Taking the Road Less Travelled – Part Two

by Mr. Propwise

This is Part Two of an interview with Getty Goh on his tips for investing in overseas property, and his experiences developing an overseas property project. In Part Two we ask Getty which countries have the most upside for property investors, how to find deals, how much capital you need to invest overseas, and his experience developing property overseas.

Getty is the author of two real estate bestsellers (Buy, Bye Property: Mistakes you want to Avoid in Property Investing and Buy Right Property: the R.I.G.H.T. Approach to Property Investing in Singapore), as well as the Director of Ascendant Assets Pte Ltd, a real estate research and investment consultancy based in Singapore. With his latest foray into Krabi, Thailand, Getty is adding development to his real estate CV. Getty has an MSc in Real Estate and a BSc in Building from the National University of Singapore. He is also a guest contributor at Propwise.sg.

Which countries should overseas property investors look at? Which have the best potential upside?

Different countries present different opportunities and challenges. Even within a single country, different locations present different investment potential. For example, in big countries like the US, places like New York (in the East Coast) present different opportunities as compared to places like San Francisco (in the West Coast). Even in smaller countries like Malaysia, opportunities in Kuala Lumpur are very different from Penang or Johor. So it is really not possible to pinpoint a particular place that has the best upside.

A location I would have considered had you asked me this question several months earlier is Bangkok, Thailand. After the Pheu Thai party won the Jul 2011 election with a landslide victory, the political outlook seemed to be stabilising and investor optimism was quite apparent. Unfortunately, the flooding of some parts of Thailand, including Bangkok, could not have come at a worse time. Apart from economic impact from the flood damages, investor sentiments are not very positive as many believe that Thailand’s flooding issue is a massive problem that cannot be quickly resolved.

However, some investors may adopt a contrarian view and think that now is the perfect time to enter the Bangkok property market. With everybody staying at the sidelines, there are indeed some extremely good deals around. I must qualify that this strategy is not for everyone. However, if you have cash to spare and have a long investment horizon of between 5 to 10 years, this strategy may be a viable one for you.

What are the ways an investor can find overseas property investment deals?

As an investor myself, I have tried looking for properties in Malaysia, Bangkok and even in the US before. Avenues that investors can try are property exhibitions, property portals or magazines. If you flip the papers, you will see numerous overseas property exhibitions and I reckon that all of these are good starting points.

However, I will not stop there and will go a step further to travel to places where I want to buy a property to check out the market there personally. When it comes to property investing, the phrase “information is power” is absolutely true. The more you know, the better your decisions are. So if you want to make money from property, whether it is local or overseas, just do what you can to learn as much as possible.

How much capital do you need to have to invest overseas?

It depends on where you are looking and what you wish to buy. I have come across a particular development in Malaysia that was truly no money down. Purchasers were able to get up to 90% loan while the remaining 10% came in the form of a developer’s discount. On top of that, that developer still gave a guaranteed rental to sweeten the deal further.

Before you get excited and call your property agents to find out which development that is, I must qualify that each unit costs more than RM$5 million. This high price tag is enough to put a lot of average investors off as the monthly repayment would be quite hefty.

Nonetheless, overseas property is generally not as expensive as Singapore properties; with a start-up capital of between S$50,000 and S$100,000, you should be able to find something. The size and profitability quotient would really depend on which country you decide to invest in.

Why did you decide to develop property overseas?

The decision to develop property overseas stems from various factors. Primarily, I have always wanted to own properties abroad to get away from the hustle and bustle of city life. Singapore is within three hours flight time to many popular destinations e.g. Bali, Bangkok, and Phuket, hence it is extremely convenient for people living in Singapore to make a quick weekend getaway to one of these travel locations.

Apart from my desire to own an overseas property, another reason that pushed me to look into overseas development was the lack of investment opportunities in Singapore. As I shared earlier, I really believe there are presently limited investment opportunities in Singapore with the anti-speculation measures and high land prices. I wanted to keep growing my money, hence after doing much research, I figured that it would make sense to venture overseas.

**What sort of obstacles did you have to overcome when doing an overseas property development?
**

Almost anything can pose as an obstacle to the development. Obstacles can come in the form of weather, soil conditions, legal issues, financial challenges, design complications, finding buyers, government policies, environmental impact, etc.

The job of any developer is to overcome these obstacles and to make sure that the project is of as high a standard as possible, while remaining within budget and within the deadline. While it may seem fairly straightforward, it is actually very challenging to juggle the numerous aspects of the development all at once.

For me, it is an extremely humbling and enlightening experience. Ultimately, I now have much greater respect for those who have the courage and ability to do it.