Jun 07, 2016
If a business has fully expanded in its home country to the point where the market feels saturated and littered with other competitors vying for similar spots, it may well be time to look elsewhere. With the world continuing to be better connected and with the potential bounty it could bring, moving into international markets can bring a number of benefits to a company.
In the UK, the property business is quite obviously worth a great deal, with some estimates putting the figures at an absolutely crazy £5.75 trillion in the first quarter of last year. Trillion – it’s worth repeating a second time. Therefore, it’s no small wonder that everybody wants a piece of it.
In such a busy market, the risk of a crash devaluing the entire stock in a short space of time is always possible, especially in times of political uncertainty. Therefore, looking to diversify assets abroad seems like a sensible idea.
Europe is still a big continent, no matter how it seems in comparison to the likes of Asia, and opportunities are ripe for investment. It is by no means a case of just going and doing it though, and some prior consideration must be involved to bring good returns.
An easy way to expand internationally is to acquire a business that already operates in the desired location, giving instant access to prior knowledge of the area, along with business partners that are happy to cooperate. This can also help with cultural differences, language barriers and overseas legislation. Going blindly into such a market comes with naturally bigger risks, but the payout could easily be greater.
If the desired target market is in a country that does not allow non-citizens to purchase land, going through agencies and international clients may be the only option, but this will of course increase costs in the short-term, even though the long-term gain may well be worth it.
So, which markets are considered the best in which to operate? There will be advantages and negatives for each country, but specifics to look out for include income tax on rental properties, the laws of the land relating to protection of landlord and tenant rights, as well as transaction costs to acquire property. The stability of the economy also bears thinking about, as will any future expected trends that could affect this later on.
There are many ways to put plans in motion, and one way is to consider outsourcing some of the successful and well-oiled aspects of the UK business, allowing the experts within the company to focus on such international expansion. This can be done through an umbrella company, which can also take care of details such as managing contractors, dealing with payrolls and taxes, and general administration. This allows for a proper search for the right market abroad, without unnecessary distractions taking away from these efforts.
There are many reasons to opt in and take the chance of these risks in certain places, especially where there is a strong and stable economy, as well as minimal restrictions on what property you can buy, even if you are from a different country. Capital cities are usually considered the best to go for, as they will likely have many of the agencies and contractors that may be needed, as well as a likely better grasp of English. As capitals are where the money often centres, returns are also expected to be higher.
As with any investment, this will not be without risk, but if all of the negative possibilities are properly weighed up and assuaged, this could be the perfect time to expand into international markets.