Published:
12:08 PM July 18, 2022
Purchasing land overseas can be an enormous step for companies, but also a move that can help secure their future viability.
However, with current market unpredictability, rising living costs and a host of financial challenges to wade through, how can you know if such an investment is a worthy endeavour?
To help you understand what money matters you’ll need to consider, we speak to Reece Dye, head of corporate dealing at Clear Currency.
Below, he reveals the answers you need to make your decision.
Q: What are the benefits of UK companies purchasing land abroad?
A: It’s an investment for the future and a great way to diversify your business and gain access to new markets. You may also find land prices overseas offer better value for money.
Companies may want to open an office or build infrastructure in another country and require land for the project. Moving into overseas markets can provide access to new networking opportunities, untapped marketing potential and wider recruitment options.
Over the coming years, it’s also likely many businesses, especially those working within the energy, agriculture and technology sectors, will need to increase sustainability and switch to green energy.
Considering a land purchase now can ensure you have the resources in place to function within an eco-friendlier world.
Q: Can foreign companies also purchase land in the UK?
A: Absolutely. Places like Norfolk can be suitable locations for renewable energy farms. Current wind farm projects in East Anglia include the Hornsea Three Offshore Wind Farm, run by Danish energy group, Ørsted.
Plans include building up to 231 offshore wind turbines, located roughly 120km off the Norfolk Coast, to generate enough green electricity to power over two million homes.
European energy company, Vattenhall, has also been awarded permission for their Norfolk Vanguard Offshore Wind Farm project. It aims to provide electricity to 1.95 million UK homes per year, saving three million tonnes of carbon dioxide emissions.
Energy companies are purchasing land overseas and in the UK to transform into wind farms to help tackle rising climates.
– Credit: Getty Images/iStockphoto
Q: How have Brexit and Covid-19 affected land purchases overseas?
A: Following Brexit, accessibility and ease of setting up a business in another country has become more difficult for UK companies. If you are considering moving your business abroad, it’s important to consult a local legal specialist to help you understand current regulation and laws.
It’s not just the UK that has experienced an economic downturn. Covid-19 has affected markets worldwide, so it’s essential to research the financial state of the country you’re buying land in before moving forward, as this may impact costs.
Rising inflation could also influence land prices. To budget effectively, businesses will need to be aware of their current income and expenditure, and have an understanding of any outside events that could alter profitability.
Q: What else will business owners need to consider when buying land in another country?
A: You’ll need to consider the size and length of the project you’re undertaking. Land sales can take many years to complete, and several more years for construction to finish. This means businesses will need to factor in the possibility of prices increasing and understand at what point the project may become commercially unviable. In the current climate, businesses have to simulate a multitude of scenarios and be prepared for the unexpected.
During the sale period, it’s imperative to mitigate the risk of currency exposure. When transferring large sums of money overseas, costs can be affected by rises and falls in rates and exchange fees.
Using a simple tool such as a forward contract can fix exchange rates at a set price until a future date when payments will be made.
Working with a currency expert can help to ensure you have adequate liquidity to proceed, provide financial protection and assist you with contingency planning. This means that even if there are surprises along the way, you’ll be better prepared to deal with them.
A currency specialist can help lower the impact of currency risk on your budget.
– Credit: Andrea Piacquadio/Pexels
Q: Why use a money transfer specialist like Clear Currency when buying land in another currency?
A: It’s our aim to help companies save money when dealing with overseas projects through understanding the client’s end goal, highlighting potential risks and executing an effective strategy.
Currency rates are constantly changing, and even small fluctuations can make a significant difference to the amount you’ll pay for the acquisition. This may cause you to spend more than you intended, or in certain circumstances make the overseas venture unaffordable.
A dedicated account manager will help you understand the financial factors you’ll need to consider. They’ll provide a bespoke, personal service and aim to lower the impact of currency risk on your budget.
You can use our online payment platform to manage and track all your international payments in one place, access live exchange rates and make same-day transfers. This removes stress and makes it easier to manage your money. We provide access to competitive rates and won’t charge you for transfer fees, helping to reduce costs.
Even if the land deal doesn’t go ahead, it’s always worth having a conversation with us. The more informed you are, the better the outcome.
Though the current market may seem a challenging and uncertain one, with the right help, there’s no reason why it should impede your business plans.
Clear Currency is FCA regulated and has a 5* Trustpilot rating.
To discover more about international transfers and sign up for a free account, visit clearcurrency.co.uk.
Call +44 (0)20 7151 4871 or email edp@clearcurrency.co.uk for more information.
