International Property: It’s a Funny Old Game
23 November 2011
It's a funny old game, a phrase coined by adored sports presenters greives and St John to describe their beloved game of football, but now it aptly describes the world of international property. So many crazy situations conspiring to create a lot of misery, but also a lot of opportunity if you know where to look.
Three supposedly established and developed economies in the world's largest single monetary union have been forced to ask for emergency aid to avoid going bankrupt. Greece, Ireland and Portugal are small-fry however compared to Italy, which is now looking dangerously like needing a bailout, and even Spain's borrowing costs are nearing the bailout threshold. Yet property experts in Spain are expecting the recently elected government to go on a spending spree.
The UK housing market is in atrocious shape, prices are growing in areas where first time buyers can't afford to buy, and falling when first time buyers can afford to buy, but in the areas where first time buyers can afford to buy, unemployment and the lack of job security means most don't want to buy anyway. Anyone who has the means and inclination to buy will be lucky to get a mortgage, and of the people who have a good enough credit rating to get a mortgage, and aren't hindered by any of the above, most can't raise the necessary deposit. On the upside the rental market is booming so landlords are happy. The picture in the US is much the same as the UK, multiplied by the much bigger market size.
The Middle East will never be the same again, both Libya and Egypt had their governments overthrown, and the Syrian autocracy is still fighting to hang on. This is just one of the reasons why Turkey is flourishing. It has become a safe Muslim country to holiday in, live in and invest in, at the same time its strong and stable economy make it stand out as all of the above from the European side as well.
There are doubts over whether the global economy will have recovered in five years, heck some people are even questioning whether the UK property market will ever recover. Yet, amid all this doom and gloom there are pockets of solidity. Safe havens like Switzerland and St Kitts where property prices are holding, but not becuse they are so extortionate that only the super-rich can afford them.
If you take the optimistic stance then now is a time of unprecedented property investment opportunity. Property in the UK, US, and Spain at discounts of up to 60%, and some of them 40% below their true market value in the UK and Spain, some in the US at 50-60 percent below their replacement build cost -- true bargains. Even in other locations like the Caribbean where prices have held they haven't grown by anywhere near what they normally would in the last few years, and with currency fluctuations there are some real bargains there.
It's a topsy turvy world, we can either sit and cry about it, or make the best of it.