The Abu Dhabi property market has witnessed a considerable improvement in buyer interest during the summer of 2009 compared to the beginning of the year. A healthy local stock market and the continued abundance of employment opportunities in the Emirates’ capital city are just two of the reasons for this resurgent confidence from long-term property investors in particular. An international real estate agency noted that high value transactions in the Al Reem Island and Al Raha Beach developments were a positive indication about recent investor trends, highlighting more reasonable asking prices as a lure for cash rich buyers.
Another reason for the improvement in local property market conditions is the willingness of banks to approve mortgages- a vastly different picture from the recession-wary reluctance of late 2008. Expatriates working in government institutions, for example, have been offered 85% to 90% pre-approved mortgages for properties developed by Aldar and Sorouh. Again, Al Reem Villas, Al Reem Island and Al Raha Beach developments have witnessed up to a 35% drop in apartment prices, increasing their affordability and therefore demand from buyers. Overall, the first half of 2009 has witnessed a broad trend of 4% to 5% price decrease for property in Abu Dhabi.
Abu Dhabi Real Estate
Sorouh, one of Abu Dhabi’s major property developers, has offered reduced prices and rescheduled payment plans for existing buyers on their Gate Towers project in Shams Abu Dhabi, and are focusing their construction work on the Sun and Sky Towers on Al Reem Island, scheduled for completion in early 2010. Again conforming to a trend of lowering prices to increase buyer demand, it also bodes well for the Abu Dhabi property rental market, which had been subject to something of a contracted supply during the first half of 2009. However, two trends in the last six months have contributed to the situation around apartments for rent in Abu Dhabi; firstly, expatriates leaving the Emirate on account of job loss, thereby vacating their apartments and houses, and secondly, internal migration to Dubai where the rent is considerably cheaper than Abu Dhabi real estate. Further healthy competition for tenants has been provided by relatively cheaper rents located on the outskirts of the main city, such as Al Raha Gardens and Khalifa City. With cheaper villas and apartments for rent, for example a 3 bedroom villa costs less than a 2 bedroom apartment in the city, landlords within Abu Dhabi have begun to pick up the trend and offer more competitive rental rates for their properties.
You can’t open a newspaper or drive past a desirable coastal location without coming across the signs – you know the ones the happy smiling couple who look just past middle age who are enjoying a pool-side gin and tonic or maybe enjoying a friendly tennis match. They are invariably advertiseumetns for “over-45’s” or “adults” communities – what used to be known as retirement villages. The question is – are they are a good property investment?
Australian retirement villages appear to be in trouble though – it sounds like the 20-somethings who came up with the advertising jingles and billboards didn’t actually ask the potential clients what they wanted. The result is that – according to The Australian around 1/3 of sections available for sale in new or existing retirement communities are in the hands of the receivers. It sounds like that developers and their advertising agencies forgot that the older generation didn’t grow up being told what to think by the media – and have an annoying habit of making up their own mind about what they want.
So what type of property does an older Australian want in their retirement? When asked by researchers it turned out that most retirees didn’t want to move before they were 65, 75% of them relied on the age pension for their income, most wanted to continue to live in the same community that they had been prior to downsizing, and although they would live in units they wanted to live in small complexs with ten or less properties. Oh and they aren’t too keen, or able to, pay for all those extra fees for the village’s facilities – in fact they are just as happy to continue to use the faclities in their suburb that they have always used. They certainly don’t have the cash to pay for services they don’t want or need. That’s probably why developers who are offering expensive properties – three-bedroom, 2-bathroom is the common configuration, on the urban fringes complete with swimming pool, gym, shopping centre, spa and sports facilities – are having trouble selling them.
You do need to downsize sometimes ...
Several developers have gone bust in the last 12 months unable to continue to service their high borrowings – particularly when potential buyers have had to withdrawal because they in turn were unable to sell the family home at the right price. So if you think a nice little investment in a retirement village may be good idea and you can use it yourself later – think a bit harder. Although the marketing is all around the implied “security” of only living with “your own type” – i.e. other old people – the reality is that most people never consider themselves old. I remember a relative who was adamant she wasn’t old – in her 80’s – we tend not to chose our housing needs based on living with an age cohort. Instead although older people may want to downsize to a more easily maintainable property – they still want to live in the area they know well. I rather suspect that well-maintained units in established areas, which don’t have excessive numbers of stairs or loud neighbours maybe more to their taste.
