A report from Grant Thornton LLP reveals that many investors rely on gut instinct rather than analysis when making foreign real estate investments.
The study, Uncovering Opportunities for Overseas Investment and Growth, found that cross-border real estate transactions increased by 9% during the first half of 2015 and suggests that the surge is driven by demand for investments in politically stable regions. However, when it comes to making the final decision, Grant Thornton says that more than half of all senior executives in Canada (51%), Australia (51%), USA (58%), UK (58%) and India (61%) make their choice because it “simply feels like a good fit”.
"The cross-border real estate investment market is in a purple patch, as a whirlwind of demographic and political changes reshape the global landscape and force savvy, progressive investors to seek stability in new territories," comments Bo Mocherniak, National Leader of Real Estate and Construction at Grant Thornton.
Mocherniak suggests one important conclusion to draw from the study is that the sheer force of familiarity should not be underestimated. “Put simply, investors like putting their money into territories they know,” he says. “It's a double-edged sword though. Without more comprehensive analysis alongside it, gut instinct can blind investors to emerging opportunities in less familiar locations.”