Don’t Underestimate the Value of an Informed Local
Whether you’re looking across the farthest seas, or perhaps just to the next state over, a pair of locally tuned eyes can be an indispensable tool in any successful investment plan. I’ve said it time and again, but it deserves specific emphasis. No matter how smart or perceptive an investor is, they aren’t omnipotent. A local expert can bring a unique perspective, wary of the minutiae and micro-economics of a given location. In the most far-flung markets especially, a local can provide knowledge that you won’t be able to find anywhere else, through experience and graft.
General market trends are important, that’s a no-brainer. The world’s a big place and a bird’s eye view is the best place to start; keeping horizons broad and allowing for a more creative approach to property investment. Information and key data is more readily available for broader markets, but at the local level it can be harder to come by. A successful long term investment relies on the recognition of market patterns and sustained growth in any given area, but some of the factors affecting this can be less visible than others. Say, for example, that you intend to invest in a residential property in an area where proposed high-speed rail links will increase the value of the renting market. On the large scale it makes sense; the rail company has produced a plethora of glossy materials with chock full of charts and graphs showcasing the potential growth. Strong transport links are a big tick for most demographics, that’s a universal truth surely? A local insider however might tell you that the project has recurring financial issues. That construction has been stalled on multiple occasions and that the potential noise pollution that will come with the line has already caused a drop in the local market, which has historically favoured a peaceful quiet.
Even the smallest and most enclosed markets will have their own quirks and tribulations that are hard to measure. Local agents, solicitors and insiders are going to be your best means of tapping into hidden information that you just won’t find elsewhere. You wouldn’t ask a tourist for directions, so why rely solely on broad trends to predict small markets?
The use of locals should still be handled with care however. Small scale perspectives may be more exact but they can also be just that, small. The key is balance, no market is entirely segregated, locations affect one another and broad trends have trickle down effects. You need to ensure that your provincial property pro doesn’t have tunnel vision, and you also need to be on the lookout for ulterior motives. As I’ve said before, (optimising resale value), you are going to be the outsider here, and when dealing with agents you need to establish whether they favour buyers or sellers, and if their own investments clash with your intentions. The traditional property real estate model has been to focus on a particular suburb or area, and heavily advertise that expertise. Most agencies are going to tell you they’re local experts, so it helps to play the field. When selecting a local sales agent you should keep in mind other elements of their approach and history as well. Their sales record, integrity, years of experience and your own personal chemistry are still important factors, don’t sacrifice them.
When dealing on an international scale, local insight has its importance magnified. Nothing pays off on the world stage like your own time investment and a hands-on approach, but you’ll still need expertise to handle language barriers, currency exchange and different cultural and social approaches to property. The housing needs of a Swiss banker are going to be very different to a Thai journalist; styles and trends can be incredibly specific and prone to fluctuation, whilst enduring cultural ideas around property can be hard for an outsider to understand. Chinese investors hate any form of debt, and shy away from large loans. Japanese properties focus on accessibility over size. Indians vacation more for social reasons, at different times of the year, and to very different locales than the average Brit or Swede. No matter how much research you’ve done or how much time you put into scouting a location, you can’t read up on perspective. That you’ll have to pay for.