdiv was recently named the European Capital of Culture for 2019, and property prices are set to rise as a result.

4. Feldkirch and Bludenz, Austria

These two alpine towns in Western Austria saw house prices increase by 25.4% and 22.1% in the past year and homes have an average cost of €350,000. To give a sense of scale, property in Vienna increased at a lower rate of 18%. If you’ve got a larger budget then look no further than Kitzbühel, where property has increased by a staggering 39.4% last year. The average cost of property here can set you back as much as €1,000,000.

5. Rotterdam, The Netherlands

Rotterdam is a more appealing alternative to Amsterdam and saw property prices increased by 17% last year, compared to the national average of 10%. Properties also sold within an average of 33 days on the market, which is 11% faster than the year before. Home prices in Rotterdam average €271,000 and the city is seen as a great alternative to living in the Netherlands’ capital city.

Investing in property — long-distance destinations

How about something further afield when it comes to real estate investing? We’ve looked at the best rental properties outside of Europe according to Go Banking Rates to help you with your search.

Rental yield is a measure of how much money an income-generating asset produces each year as a percentage of that asset’s value.

5. Indonesia

Rental Yield: 8.61%

Rental Income Tax: 20%

Average monthly rent: €2,245

Indonesia’s effective rental income tax is one of the highest discovered in the survey. However, this is offset with high rental prices on average and high rental yields making this an interesting choice when buying a vacation home abroad. There are a few things to bear in mind here:

    1. There is a set fixed minimum price for the property per region.
    2. If you are a non-Indonesian national, you are only allowed to purchase one property, which is limited to a maximum of 2,000 m² land size (for houses).
    3. If renting out to others, you must release or transfer the Right of Use to another person, who meets all requirements of owning property in Indonesia.
    4. Your home ownership lasts for an initial period of 30 years, but this can be extended once the time has passed.
4. Panama

Rental Yield: 5.75%

Rental Income Tax: 2.08%

Average Monthly Rent: €1,900

Panama’s high rental yield, low taxes and favorably high rental prices make this country number four of our top five recommendations for investing in rental properties. To give you an idea of property prices, in the popular San Francisco Bay area, a two-bedroom apartment will cost you around $78,000 (€73,000).

3. Costa Rica

Rental Yield: 7.48%

Effective Rental Income Tax: 5.16%

Rent: €1,300

Due to its declining property prices and growing tourist numbers, Costa Rica is a great option. In San Jose, the country’s capital, the average listing price of houses fell by 2.2% in 2018 according to encuentra24.com with average prices for a one-bedroom apartment costing €476,000.

2. United Arab Emirates

Rental Yield: 5.19%

Effective Rental Income Tax: 5%

Rent: €2,800

In a bid to secure high net worth individuals, recent visa reforms make the UAE very attractive if you plan to live and invest overseas. If budget isn’t a concern, you can secure a five-year residence visa if you invest at least €1.2m in property. In Dubai, average property prices stand at €200,000 for a studio, €290,000 for a one-bedroom and €293,000 for a two-bedroom apartment.

1. Philippines

Rental Yield: 6.13%

Effective Rental Income Tax: 4.06%

Rent: €2,200

Property prices in Manila have risen by 10.6% this year, making the Philippines the number one choice for real estate investors. Property for sale in the capital costs €190,000 for a small condo on average. The only limit is that the total number of foreign-owned units in a single building is not allowed to exceed 40%. Low tax rates and an impressive rental yield make the Philippines a strong investment potential.

Once you’ve decided on a property destination – Final steps

As you can see, there are various websites to help you decide on the type of real estate you’re looking for. Once you’ve found your investment property, you’ll need to begin thinking about the next steps.

  1. Decide on a mortgage and seek investment property help from a specialist lender.
  2. Enlist the help of a locally qualified lawyer to create a Deed of Sale contract and look for a legal translator to ensure everyone is on the same page and the property is legally watertight.
  3. Sign the Deed of Sale contract, along with the seller and in the presence of a notary.
  4. Your legal representative should then help you register the property transfer. Fees should include the transfer tax as well as any other outstanding taxes or fees.

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