Forex and Real Estate Investments Abroad: The Guide That Will Help You Understand Rates, Fees, and Money Transfers
The guide that will help you understand exchange rates, fees, and money transfers before purchasing a property abroad
More and more Israelis have been turning to real estate investments outside of Israel in recent years. The reasons are varied and include risk diversification, more accessible property prices, different yield opportunities, and sometimes even future planning for relocation. Among the popular destinations, one can find countries in Europe, the United States, and Cyprus, with Portugal standing out particularly as an example of a market attracting Israeli investors.
Alongside the choice of property, the area, legal checks, and tax aspects, there is one component of the transaction that tends to be perceived as merely technical, but in reality, it has a direct impact on the overall cost of the investment: currency management.
In this article, we will organize the world of foreign exchange in the context of real estate investments abroad, understand basic concepts, examine the types of fees, and see how small decisions can affect large amounts.
What is foreign exchange and how does it fit into real estate transactions abroad
Foreign exchange is a term that describes any action involving foreign currency, whether it is conversion, purchase, or transfer of money that is not in shekels. In the world of real estate investments abroad, foreign exchange accompanies the investor at almost every stage of the transaction.
From the moment the contract is signed, through advance payments, transferring equity, payments to local lawyers and authorities, to receiving rental income or future sale of the property. Each of these actions is carried out in the local currency of the destination country, usually euros or dollars, while the capital of the Israeli investor is in shekels.
This gap creates exposure to exchange rates and fees, which are sometimes unclear to those who do not deal with the field on a daily basis.
Official rate versus continuous rate and what it means for investors
Every day, the Bank of Israel publishes official rates for various currencies. The official rate is intended to reflect the market situation and is based on an average of transactions carried out during certain hours of the day. However, it is merely an informative rate and not one that can be used for actual conversions.
In contrast, the continuous rate is the rate at which transactions are conducted in real-time. This rate changes throughout the trading day according to supply and demand in the global foreign exchange market.
For an investor in real estate abroad, this difference is very significant. For example, if you checked the euro exchange rate in the morning before transferring payment for the purchase of a property in Portugal, there is no certainty that this rate will be the same as the rate at which the conversion will actually take place. Even a small change in the rate can lead to a difference of thousands of shekels when dealing with high amounts.
Conversion Fee and Exchange Margin: Two Completely Different Costs
When converting shekels to foreign currency, there are usually two separate costs that it is important to distinguish between.
The first is the conversion fee. This is a fee that a financial institution charges for the mere act of performing the conversion. Sometimes it is presented clearly and sometimes less so.
The second cost, and sometimes the more significant one, is the exchange margin. This is the difference between the rate at which the financial institution buys the currency in the market and the rate at which it sells it to the client. This margin is not always transparent, but it directly affects the total cost of the conversion.
For example, an investor purchasing a property in Portugal for four hundred thousand euros and converting the amount from shekels may pay tens of thousands of shekels just due to a wide exchange margin, even if the official conversion fee seems low.
Money Transfers Abroad and Why It Is Still Expensive
After performing the conversion, the money must be transferred to the destination country. In most cases, international transfers are carried out through the SWIFT system. This is an established and reliable network that connects banks around the world, but it also incurs costs.
One transfer can go through several intermediary banks, each of which charges a fee. Therefore, even in an advanced digital age, investors sometimes find that the amount that left their account in Israel is not exactly the same as the amount received in the destination account abroad.
In cases where several transfers need to be made throughout the property purchase process, these costs accumulate and can affect the feasibility of the transaction.
Common Fees in the Forex World
In real estate transactions abroad, there are several fees that it is advisable to know in advance.
The conversion fee is charged for the act of converting the currency. The exchange margin affects the actual rate at which the conversion takes place. The transfer fee is charged for sending the funds to an account abroad. The foreign currency receipt fee is sometimes charged by the receiving bank. Brokerage fees may be charged by intermediary banks along the way.
The amount of the fees varies between different entities, between countries, and between transfer methods, so early checking is an important step in the process.
Currency Volatility and Its Impact on Real Estate Transactions
Quando se assina um contrato para a aquisição de um imóvel no estrangeiro, o preço é indicado em moeda estrangeira, mas o capital do investidor está em euros. Entre a data da assinatura e a data do pagamento efetivo, a taxa de câmbio pode variar.
Por exemplo, um investidor que adquiriu um imóvel em Portugal por trezentos mil euros, e ainda não transferiu o montante total, pode encontrar-se a pagar mais em euros se a taxa do euro subiu nesse período. O imóvel em si não valorizou, mas o custo total sim.
Hedge de moeda estrangeira como proteção contra incertezas
O hedge de moeda estrangeira é uma ferramenta financeira que permite fixar a taxa antecipadamente e reduzir a exposição às flutuações das taxas de câmbio. Trata-se de uma ferramenta mais avançada, que não é adequada para todos os investidores, mas é relevante em casos de transações de montantes elevados ou quando há pagamentos futuros conhecidos.
Mesmo que não se utilize o hedge na prática, o simples conhecimento da possibilidade permite uma tomada de decisão mais informada.
Em resumo, conhecimento que se traduz em economia
Os investimentos em imóveis no estrangeiro não se limitam apenas à escolha de um imóvel e a verificações legais. A gestão correta da moeda estrangeira é uma parte integrante da transação, e por vezes a diferença entre um planejamento adequado e a negligência do assunto reflete-se em dezenas de milhares de euros.
Uma compreensão básica das taxas, comissões e mecanismos de transferência permite que os investidores tomem decisões melhores, reduzam custos e evitem surpresas desagradáveis pelo caminho.
Altschuler Shaham Financial Services Ltd. possui licença para prestar serviços em ativos financeiros - ampliada de acordo com a Lei de Supervisão sobre Serviços Financeiros (Serviços Financeiros Regulamentados), de 2016, número 56881