Land is a limited-supply, safe investment and buying land abroad is a comparatively safe way to earn high returns on your investment. However, this option involves greater risks as you will most likely be investing in unfamiliar regions. To realize the high returns potential while minimizing the risks, you have to do both a market study and a due diligence exercise.

In this post, we look at the market study and due diligence as it relates to land.

Returns on land can be obtained in different ways. The simplest option is to buy land and wait for its price to rise before selling it. Another option is to construct built-up space (that has a market demand) on the land and earn recurring returns by letting out the space. Instead of letting out, the built up space can also be sold at a profit.

The issue here is studying the market demand and likely future trends. If population in a location is increasing owing to higher birth rates or through immigration, demand for land and residential property is likely to go up. Economic growth of a region also will tend to increase demand for land to build factories and offices, and for built up commercial property.

In addition to selecting a region where investment in land is likely to earn good returns the investor should also do a due-diligence exercise to ensure that the investment will be safe. The due diligence will typically involve:

• Reviewing the political stability and rule of law in the region selected for investment
• Looking at the legal position regarding foreign ownership of land in the region and the system of land records maintenance
• Checking whether competent real estate managers are available at the location to manage your property and even add value to it

Provided you select a good location to invest and then do a proper due diligence, there is every reason that buying land abroad can turn out to be one your best investment decisions.

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