Have you been reading up on the financial benefits of buying rental property in Southeast Asia? Are you thinking that the time is right to let your money earn more in these emerging markets? Maybe you’ve found a resort you’d like to invest in and you’re really close to picking up the phone to call your lawyer and seal the deal. Is there still one small, nagging thought holding you back?
If you’re like most people, your fear is this: Just how safe is your money in the Southeast Asian property market?
Why Southeast Asia?
Real estate is a favorite Southeast Asian investment option for lots of reasons. Low prices, high return and easy accessibility are among the reasons given by investors in nearby parts of Asia about why this is a popular choice.
But… is it safe?
Whether it’s Jakarta, Manila or another upcoming market, you need to know what foreigners can and can’t do. Foreigners and non-residents are subject to a different set of laws from citizens. They might even be subject to a different set of laws than foreign residents. The law will differ from country to country. Here are a few things to think about before putting your name on the dotted line:
Local Partnerships
Though most countries will allow foreigners to own condos or a stake in any resort or other business, they will not allow you to own land in their country. Many Southeast Asian jurisdictions, such as Thailand, require a local partner in order to own land. In these cases, it is imperative that you know and trust the person you partner up with.
So many foreigners have been burned in these local partner transactions that it barely makes a memorable anecdote. If you don’t have someone you truly trust to partner up with, it is often more advisable to simply invest in condos that you can own without a partner or to invest in a resort or other holding that has several owners and dedicated lawyers.
Safer Than Ever Before
Because of the ever-increasing size of the middle class in Southeast Asia, there is more consumer spending ability there than ever before. That means that investing in retail, resorts, restaurants, bars, condos and more is becoming more of a safe bet. After all, more and more we are seeing that there is a captive – and spend-happy – audience in cities all over Southeast Asia.
The debt crises in Europe and economic slowdown in formerly hot markets such as Brazil and India makes those markets less attractive than they have been in recent years.
Southeast Asia is really coming into the spotlight for foreign real estate investors.
Know The Law
One of the most important things to remember when investing in real estate in Southeast Asia is that you – and your investments – are subject to the local law, not the law in your home country.
Make sure to read up on the banking and monetary laws in the country where your investments are located. Investor protection rules can vary widely across the world and you don’t want to wait until your back is up against the wall to do your research. It’s best to hire a local lawyer who is familiar with the ins and outs of the local legal system. If you choose a reputable lawyer, they should be able and willing to answer all of your questions in a thorough and straightforward manner.
Safety First
No matter how safe the banking structure seems to be in the country where you plan to find a property, it’s best to invest your money into well-respected companies with long, successful histories. Ask your lawyer to perform due diligence and perhaps provide a recommendation about great development companies, neighborhoods or resorts that you might be able to place your money in.
In addition to the peace of mind that comes with knowing your money is in good hands, you can also rest assured that you can go to your local lawyer with any Southeast Asian property questions today – and into the future.
This article is written by Adrian Mah from Asia Law Network.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.