Top retirement destinations may not be worth the investment risk

February 2, 2015 admin

Panama CityThis past September, I wrote a post about the growing confidence of U.S. workers regarding their ability to afford retirement, including comment on the best (and worst) places to retire in the United States. Now, ThinkAdvisor has come out with the top 15 foreign countries for U.S. retirees to spend their golden years in 2015 based on a series of measures (such as real estate, cost of living, healthcare and climate).

But where do some of these countries rank on the radar for ease of institutional investment for investors eager for greater yield in a low-growth world?

Here’s the top 15 list of foreign retirement destinations:

1. Ecuador
2. Panama
3. Mexico
4. Malaysia
5. Costa Rica
6. Malta (tie)
6. Spain (tie)
8. Colombia
9. Portugal
10. Thailand
11. Italy
12. Uruguay
13. Belize
14. Nicaragua
15. New Zealand

The six countries in bold on this list received risk rankings from Cushman & Wakefield’s 2014–2015 report, Emerging and Frontier Markets: Assessing Risk and Opportunity. The report ranks 42 emerging and frontier markets from lowest risk (1) to highest risk (42) in terms of transparency risk, geopolitical risk, corruption risk and health/safety risk, and also provides a snapshot of each country’s property market.

So while Panama may rank as a desirable location on the retirement living front, it poses the highest level of risk to investors, with a ranking of 27, of these six nations.

In this low-growth environment, more institutional investors may consider branching out from sought-after safe-haven markets to emerging and frontier markets to help meet underfunded liabilities.

But with those potential rewards come a multitude of risks that must be carefully weighed against long-term portfolio investment strategy and needs.

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Jennifer-Molloy91x119Jennifer Molloy is editor of The Institutional Real Estate Letter – Asia Pacific.

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