Is Investing in International Real Estate Really Throwing Money Away?

This week I read a report on remarks by Yaakov Atrakchi, CEO and founder of the real-estate company Aura, at a real-estate conference, saying that people who buy property abroad are likely to “lose their money”. These remarks raise an important debate and touch a sensitive point for many investors. The statement, although it reflects a certain point of view, ignores a wide range of considerations and potential advantages in international real-estate investment.

It’s no secret that apartment prices in Israel have become out of reach for young couples, and without the developers’ special offers over the past year and a half since the war began, the whole housing market would presumably have run into serious trouble. According to an analysis of Central Bureau of Statistics data, at the end of 2024 it took 166 monthly salaries to buy an apartment in Israel (based on the average apartment price compared with the average wage), whereas in 2017 it took only 153. So when the average apartment in Israel costs NIS 2 million (and in the high-demand areas between Gedera and Hadera you won’t find a new apartment from a developer at that price), it’s no wonder that anyone with a few hundred thousand shekels is looking for the option of buying property overseas (which of you hasn’t come across ads for an apartment in Bucharest for 120,000 euros, or an apartment in Athens for under 100,000 euros?).

Another reason investors look for opportunities beyond the country’s borders is diversifying their portfolio. Spreading assets across several geographic markets can reduce the overall risk of the portfolio. When one property market goes through a slowdown or a crisis, other markets may keep growing or stay stable, balancing out the overall returns.

Another significant advantage lies in growth potential. Property markets in other countries sometimes offer investment opportunities with more significant growth potential than the local market. This can stem from a range of factors, such as rapid economic growth, accelerated urbanization, or relatively low valuations of properties in a particular market. For example, developing countries or rising markets may offer higher long-term appreciation potential (look at what happened to property prices in Croatia in 2023, which rose by about 23% after it joined the eurozone, and the same is expected for price rises in Romania and Bulgaria with their expected entry into the eurozone in 2026).

In addition, investing in property abroad can give access to markets with more favorable conditions for investors. Some countries may have more attractive tax rules for foreign investors, lower transaction costs, or simpler and more efficient purchase procedures. A thorough understanding of these conditions can lead to significant savings and greater profitability.

Another important advantage is the ability to take advantage of specific opportunities in particular markets. For example, a given country may have growing demand for rentals because of a growing young population or students, which makes investing in rental apartments especially attractive. Alternatively, certain areas may be going through accelerated development of infrastructure or tourism, creating investment opportunities in commercial properties or holiday apartments.

It’s also important to consider the global and personal benefits of investing in property abroad. Owning a property in another country can provide options for living or holidays, diversify your personal assets, and serve as a financial base in another place in the world.

Still, the disadvantages and challenges of investing in international real estate can’t be ignored. One of the main challenges is the distance and the difficulty of managing the property. Managing a property remotely can be complex and require the help of local management, which involves extra costs.

Another challenge is insufficient familiarity with the local market and its regulations. Not understanding property law, tax procedures and the local business culture can lead to costly mistakes. That’s why the help of local professionals and international real-estate experts is critical.

Although Mr. Atrakchi’s remarks raise an important point about the caution needed in real-estate investment abroad, they don’t reflect the full picture. A sound, well-calculated investment in apartments abroad can deliver significant positive results, whether in higher returns, a more diversified portfolio, or taking advantage of unique opportunities in different markets. The key to success lies in thorough research, understanding the local market, getting help from expert professionals, and sensible risk management. Investing with knowledge and professional guidance can make buying property abroad a wise and profitable financial decision.