Why relocate your property portfolio?

By YIP | 15 Apr 2020

Source: Unsplash

It is not an easy decision to make, but selling up property in one country and investing in another could potentially leave your portfolio in better shape.

The question of relocating your property portfolio is different to that of diversification. Having investments in several countries gives you greater insurance to fluctuations in the property markets, with a diverse portfolio minimising the risk to the investor. 

You may have investments in one region or country where the property market is booming, thereby compensating for another area where prices are less favourable. This is where a diverse property portfolio really pays off.

However, there are some clear advantages that arise with property portfolio relocation. This strategy may not be feasible for every type of property investor, but those with the capacity for relocation should consider these benefits.

Access to a stronger economy
Portfolio relocation essentially turns property investors into forex traders. Taking advantage of the inherent volatility of currency values is at the centre of forex trading, with investors using real-world events to inform their decision about whether to buy or sell a particular currency.

Buying and selling currencies is one thing, but relocating a property portfolio naturally presents more of a logistical challenge. However, getting in on the ground floor of an emerging economy could give your portfolio more scope for growth than a more established market. If a currency is on an upward trajectory, then your new portfolio could soon be worth more than the price you paid.

Access to a stronger property market
If diversification is a safe move to protect your portfolio against sudden changes in the property market, then relocation is an aggressive strategy that seeks to capitalise on those sudden changes. Property portfolio relocation allows an investor to remove their exposure to struggling markets and gain a foothold somewhere with better long-term prospects.

If your local property market is lacking liquidity or has a bearish outlook for the future, then one way to find value could be to cut losses on those investments and take your portfolio to a more optimistic market. The initial relocation may require significant outlays and an acceptance of some losses, but picking the right investment location could see your faith rewarded as property values increase.

Escape from political uncertainty
Political uncertainty, like the Brexit saga that has gripped the United Kingdom in recent years, can cause markets and economies to stagnate. Brexit has made life difficult for both buyers and sellers, as the UK's long-term economic future remains unclear. If you think the country of your portfolio is on the cusp of a Brexit moment, then total relocation may be the only way for you to avoid a period of extended uncertainty. 

Source: Unsplash

Source: Pixabay

A big decision
While forex traders can respond instantly to even minor fluctuations in currency value, relocating a property portfolio is a one-off move that requires an accurate forecast of long-term economic trends. That is the biggest disadvantages: the risk of misreading economic conditions.

Moreover, selling up all property in one country to invest in new properties in another country is a move that takes time, requires significant logistical effort, and may need considerable initial outlays to fund the relocation.

However, it is a strategy that can move your portfolio away from unfavourable market conditions and take it somewhere better suited to economic growth. Weighing up risk versus reward is something that property investors do every day, so portfolio relocation may be an attractive option for some.

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