Exploring the Benefits of Cross-Currency Property Investing

Brad Smith
Written By Brad Smith

Investing has evolved from traditional commitments in stocks and bonds, agriculture, and machinery. Although property investment has been around for a while, investment in different currencies is becoming a new trend, and rightly so. Before now, people wanted to invest in properties that shared the same political and economic jurisdiction as the investor, but the tides are changing. In this article, we will consider the benefits of property investment in different currencies. 

exploring the benefits of cross currency property investing

What Is Property Investing? 

Property investing is the act of purchasing properties with the aim of receiving returns on the investment. The returns can come from revenue generated from rent or resale. Some investors aim for both. With urbanization on the rise globally, property investing is a hotspot for investors, especially those who want to improve their investment portfolio via international property investing.

How Can Property Investing in Various Countries Benefit You?

Investing across various currencies comes with several benefits. Let’s look at some of them.

Diversification of Interests

Variety is the spice of life, and investing in various currencies adds spice to your life by diversifying your interests. When you secure a property outside the boundaries of your country, it allows you to experience different cultures without worrying about lodging fees. With this investment option, whether it’s a long-term or short-term travel plan, you have fewer things to worry about. If your international property investment is located in a country that offers a resident permit for foreign homeowners, this is another plus for you. In general, when you have properties across various currencies, it adds international class to your lifestyle and diversifies your experiences. 

Hedging Against Currency Risk

Currency fluctuations are common occurrences, often affecting the value of properties. When properties in your name are located outside your country, you can hope for a secure investment that is safe from economic uncertainties. For example, if you were a homeowner in the United States during the economic recession of 2008, your investment would suffer plummeting value. However, if, at that time, you also owned property in the Eurozone, your investment would be safe from the American recession. Also, if you live in a country where lawsuits can easily take away your home, foreign investment in a safer country helps to protect your property.

Access to Global Markets

access to global markets

This benefit accentuates the foremost reason most people invest in property in the first place — profit making. With investing in properties in various currencies comes access to global markets and probably better markets. In most developed countries like Canada and Australia, where development has reached its peak, property valuations rise slower than in developing countries. Although having properties in developed cities like Sydney secures your investment from political events like uprisings, you may not enjoy investment returns higher than 2%. This reality will keep you locked on a property longer than you expected if profit is your ambition. 

In third-world countries, the situation is better in terms of profit generation. In some cities in Cambodia, for instance, your property can experience double-digit value appreciation in the range of 10–15% yearly while receiving up to 10% returns from renting services. The reason is apparent: as these cities keep developing, they attract more settlers. The influx of settlers increases demand for accommodation, which in turn increases prices, thus improving your income and revenue generation. 

On the other hand, it increases your potential of starting a business in another country, giving you access to markets outside your national jurisdiction. This may be a valid option for countries where taxation rules are not stringent, and the business environment is friendly. Having a property in such a country eliminates travel and lodging costs as you navigate towards earning from international markets. 

Potential for Higher Returns

Owning property investments in various currencies doesn’t only help secure your money for economic risk; it also improves your portfolio. With various countries around the world experiencing an upsurge in economic status, owning properties in those countries will inadvertently increase your returns on investment. Also, if the currency of the country where the property is located strengthens against your home country’s currency, that is a plus. Another beneficial perspective is that of taxation. In the U.S., for example, tax returns seem to be higher than in other countries. By purchasing properties in countries with more favorable taxes on properties, you can cancel out some expenses and increase your returns. 

What To Consider When Investing in Various Currencies

Property investing in various countries is no doubt a beneficial venture. However, if you are looking forward to investing in multiple currencies, here are a few things to consider.

Currency Disparity

currency disparity

You have to look out for the value of the prospective investment in its native currency against that of your native currency. In this discourse, the EUR-USD usually receives a ton of attention due to European interest in American properties and vice versa. 

If you are living in the United States and your property investment is located in a country where its currency is weaker than the dollar, it means that you will need less money to acquire the property. However, if the property is in a country where the dollar is weak, you will need more dollars to buy the property. In this scenario, the property’s resale value will make more money for you. 

An escape from this reality can occur when the property is valued and transacted in USD. This way, currency disparities, such as in EURUSD, wouldn’t affect the value of properties. 

Are You Renting Out the Property?

This also boils down to currency valuation. If your country’s currency is stronger than the currency of the investment’s location, you can expect the following scenarios: 

  • The cost of managing the rental will be minimal as your currency will purchase more of the other currency. 
  • The income from your property may not turn in so much revenue when converted to your country’s currency. Still, it should be enough to cover operational costs and your living expenses whenever you are in the country of your investment. 

Should your country’s currency be weaker than the currency of the investment, then these scenarios are reversed. 

Opportunities in Global Property Investment

Investing in properties across various currencies holds several benefits and, with informed decisions, can improve your revenue beyond what single-market investing can offer. From the diversification of interests to access to global markets to the potential for higher returns, among others, the benefits are numerous. If you’re looking forward to investing in properties in various countries, rest assured that it’s a worthy interest.

smith brad omni

Written by Brad Smith

CEO & Lead Interior Designer

Brad Smith is an experienced interior designer and the founder of OmniHomeIdeas.com. With a Master's degree in Interior Design from Pratt Institute and a passion for creating safe and healthy living spaces, Brad shares his expert insights and innovative design ideas with our readers. His work is driven by the belief that home is where every story begins.