Talk of the impending General Election dominates the news, fuelling intense debate in every taverna across the land, as the parties lay down their manifestoes for escaping the economic doldrums. Greeks love talking about politics and they love elections even more, although that may be due to the extra holiday given for voting and for recovering from the ordeal.
This election is far more important than the last, because it will determine the course that Greece takes to avoid financial chaos. Kostas Karamanlis’ conservative ND party claim that Greece needs to continue with the belt tightening and ride out the storm. George Papandreou’s left-of-centre PASOK suggest putting more money into the pockets of the average Greek, with a 3bn Euro stimulus package.
So far, the polls suggest that PASOK has a 7% lead over ND, so should manage a comfortable majority on October 4th. However, Karamanlis is making a desperate gamble and hoping that the leftist party, SYRIZA, drains votes from Papandreou’s party, allowing his government to remain in power.
How will the Greek Election Affect Greek Annual Property Taxes?
For the vast majority of property owners, the Greek elections throw up some interesting news, with PASOK promising some sweeping changes to the property taxation structure. Before continuing, remember that such promises always come with the usual proviso that politicians promise anything before an election; whether they deliver is a completely different matter.
George Papandreou - Promising to Reform Greek Annual Property Taxes
In a televised debate, the PASOK leader stated that he was going to implement a different property taxation regime within 100 days, if voted into office. This scheme, part of a five-point plan to stimulate the economy, is based upon relieving the taxation burden of normal homeowners and shifting it towards the large property owners and real estate holdings. Interestingly, he included the Greek Orthodox Church in this, as one of the largest property owners in Greece.
Currently, the taxation level in Greece is set at €243 000, at which time you will pay a rate of between 0.3% and 0.8% of the total value of your property, every year. This cut-off is measured against the value of the house as determined by the tax office, which is generally significantly lower than the market value. Finally, this tax-free figure incorporates the total value of all your properties, not every individual property
Whilst this level ensures that many homeowners do not pay Greek annual property taxes, there are still significant numbers falling on the wrong side of the cutoff, especially if they own more than one property. For many foreign property owners, who tend to buy properties in expensive hotspots near the coast or in the cities, this level is not so generous.
If PASOK, as predicted, do gain a majority, then there is a chance that this level could increase and save you a little money. Of course, if you are an investor or speculator, with a portfolio of rental or sale properties, then you may be praying that Kostas overcomes the odds and at least prevents PASOK from gaining an outright majority.
Whichever way the election goes, Greek property prices have remained steady, and it is one of the few countries in Europe that has not seen process plummet during the economic crisis. For an overview of the global property market and the economic crisis, Property Investment – The Credit Crisis and – The Future Part One is an excellent article.
Despite the onset of the peak holiday season visitor numbers continued to fall on Lanzarote during August. According to the latest figures just released by the Spanish airport operators AENA. Which reveal that the number of tourists spending their summer holidays in Lanzarote fell by 16.68% last month versus August 2008.
Visitor numbers on the Canary Island of Lanzarote have indeed been falling throughout the year – in line with declines across the rest of Spain. As the combined impact of the credit crunch and the depreciation of sterling against the euro combine to take their toll on the island’s all important tourist industry.
So far this year nearly 200,000 fewer foreign tourists have visited Lanzarote than during the same period in 2008. A decline of just over 18%. With the bulk of these missing arrivals accounted for by the UK – Lanzarote´s largest and most important market.
Last month alone the number of British arrivals fell by 18.17% – down to 55,063 from 67,920 visitors. Whilst Germany, Lanzarote´s second largest market, registered a fall of 9% from 20,878 arrivals last August to 18,998 last month. With Eire, the island’s third largest market down by 3.59%.
Inevitably declining tourist numbers are having an impact across all sectors of the island’s economy. With many bars and restaurants struggling and hotels and apartment complexes reporting falling occupancy levels. Whilst many overseas investors with property interests such as holiday villas in Lanzarote have also seen their bookings take a tumble. Especially outside of the peak holiday periods such as half term.
Despite the declining numbers and the ongoing economic crisis confidence for the winter season is on the increase on the island. As Lanzarote´s tourist industry has recently been warmed by the news of the addition of a raft of new services from Ryanair. Who have switched their focus to Lanzarote and the Canaries this winter in order to take advantage of the tax breaks provided by AENA and the Spanish government.
Ryanair will be operating 16 new routes to and from Lanzarote this winter, commencing in late October. With the company anticipating that these new flights to Lanzarote will help to provide a significant boost for the island’s tourist industry and property market. Whilst other low cost operators such as Jet2 and Aer Lingus have also announced an up-weighting of their services to the island across the coming winter months.
