There are significant advantages to investing, holding assets and doing business offshore. Investors have a broader access to global markets and therefore more investment opportunities whilst simultaneously diversifying their personal investment portfolio. Assets are protected from South Africa’s unstable political and economic arena, enjoying privacy and personal security, and there are many possibilities to legally reduce taxes.
Investments are typically categorized in 3 classes:
| CLASSIFICATION | REASONS FOR INVESTING |
| Short to Medium Term | Tax Minimization, Negative Gearing and Depreciation Benefits |
| Medium Term | Increased Rental Income |
| Long Term | Capital Growth |
Some major benefits of investing offshore include:
- Few investments today offers the stability, simplicity and good returns offered by property investment
- The current drop in the property market makes it the best possible time to buy
- A very sound investment in a politically and economically stable country that offers long term capital growth as well as safe investment structures
- Rental income generated by the property supports cash flow
- Negative gearing
- The property is insurable against loss or damage – even an event such as the tenant breaking their lease or failing to pay their rent can be insured
- Investing in offshore property is and will always be a safeguard against any fluctuations in the South African economy brought on by either political instability or rising inflation
- The property’s value will be measured in either British Pounds or Australian dollars which have performed very well against the Rand for decades thereby providing future Rand hedge for investors
- It can be sold whenever an investor wants to liquidate their position and the net proceeds repatriated at the prevalent exchange rate at the time. The structures established gives the investor the benefit of extracting funds by selling or borrowing against the investment
- Both the UK and Australia have a growing population and an undersupplied housing market
- Capital appreciation of the property amplified by the exchange rate
- No other investment allows you to purchase with other peoples’ money (The Bank’s) and pay this back with other peoples’ money (the rental income from tenants)
Conclusion
For many people around the globe offshore investing has long been an acceptable way of life. For some, the prospect of investing money outside of South Africa can be daunting, but with expert advice there are a number of benefits to be had.
There is a vast spectrum of investment opportunities available within the property market, ranging from the ridiculously expensive to the nicely affordable, and with the help of BDB International, you should be able to find something suited to your taste and pocket.
Investing in a fixed asset, as opposed to an intangible one can sometimes provide more stability, and over the long run property has tended to hold its value better than some other commodities. If we on the one hand say that it is generally possible to achieve a healthy return on a real-estate investment, on the other hand we also need to paraphrase that old Realtor’s saying: ‘location, location, location’ is everything.