I’m A Singaporean Living In France: My Essential List Of Things To Consider Before Buying A Property Overseas

I’ve been preaching overseas property investment to some friends lately. Perhaps to deaf ears, since many of my friends have their hearts set on Singapore. I’m also a terrible salesman, I think; I don’t think I can sell toilet paper to someone who is having diarrhoea. 

Anyway, all jokes aside, I’m sure I piqued the curiosity of some readers with my first article about buying overseas property as a young Singaporean, and there were already a few comments from interested buyers of French property. 

Before the curious and eager start to get too inspired by my journey, I kind of want to write a reality checklist before we proceed.

I don’t think I have emphasised enough how risky buying property overseas is yet, and it’s hard to balance being weary, being sceptical, and being discouraging because I would ideally like to be just the former where possible in order to dish out neutral, helpful advice.

Buying property anywhere needs to be a seriously thought-through decision, and it took me 6 entire years of thinking before I actually went ahead to kickstart the process, 5 years of working my butt off to earn my place overseas, and 2 years of stabilising myself in my new environment before I decided to commit to a property purchase.

It’s been a long journey where I feel like I’ve aged, and I’m not even 30 yet.

I know there are two types of readers following my journey, a small group that wants to buy for their own use, and a larger readership that’s following to see if France/Europe would be ideal for investment.

I’m not going to dive deep into numbers in this article (it’s not possible), but today I’ll talk about a general list of important considerations for both perspectives.

From an ownership point of view (If you’re buying for your own stay)

Consideration #1: Visa, earning your right to stay in the overseas country

This is by far the most important, overlooked consideration for many Singaporeans wanting to own property overseas (in Malaysia, for example). If you’re buying a property to live in (to retire in, for example), I think it would only make sense if you are able to obtain the visa to live in the property you bought overseas.

This is the reason why countries with golden visas (e.g. Portugal) became extremely sought after by richer investors, because it saves investors and future residents a big headache when it comes to obtaining residency status later on.

While not every country has a residency restriction for property ownership, I personally would advise against just buying a property before you’ve relocated or at least visited the location multiple times and know that you can move there, because the last thing you’ll want is your property turning into a graveyard when you realise you cannot physically live there, and also if you don’t understand the culture and how things work in the country of your desired location, things can get hairy for you.

Consideration #2: Stability, how long can you stay in the city you bought in

Personal stability is very important, it doesn’t make sense to buy a property if you’re just going to move to a different city a few years down the line. 

Regardless of the price trends of the last few years, property appreciation is not a guarantee, and letting go of your property just because you got a new job that requires relocation is likely to result in losses.

When you buy property somewhere, it’s quite safe to note that you’ll be anchored in the city you’ve bought in for a while. While you can still rent out your property, should you decide to leave, the downpayment committed to the property is something that would take time to recover.

Only buy if you know you’ll be able to stay there for a while. Because if not, it’s generally not worth it.

Consideration #3: Yields and valuation of your property area

Notice how this is not one of the first things on the list to focus on, because it’ll be wise not to care about this until you get the first 2 considerations down.

There’s always property gold everywhere in the world, but if you don’t have the right to live in the said country where your property is located, nor have you established yourself in the city you wish to buy in, yields and valuation of the area won’t mean much.

Anyway, it’s important to note the property dynamics overseas differ a lot from neighbourhood to neighbourhood. In the case of the French city I intend to buy in, neighbourhoods in the city centre can differ in price as much as 1,200€ per square metre and yields can differ from 3% to as much as 17% in some transactions.

Multiple factors can impact the value of the property, such as age, neighbourhood maturity and stability, facilities, etc… So it’s important to research thoroughly before you commit.

But overseas is not Singapore, and generally, you will count yourself lucky if the prices don’t depreciate.

When you dive in deep you’ll know what I mean, property is not gold everywhere.

Consideration #4: Safety

Singapore is a super desired location for both locals and foreigners alike due to our unbeatable safety records, and safety is essential to living peacefully where you choose to settle down, so the neighbourhood you buy in needs to be somewhere safe.

Unlike Singapore, we cannot generalise safety indexes to the entire country when looking at overseas locations. Other countries are much bigger than our tiny red dot, and because of this, there are different safety dynamics just walking to a different neighbourhood two streets away.

To really understand if the neighbourhood would be good for you, you need to scout the area and look at local newspapers to get a true sense of the crime rate of the area. Talking to neighbours would also benefit you greatly because if you get the sense people just want to get out, that’s not a place you want to live in.

So we cannot be complacent and need to do our due diligence of research before we sign the deal. Contrary to popular belief, overseas locations can be just as safe as Singapore. You really just need to have an open mind to look.

Consideration #5: Taxes & maintenance fees

Europe is big, and each country has their unique tax laws and how they go about structuring the collection and use of maintenance fees for communal buildings. Basically, every country has a different way of doing things, and we need to understand what it means and how it would affect the cost of your property ownership down the line.

For example, France imposes a tax on homeowners called the taxe d’habitation, so you’ll have to pay a set amount every year you own a property, and that increases when you start owning more properties around France. If you own an apartment, it’s likely you are in a co-ownership, so you’ll have to pay maintenance fees monthly or quarterly depending on the agreements.

Because of these costs, in many areas of France, it is now cheaper to rent than to buy.

