This week I read a news item about remarks by Yaakov Atrakchi, CEO and founder of the real estate company Aura, at a real estate conference, according to which buyers of real estate abroad are likely to “lose the money.” These remarks stir an important discussion and touch on a sensitive point for many investors. This statement, although it reflects a certain point of view, ignores a wide range of considerations and potential advantages inherent in international real estate investments.
It's no secret that apartment prices in Israel have become inaccessible to young couples, and without the contractors' promotions of the past year and a half since the start of the war, it can be assumed that the entire real estate market would have run into serious trouble. According to an analysis of Israel's Central Bureau of Statistics data, at the end of 2024 it took 166 salaries to buy an apartment in Israel (calculated by the average apartment price compared with the average wage), while in 2017 only 153 salaries were needed. So when the average apartment price in Israel is 2 million NIS (and in the high-demand areas between Gedera and Hadera you will not find a new apartment from a contractor at such a price), it is no wonder that someone holding a sum of a few hundred thousand shekels looks for an option to buy a property overseas (which of you has not come across ads for an apartment in Bucharest for 120,000 euros or an apartment in Athens for less than 100,000 euros).
Another reason investors seek opportunities beyond the country's borders is diversifying the investment portfolio. Spreading assets across several geographic markets can reduce the overall risk of the investment portfolio. When one real estate market experiences a period of slowdown or crisis, other markets may continue to grow or show stability, thereby balancing the overall returns.
Another significant advantage lies in the potential for higher returns. At times, real estate markets in other countries offer investment opportunities with more significant growth potential than the local market. This can stem from a variety of factors, such as rapid economic growth, increased urbanization, or relative undervaluation of properties in a particular market. For example, developing countries or markets on an upward trend may offer higher appreciation potential in the long term (see what happened to real estate prices in Croatia in 2023, which rose about 23% after its entry into the eurozone, and so the expectation is also for price increases in Romania and Bulgaria with their expected entry into the eurozone in 2026).
In addition, investing in real estate abroad can enable access to markets with more favorable conditions for investors. In certain countries there may be more attractive tax regulations for foreign investors, lower transaction costs, or simpler and more efficient purchase processes. A thorough understanding of these conditions can lead to significant savings and increase the investment's profitability.
Another important advantage is the ability to exploit specific opportunities in certain markets. For example, it may be that in a certain country there is growing demand for rentals due to growth in the young population or students, which makes investing in rental apartments especially attractive. Alternatively, certain areas may experience accelerated infrastructure or tourism development, which creates investment opportunities in commercial properties or vacation apartments.
It is also important to address the global and personal advantages of investing in real estate abroad. Owning a property in another country can provide living or vacation options, diversify personal assets and serve as an economic base in another place in the world.
However, one cannot ignore the disadvantages and challenges involved in investing in international real estate. One of the main challenges is distance and the difficulty of managing the property. Managing a property remotely can be complex and require reliance on local management parties, which involves additional costs.
Another challenge is insufficient familiarity with the local market and regulations. A lack of understanding of real estate law, tax procedures and the local business culture can lead to costly mistakes. Therefore, relying on local professionals and professionals experienced in international real estate is critical.
Although Mr. Atrakchi's remarks raise an important point about the caution required in real estate investments abroad, they do not reflect the full picture. A correct and calculated investment in apartments abroad can yield significant positive results, whether in higher returns, diversification of the investment portfolio or exploiting unique opportunities in different markets. The key to success lies in conducting in-depth research, understanding the local market, relying on experienced professionals and managing risk prudently. An investment made with knowledge and professional support can make buying real estate abroad a wise and profitable financial decision.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית