Global Real Estate ETFs: Conservative Interest Prevails

Tom Lydon
updated | Author's Website

After an impressive collapse of the international housing market, risk-averse investors are now seeking to invest in safer overseas properties. Interest in conservative and long-term property investments may be just the thing to stabilize international real estate exchange traded funds (ETFs).

According to mortgage specialist Conti, property investors looking to snatch up houses overseas are sticking to proven, more traditional locations for long-term investment, according to NuWire Investor.

Locations of interest has France in the lead with 31% of inquiries received by the company, followed by Spain with 22%. Turkey remains in third with 13%, Portugal in fourth and Italy in fifth. Location interest is waning in countries such as Bulgaria and the United States.

  • France. France has a relatively stable market. The country’s financial system is eager to lend to foreign investors, so much so that it may be possible to borrow up to 100% of the property value. Interest is low and many property sellers are still dropping prices.
  • Spain. Buyers have a large selection of available properties and the benefit of low interest rates. But there are problems with exposure to corrupt licensing laws or land grab issues.
  • Turkey. Turkey is situated in a nice Mediterranean location and overseas buyers won’t be up against a strong euro. Tourism is on the rise, which should increase demand for quality rental properties in tourist areas.
  • Portugal. Portugal has seen a drop in interest rates and lower property prices, with some locations down 30%. Recently, the country reported an end to its recession.
  • Italy. Italy can yield profitable acquisitions in more popular areas with international tourists.
  • Bulgaria. Lenders have been in a bind with development and the market has a glut of  buildings. The result is a steep drop in valuations and banks are questioning asset security, which inevitably has lead to lower overseas demand.
  • United States. The main reason overseas buyers look to the United States is because of a depreciating dollar, which has made properties cheaper.
  • SPDR Dow Jones Wilshire International Real Estate (RWX): up 36.4% year-to-date; France is 11.3%, Italy is 0.14%

ETF RWX

  • iShares FTSE/NAREIT Global ex-U.S. (NASDAQ:IFGL): up 41.8% year-to-date; France is 7.1%, Italy is 0.2%

ETF IFGL

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