So take note of this and calculate if it makes sense for you to be an owner. The stories painted by the media about how owning is always better than buying are not true. It really depends on the circumstances.

From an investment point of view (for rental income, profit upon sale)

Consideration #1: Realistic rental yields and stability of rental income

The rest of the world is not Singapore, and this comes as a culture shock to many keen investors of overseas property. Depending on the country, you may not get the rental yield you’ll have back home in our city-state.

In Singapore, the average gross rental yield is 4.63%. In France, the average is at 4.52% (a sweeping number, because in Paris alone you can go as low as 3.67% and in some areas of France even a 2% range). 

This is slightly lower than Singapore’s, and a 0.11% difference doesn’t seem like much, but if your property costs more than Singapore (due to the exchange rate) but fetches a fraction less of rental yield, it will start to add up, especially when you consider the next point.

Consideration #2: Rental laws and taxes as a non-resident

Non-resident landlords are usually subjected to stricter laws and higher taxes in most countries. In France specifically, being a non-resident will subject you to a minimum tax of 20% on your rental revenue, and past a certain threshold, it could go to 30%.

This high tax rate, on top of lower rental yields (compared to Singapore), makes overseas properties not as attractive to beginner investors not living in the country where their property is located. So be very sure to do your research to calculate if it would be worth it.

Usually, it is not worth it unless you are a resident here and your total yearly gross income is less than €28.7K (which puts your tax rate at 11%). So if you’re having Paris Syndrome, let me shut that down for you right now by telling you to do your research and understand the market better before you dive in.

It’s also important to note that rental laws in France favour the tenant. You legally cannot evict tenants without the jurisdiction of the court, and you cannot evict them during winter months. It is a common horror story among landlords where they can make massive losses of at least 10 months (6 months eviction notice, plus 4 months of cold season).

I can see why investors and property owners would rather do AirBnBs now because 120 days (4 months) of short-term income beats a 10-month no-income risk.

Consideration #3: Timing and being patient

It’s not far-fetched to say that timing is everything when it comes to getting a good deal on a property. Many seasoned investors might disagree and insist on the fact that being on a constant hunt is the best way to get something good.

There is no wrong strategy, but timing and luck do contribute to getting the best deal as well. The best strategy utilises both principles of hunting and waiting.

I was quite mad at myself for not buying property pre-COVID (Aren’t we all?), but I realised rather quickly that buying earlier would not have worked out in my favour. The market was sizzling hot a few years ago with low interest rates and a large buyer pool, I would not be able to compete with buyers with a larger loan affordability.

With more buyers, comes more competition. Truly special properties were quickly snapped up, and whatever else was left was literally scraps to be bought by the desperate. Today, these scraps are being sold for a quick flip, but the buyer pool has significantly reduced, so you can’t offload your crappy property as quickly.

Ever heard of the saying, “Fortunes come in cycles”? Good properties will come into the market with time, an aggressive investor will actively hunt for one, sure, but it’s completely fine to be patient and wait as well. Because in waiting you can keep track of the market and learn more about the trends before you commit.

Use time to your advantage. Sometimes it’s not wise to speed-run through buying property. Life isn’t Monopoly.

Consideration #4: Long-term property appreciation and exit strategy

After understanding the technicalities, taxes, and location of your investment property, thinking of an exit strategy is a very important step before you spend hundreds of thousands (perhaps millions) on your faraway home.

Rental yield aside, another common way to profit from property investment is selling the property at a profit. This is where overall property appreciation comes in, and it is determined by multiple factors such as the condition of your property, desirability of the location, and everything else listed above in the own stay section.

However, it is important to note that profiting from a property sale only happens, well, when you make the sale. So what that means is that you’ll need to consider who you’ll want to sell to when the time comes. Many beginner investors make the mistake of thinking they will definitely fetch the market price when the property appreciates to a certain threshold, but global economics will affect your buyer pool.

If the trend of housing prices going up with wages staying mostly stagnant continues, your buyer pool in the next few decades will shrink to a sad state.

Basically what I’m trying to say is just because the property appreciated to an obscene amount due to market movements, it doesn’t mean there are buyers who can buy it. Your exit strategy needs to be a realistic one, where you also consider the economics and financial state of the overall population.

On this principle, apartments in Paris are usually quite difficult to sell, as only the top 3% of France would be able to afford to own a place in the sought-after arrondissements of the capital. 

And if you think about it for a minute, you would know the ultra-rich have choices, and they can always move somewhere else in France or Europe. 

There is also no supply shortage when it comes to luxury properties for that market, so please think twice before you buy. If the locals can afford it, why would they sell it to a foreigner?

Also, capital gains tax exists in other countries. In France, you are subjected to high capital gains tax if you sell the property, and every year you own it, you get a discount from it (until it reaches zero, which takes 22 years). So long-term ownership is generally preferred and hinted at. If you cannot hold the property for that long, I advise against buying in France.

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Now, I obviously listed French examples since I’m buying property in France, but the same principles apply to any other country you’re considering purchasing in. Be it Malaysia, Thailand, New Zealand, Australia or any other country popular among Singaporeans looking out, it is of utmost importance to do your due diligence beforehand.

Buying property anywhere, especially the first time, is a scary process. As long as you do your research, consult professionals, and think about it for some time, it could work out for you. Even if it doesn’t, life is all about trying (but please make sure you’re not making million-dollar mistakes if you can).