The coronavirus pandemic is opening up opportunities in international real estate whether it’s taking advantage of downtrodden markets that are poised to pop or emerging markets that are on the rise.
“Nothing like the coronavirus crisis has come along before,” said Ronan McMahon of Real Estate Trend Alert, a publication of International Living. “And no one, no matter what they say, knows for sure where it’s headed.”
“Many people feel powerless in the face of this chaos, but my feeling is that if you play this crisis right, it can prove to be quite lucrative over the long-term. But that means looking to internationalized markets, like Mexico’s Riviera Maya. Or to places where the middle class is exploding, like Colombia. Or to downward-trending spots like parts of Europe where the population is older and innovation is limited, but where offerings have historic appeal, like Italy, for instance,” McMahon added. “Now is the right time to take strong U.S. dollars from a stagnant domestic market and put them to work in vibrant overseas markets by buying undervalued assets and locking in super-strong income and appreciation potential.”
Additionally, would-be international real estate investors can take advantage of low interest rates to finance their prospective purchase.
“It’s possible to do this today by borrowing money at historically low rates. We are in an unprecedented zero-interest-rate environment, which means it’s possible to access incredibly cheap money to buy high-yielding, undervalued real estate,” said McMahon.
Xtrackers International Real Estate ETF (HAUZ ) seeks investment results that correspond generally to the performance of the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index is a free-float capitalization weighted index that provides exposure to publicly traded real estate securities in countries outside the United States, Pakistan, and Vietnam.
The MSCI All Country World Index (ACWI) ex-USA is a market-capitalization-weighted index designed to provide a broad measure of stock performance throughout the world by tracking the performance of 22 developed and 24 emerging markets.
Investors who want broad exposure to the real estate market via ETFs can start with the Vanguard Real Estate ETF (VNQ ). VNQ seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance of the MSCI US Investable Market Real Estate 25/50 Index that measures the performance of publicly traded equity REITs and other real estate-related investments. VNQ is up 7.26 percent year-to-date, according to Yahoo Finance Performance numbers.
