While Solo 401k may be invested in foreign real estate including Hong Kong real estate, it may be a wise choice to hold off in doing so for now as a property bubble currently exists in Hon Kong. For example, office rents are at $160 per square foot, which is the highest in the world. At prices 55% above those in London, even considering investing in a new home in Hong Kong is currently undesirable. Prices have gone up 50% from early 2009, putting them at around the same level in the 1990s when Hong Kong's last property bubble burst.
Reasons for the rapid rise in Hong Kong property values include:
Just like China, Hong Kong has pegged its currency to the U.S Dollar, resulting in relaxed monetary policy and interest rates below inflation. As a result, having no where else to obtain high investment returns, the locals are buying real estate.
Hong Kong's government has a monopoly on land, only releasing its grip when to its advantage of course. As a result, fewer homes get built. For example, when compared to the 1990s when new built homes were around 23,000 a year, the last few years annual figures have only been 10,000 to 11,000. This is another good reason no to Open Solo 401k solely for investing solely in Hong Kong real estate.
There are signs that the Hong Kong Real Estate Bubble may soon burst
Lastly, when you decide to purse investing in Hong Kong real estate with your Solo 401k, make sure to construct a good team. For example, besides opening your solo 401k with with a Solo 401k Provider whose Solo 401k plan documents allows for investing in real estate, you will want to find a tax professional who specializes in Hong Kong property tax laws as well as a good realtor.
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