A GUIDE TO FOREIGN OWNERSHIP FOR REAL ESTATE
The essential laws foreign property investors should know
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MANILA, FEBRUARY 12, 2015: With a myriad of laws and regulations to navigate, investing in
property can seem overwhelming even on your home turf. This is even more true
if you are looking to purchase real estate overseas, where everything from the
local customs to the legal requirements will be unfamiliar.
As
a guide for investors, global property website Lamudi takes a closer look at the laws
international buyers are likely to encounter when hunting for real estate in
some of the leading investment destinations in the emerging markets.
Asia: invest through leasehold,
not freehold
At
first glance, it may seem that buying property outright is out of the question
in many countries. In the Philippines, for example, non-Filipinos are
not permitted to own land. However, they can lease private land for a period of
50 years, and this lease can be renewed for a further 25 years. Additionally,
the Condominium Act permits non-nationals to buy condominium units as long as
total foreign ownership in the development does not exceed 40 percent.
Similarly,
owning property outright in Indonesia is a right that is reserved for citizens.
HakMilik, or right of ownership, can
only be held by Indonesian nationals. However, HakPakai,
or right of use, can be issued to both foreign individuals residing in
Indonesia and foreign-invested entities.
In Myanmar, a country which has attracted record levels of foreign
investment following political and economic reforms, similar restrictions
surrounding ownership apply. However, under the foreign investment law
introduced in November 2012, international investors are eligible for land
leases of up to 50 years, which can then be renewed for two 10-year periods.
Middle East: ownership allowed,
with restrictions
In Saudi Arabia, foreigners can own property outright but should still
expect to face some restrictions. Foreign companies must have a legal presence
in the Kingdom, while individual investors have to live in the country and must
also hold a permit from the Ministry of the Interior. An important exception is
the holy cities of Mecca and Madinah, where only Saudi nationals are entitled
to buy property.
In Jordan, similar rules apply. Individual foreign investors can buy property for
residential purposes, provided that their country of residence has a reciprocal
relationship. International buyers will need to seek approval from the Cabinet
(Council of Ministers),as well as from the Minister of Finance or the General
Director of the Survey Department. Investors from other Arab nations are exempt
from this requirement.
Latin America: ownership
restricted by location
In Mexico, whether a foreigner can buy property outright depends on the location.
Restrictions are placed on foreign ownership of land in a prohibited zone which
includes land that is within 50 km of the coastline or 100 km from the
country’s international borders. The restriction is included in Mexico’s 1917
constitution and reflects fears from that time about the United States’
expansion. However, foreigners can still acquire property within this
restricted zone through a bank trust, known as a fideicomiso.
Likewise,
few restrictions exist for foreign buyers in Peru, unless the property is located
within 50 km of the country’s border. Elsewhere in Latin America, international
investors face very few limitations. In Colombia, foreigners looking to invest in
property have the same ownership rights as citizens of the country. Even
tourists can acquire property here without proof of residency.
Africa: mixed investment
opportunities
Foreign
investment in property in many African markets is restricted. One notable
exception is Morocco, which is open and actively attracting foreign buyers.
Foreigners are not required to hold residency in order to tap into the
country’s booming property market. However, international investors looking to
buy here should hire both a notary and a local lawyer to get expert advice for
navigating the real estate market.
Elsewhere,
buying property on a freehold basis is not an option for international
investors. In Tanzania, where the bulk of the country’s real estate is
government owned, foreigners can only occupy land when it is intended as an
investment. This can be done by obtaining a right of occupancy through the
Tanzania Investment Centre. In other countries, foreign ownership is often
restricted to a leasehold basis, such as in Kenya where international buyers can
acquire property only on a 99-year lease.
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