Anyone who picks up a copy of the Straits Times in Singapore will notice the numerous advertisements promoting the latest foreign luxury properties to Singapore’s wealthy investors.

Wary of the local beleaguered market, Singapore’s investors have taken the plunge overseas. Furthermore, the ability to circumvent local cooling measures including the Total Debt Servicing Ratio (TDSR) by taking overseas loans and the strong Singapore dollar have made investing in foreign properties more attractive. The Monetary Authority of Singapore’s (MAS) latest Financial Review showed that despite the overall global slowdown, Singaporeans still spent a considerable S$1.1 billion on foreign residential properties in the first half of 2014.

Where have these Singaporean investors gone to? According to the same report, Malaysia, Australia and U.K. accounted for 91% of total transacted value, and 76% of volume. Specifically, the cities garnering the bulk of investments from Singaporeans are Iskandar Malaysia, Melbourne and London.

Across the causeway, the development of Iskandar Malaysia brings renewed interest in Malaysian properties. Iskandar Malaysia developer UEM Sunrise reported that Singaporeans buyers comprise 74% of the non-Malaysians who have purchased its properties. As Singaporeans are increasingly priced out of local landed properties, Iskandar’s close proximity to Singapore and affordable homes offer the best of both worlds. Moreover, the proposed high-speed rail connecting Singapore to Iskandar in 2020 will further shorten travel durations to just thirty minutes. Iskandar also secured S$3.8 billion in foreign investments in the second quarter of 2014.

However, in the shorter term, there are worrying signs of falling demand and oversupply in Iskandar, which have led to a wary outlook. Real Estate and Housing Developers’ Association Malaysia’s first half of 2014 Property Industry Survey noted that 85% of 152 developers experienced a drop in sales. Further exacerbating the issue, developers from China have excessively flooded the Iskandar market. Guangzhou R&F Properties launched more than 3,000 units at its Princess Cove development in August 2014. As many of the developments and investments in Iskandar will require time to mature, returns will only bear fruit in the mid-term.

Towards the South, Melbourne continues to be an evergreen choice for property investors due to its popular universities, relatively close flight time to Singapore, as well as being rated one of the best cities in the world to live in. To sweeten the deal, Melbourne’s annual capital growth was recorded at 6% for the last two years until June 2014. With both Melbourne’s population growth forecasted to grow at 2% per annum, and metropolitan rent peaking at 2.6% over 12 months through June 2014, the long-term prospects of property investments there continue to entice.

As such, property developer World Class Land Pte Ltd (WCL) chose to reveal its latest Melbourne condominium development, ‘Australia 108’, in Singapore, ahead of other Australian cities. At 319 metres tall, Australia 108 will be highest residential building in the southern hemisphere. On the opening day, WCL’s confidence was validated by the sale of 65% of the 193 available units.

Further abroad, London is another hotspot for Singaporeans investing overseas. While London has always been attractive due to strong historical and academic links, a number of other factors have contributed to its recent surge in desirability. Richard Levene, director of international properties at real estate firm, Colliers International noted, “Central London is appealing as it is outside of the Eurozone, the sterling is weak, interest rates are low, and there is relative ease of entry and exit.”

This strong demand for London properties has seen apartment prices rise 11.6% year-on-year, according to U.K’s Office for National Statistics. Yet despite concerns about a possible bubble, investors remain upbeat about the city’s investment prospects due to high liquidity and strong demand.

The numbers are promising. Savills’ London forecasted a 10.5% price growth for London properties over the next five years. Additionally, in October 2014, the U.K.-based think tank, Centre for Economic and Business Research, pencilled in a 43.5% price growth by 2018, pushing the price of an average London home to a stunning £556,000. As Singaporean buyers of London properties are mainly investors, London’s tested and proven market is still highly desirable.

While the returns of investing in overseas properties and circumventing the TDSR’s limits can be great, a cautionary note is in order. The risks accompanying foreign property investment as compared to local property investments are numerous. The dangers include unfamiliarity with foreign laws and taxes, imperfect knowledge of the property and its neighbourhood, as well as interest and foreign exchange rates fluctuations.

Without the TDSR, investors’ finances may be stretched dangerously thin. A turbulence in the property market may leave these overexposed investors in a precarious position.