Global Property Investing

What The Well Diversified Global Property Investor Should Own Now

Dec. 7, 2011, Panama City, Panama: Here’s what a well-diversified global property investment portfolio should include.

Dear Live and Invest Overseas Reader,

The perfectly diversified international real estate investment portfolio might look something like this:

• A rental property in Europe that is leveraged (that is, carries a mortgage...remember that it's possible to borrow for the purchase of real estate as a foreign buyer in many European countries) and that generates positive cash flow. Right now France, Italy, and Portugal make the most sense for this kind of investment. This is a long-haul play, and, thinking very long term, I like Paris (where I own an apartment that has been close to fully occupied the past three-and-a-half years I've had it available for rental). I'd say Paris is the closest thing to a recession-proof rental market as you'll find. France is perennially the world's most touristed destination. The rues of this city are crowded almost year-round with camera-toting, guidebook-carrying visitors, many of whom choose short-term rental apartments over hotel accommodation.
  
  

  All markets cycle, including the Paris rental market. But, even in the current economic meltdown in Europe, this city is as close to a sure-bet for this kind of investment as exists.

• Next, a rental property in a resort location. I still like the Philippines for this. It offers both currency diversification as well as a strong non-Western market for tourists giving you some economic diversification as well.

• Then, a rental property in another active market. My top recommendations today would be Panama City and Medellin. Neither is as recession-proof as Paris, certainly, but the Panama City rentals market continues to be strong (I'm netting 12% per year from my downtown rental) and Medellin is a city that offers double-digit yields on short-term rentals along with excellent long-term yields. Medellin is also a growing tourist/expat destination, so I see demand increasing over the next few years.

• In addition, your well-diversified international real estate investment portfolio should also include early-in development lots. For this, right now, look to Panama, Belize, and Uruguay. I let you in recently on one of the best early-in lot opportunities I know of right now, in Belize.

• Then, raw land. For this, again, I like Panama. Specifically, riverfront property in the mountains. Frankly, if your property investment portfolio doesn't include some holding in Panama, you should look to fix that this year. This country's property markets (rentals in Panama City, development lots, and raw coastal land) offer both safe haven and long-term upside (along with local bank financing).
  
  

  For raw land investments, I also like New Zealand and Honduras.

• Finally, in the current climate, you want some kind of agricultural play in your portfolio. Timber is typically the most hands-off option in this category. Whether it's teak, pine, or eucalyptus, trees offer great long-term annualized returns. The downside is it can take anywhere from 10 to 20 years before you see some cash flowing back to you.

  Perhaps my favorite agri-investment opportunity right now, though, precisely because the return starts flowing back to you in as few as three or four years (not 20), is a coconut plantation in Brazil. You can read more about this here. Note that the price for this offering is scheduled to increase after the first of the year.

  For teak investments, you can contact the company I'm invested with (and recommend because the investment comes as land titled in your name, rather than trees planted on land owned by someone else) in Panama here.

  For information on a pine tree investment I like in Argentina, contact my colleague here.

This portfolio would give you 6 to 15 properties in perhaps 4 or 5 countries. It'd bring you diversification of market, of currency, of type of holding, and of exit strategy.

Lief Simon

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