Investing in commercial real estate can effectively diversify portfolios and be profitable in the long term.
Portfolio diversification involves investing a portion of money in real estate, a portion in securities, a portion in currency and gold, and a portion in innovations. Moreover, each direction is also diversified: three or four currencies are bought, shares of several companies, and apartments in different regions.
Thus, commercial real estate abroad is a good investment. It shares many similarities with residential real estate, such as collecting rent and realizing capital gains/losses upon property sale. Essentially, commercial real estate often has more barriers to entry than residential but potentially is more reliable and diversified among asset classes.
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How to Invest in Commercial Real Estate?
You can invest directly by buying property yourself or with co-investors, or indirectly by buying ownership shares in real estate investment funds. Direct ownership typically requires a large capital sum tied up in the property. Indirect ownership may require less capital and is more liquid, but it may have higher management fees.
How Diverse Is Commercial Real Estate as an Asset Class?
Commercial real estate may seem like a universal category, but there are countless ways to invest in it. It can include subcategories such as:
- Retail
- Industrial
- Multifamily rentals
- Office towers
- Elderly care facilities
- Medical institutions
Different asset subclasses will have distinct characteristics from one another and will perform differently during economic cycles. There are various strategies that can be employed to increase property value for future sale or for long-term holding. For example, land development, rezoning projects/transfers of development rights.
International Real Estate Companies
Commercial real estate is one of the most important industries in the world, as it provides people with places to work. The top 10 global real estate brands are among the most successful, well-known, and authoritative companies in the field.
RE/MAX
Founded in 1973, RE/MAX operates in various countries worldwide and is renowned for its reputation and high-quality service. It takes an individualized approach to clients and pays significant attention to agent development. RE/MAX is known for using digital tools to enhance the buying and selling experience.
Sotheby’s International Realty
Established in 1976, this brand specializes in luxury real estate sales and operates in various countries worldwide. It is renowned for its reputation and high-quality service and focuses on exclusivity and marketing.
EPA Real Estate
A well-known real estate brand offering clients property sales, rentals, and management. It has an extensive network of agents and brokers. Founded in 1971, it operates in various countries worldwide and is known for its reputation and high-quality service.
Keller Williams
A leading real estate franchising company with a global network of agents, founded in 1983. Keller Williams is known for its innovative business model based on profit-sharing, which incentivizes agents to work more productively for the benefit of clients.
Coldwell Banker
Coldwell Banker is a renowned real estate brand established in 1906, operating in various countries worldwide, and known for its reputation and high-quality service.
It has a strong presence in commercial real estate markets and is known for its ability to provide clients with individualized solutions. The company also dedicates significant attention to technology and is known for its innovative use of digital tools to enhance the buying and selling experience. It offers various educational programs and tools to help agents and brokers build their businesses and provide the best services to their clients.
Savills
A leading global real estate services company specializing in property management, investment sales, leasing, and valuation. Founded in 1855, it now operates in over 60 countries worldwide and has a global network of over 30,000 employees.
Savills is known for its expertise in various sectors, including commercial and luxury real estate. The company also dedicates significant attention to environmental sustainability, implementing initiatives to reduce its impact on the environment. Savills is also known for its market research and analysis, providing valuable information for clients looking to make informed decisions about real estate.
Colliers International
A leading commercial real estate services company specializing in property management, investment sales, leasing, and valuation.
Founded in 1976, Colliers International operates in over 60 countries worldwide and has a global network of over 15,000 employees. It is also known for its market research and analysis, which provide valuable information for clients looking to make informed decisions about real estate.
Cushman & Wakefield
A global commercial real estate services company specializing in property management, investment sales, leasing, and valuation.
Founded in 1917, it operates in over 70 countries worldwide and has a global network of over 50,000 employees.
JLL (Jones Lang LaSalle)
A company specializing in commercial real estate services.
Founded in 1828, it operates in more than 80 countries worldwide and has a global network of over 90,000 employees. JLL offers its clients a wide range of services, including property management, investment sales, leasing, and valuation.
CBRE Group
A company providing commercial real estate and investment services.
Founded in 1906, CBRE Group has 90,000 employees and operates in more than 60 countries. It offers its clients a wide range of services, including property management, investment sales, leasing, and valuation.
International Real Estate Investment
Investing in overseas real estate is a great opportunity to earn additional income by buying and managing property located outside the investor’s home country.
Investors have the option to purchase these assets through direct ownership, partnerships, or real estate investment funds. Success in this endeavor requires considering various aspects and potential risks.
Pros and Cons of Real Estate Investing
The main advantages of investing in international real estate include:
- Portfolio diversification.
- Investing in emerging markets or regions with rapid economic growth has a higher profit potential than domestic investments.
- Tax benefits depend on their home country’s tax laws and the foreign country’s tax laws.
- The right to obtain permanent residency or citizenship.
Risks that an entrepreneur should consider include:
- Economic instability.
- Political instability.
- Currency risk (fluctuations in exchange rates).
- Cultural differences (to avoid legal disputes, financial losses).
Is International Real Estate a Good Investment?
Yes, investing in real estate abroad is a good option. Renting out commercial real estate can help generate passive income, diversify across different markets, gain access to economies, and protect against currency fluctuations.
When investing in real estate, it is essential to research the local market, legislative and regulatory framework, financing options, tax implications, and potential risks.
