International Real Estate Investment:

Financing and structuring cross border real estate

Real estate is big business globally as buyers increasingly look beyond their own borders for lucrative investments.

Research by property broker Tranio suggests that USD 426.8 billion was invested in cross-border real estate transactions in 2016, with commercial property attracting deals worth USD188.4 billion, while USD238.4 billion was spent on overseas residential property. The US saw the largest volume of cross-border real estate deals with foreign nationals spending USD149 billion.

While these types of international deals are becoming commonplace, there is still much to consider for investors targeting a foreign property. They must understand how real estate finance works in their jurisdiction of choice, including regulations, availability of capital and accepted structures.

They must also be willing to carry out extensive due diligence before risking their capital, taking time to understand all the peculiarities of a jurisdiction that might impact investment decisions. Once a foreign buyer is ready to invest, they should also consider the tax implications of owning assets and generating income in a foreign country, structuring their investment vehicles in the most efficient fashion.

Having an expert on the ground with intimate knowledge of the investment location is essential to a smooth purchase process. With this in mind, IR Global brought together six members of its Real Estate Group to discuss cross-border real estate transactions.

The aim of the feature is to give members and their clients’ valuable insight into the real estate transaction process across a range of jurisdictions, including best practice approaches and advice.

The following discussion involves IR Global members from Germany, the USA – California and New York, Canada and Belgium.