(STL.News) A bright spot in an otherwise dreary 2020 was the real estate market. After spending months shuttered at home because of the coronavirus pandemic, many of us discovered how much they can buy online and that this was only going to increase in speed in the months to come. Despite the coronavirus, the real estate sector has seen a resurgence as more and more people are looking to invest in urban and semi-urban properties from where they can work from home or relocate and work from a country of their choice.
Future of Real Estate
Now, as the risk to human life is fast reducing due to the availability of vaccines in many countries, it is worth imagining what the ‘new normal’ will look like as steps are being taken towards a fully productive economy. Nowhere else is this acceleration more profound than in the real estate market, as lack of property and low mortgage rates have pushed the prices sky-high and created more wealth for the homeowners.
Experts are predicting the housing demand to increase further in 2021 as buyers need large spaces to accommodate senior citizens, parents who work from home, and students who are left with no choice but to attend classes virtually. Surveys show that more than a third of large institutional investors, both local and foreign, have invested smart money in real estate in anticipation that Covid-19 vaccines will prompt a rally. More are waiting on the sidelines across Europe, North America, Africa, and Asia for a further pull-back in the market before they start snapping up undervalued properties that have been pummeled down due to the pandemic.
The Dominance of the Dollar
Japan and Europe have been two of the biggest investors in US assets for many years. However, since the outbreak of the virus, the dollar hedging costs have gone down so drastically as the interest rates have been cut to zero that this has now become a big incentive for any foreign investor for owning dollar-denominated assets, despite the prevailing global health crisis. In fact, the pandemic has upended the American housing market, and most cities are positioned to bounce back better than before.
Importance for Money Transfer Companies
Property investors might not be thinking about it, but in these tough times of global economic turmoil, money transfer companies can actually have a major impact on their profits. People who invest in real estate are safer by default as an investment in property is less stress-related than stocks and shares. Even though there are inherent risks in every business, investing in properties overseas has the maximum benefit. This is where money transfer companies can play the role of a game-changer.
One main advantage is the security of portfolio diversification when you invest in real estate abroad. That said, this is but the tip of the iceberg as there are hosts of benefits you get to enjoy if your strategy is good. Some of the important advantages include:
- Higher returns: The yield you get from an overseas property will always exceed a similar domestic investment.
- Tax benefits: For those investing in real estate, taxation is a bit complicated. By taking professional help in each country, you can easily get a better return due to differences in tax laws.
- Avoid demand-related issues: When you invest in real estate domestically, you are totally dependent on the economy, which in turn is driven by demand. Having said that, there are many places in the world where there are no issues despite the Covid-19 pandemic. If you invest in real estate in those markets, you will be able to recover most of your losses.
Since overseas investments are very expensive, money transfer companies can help in resolving matters to a large extent by offering you cost-cutting measures on every transfer. This alone can save you as much as 7% in currency exchange rates alone. You can get an overview of the same before you decide.
Risks and costs
A major issue in putting money in properties in other countries is the risk that arises out of the foreign exchange rate on which investors are totally dependent and which is unstable on any given day. Because of the global economic crisis, this conversion rate has become all the more volatile. This is why money transfer companies have become exceedingly popular as they cut down the costs of cross-border money transactions.
Trustworthiness and transparency of these transfer providers are also risk factors to be taken into account. Investors should trust only those money transfer companies which are well-established. The fees and rates they offer are much better than those of the banks, where the minimum average fee for outgoing money transfer is over $40 plus a mark-up of 2%, which makes the transaction higher than the mid-market rate. Many money transfer agencies either give a discount on large transactions or charge no hidden fees at all to enable the transfer at near about the mid-market rate. This alone can make your property investment more attractive.