AFL’s grand final is only weeks away – and that markets the traditional Spring selling season in Victoria and the rest of Australia. The spring buyer are out in force in the Melbourne property market – but is this the sign of better things to come in the Australian property market – or just another false dawn?
The threat is that interest rates will be going up by the end of the year – but maybe a potential property Australian purchaser. According to the Real Estate’s industry website – domain.com.au things are starting to look up – and they point out that prices have risen across all Australian states for the whole of 2009. Of course they have forgotten about what happened for the previous few years.
With a shortage of homes and a consequential increase in rents – the age old question of whether to rent or buy is now starting to persuade people to buy. AFG’s Mortgage Index also suggests that nearly a quarter of all new mortgages written in 2009 are for those who are trading up their home rather than new home buyers or loan refinances.
So short-term at least the signs are more hopeful than they have been for a quite a while. The issue then arises – where to buy? Australians are a mobile bunch and although many may want to buy in the suburb they grew up in, many will move city or state in order to pursue work opportunities.
Buying in a new town is always daunting but there are some interesting figures out froma recent studycommissioned by St George Bank and conducted by RP Data. They looked at Australia’s major cities and tried to pick the best value suburb. What does value mean in this contest? Well if you are a fan of the open-home circuit and the new property for sale pages in the press you might have thought that it was all about the size of the home-theatre room and the bathroom tile finishes. You’d be wrong. Instead the study took the view that at the end of the day – location is still what matters with real estate. The tiles you can upgrade – the distance of your home from the CBD is more difficult to fix. Transport links and local shopping were also considered important as well as renovation potential.
So where should you be looking for value for money if you are moving interstate:
Perth CBD from south of the Swan River
Sydney – Granville (median price $347,500)
Melbourne – Brunswick $532,000
Brisbane – Margate $347,000
Adelaide – Thebarton $391,250
Perth – Thornlie $365,000
Hobart – North Hobart $335,000
Darwin – Rapid Creek $523,000
Canberra – Dickson $505,000
In Perth an entry-level price point according to the new home developers is around $450,000 – think outside the square and you have a much cheaper home and a few hours a day less wasted on the city commute. As always when considering property investment in Australia - use your head not your heart!
For many years, the extreme west of Messinia has been looked on with a little amusement and disdain. The rest of the Peloponnese make jokes about the south-west corner of the Peloponnese, naming it bandit country and making certain implications about goats. Personally, I find these allegations to be completely unfounded and the result of traditional inter-regional rivalry.
The region is certainly underdeveloped, due to its relative distance from civilization and the lack of a decent transport infrastructure. Despite containing Pylos, the ancient palace of Nestor, and some of the most beautiful scenery and nicest people in Greece, the inaccessibility has saved it from the developers. This corner of the Mediterranean is a haven, away from the hotels, condos and holiday villas.
As you can imagine from the title, this is going to change as the Greek government’s drive to modernize the Peloponnese gathers momentum. The road from Tripoli to Kalamata is nearly complete, and will cut down the journey time to Athens by 3 hours. Kalamata is well developed, and so you have little chance of finding a bargain. However, this new road will continue further on, to Methoni, and this opens up a wealth of opportunity for property investment Messinia.
Property Investment Messinia - A Sea View Without Breaking the Bank
Property Investment Messinia – Exploring Fresh Pastures
The area around Kalamata and the Messinian Mani is saturated with foreigners and property prices have remained buoyant, despite the economic crisis. Further along the coast, you are looking at an area so underexploited that even the estate agents have not caught up. They are busy extolling the virtues of golf courses and luxury condos around Kalamata, so you can sneak in under the radar and snag a real bargain.
Already, there are a few estate agents operating out of Methoni and I suspect that they are going to see some good times ahead. Of course, there is always the opportunity of making a private sale, although I strongly suggest that you look at our guide to buying property in Greece before venturing down that path, just to protect yourself. Certainly, there is no harm in making a few enquiries or even coming out to take a look.
Property Investment Messinia – Finding a Bargain
If you are looking for a property for less than €100 000, there are some great bargains in the area, if you are prepared to look at a little modernization. For those able to spend a little more, I have seen a three bedroom house in the area, with 3 bedrooms, two bathrooms, 2300 m2 of land and a sea view for €245 000. Move a little closer to Kalamata and that price at least doubles, so this area does offer excellent value with the added attraction of enjoying summers well away from the hordes of tourists.
Apart from the beautiful sea views, you get to live in an area with ancient and modern history, nice people and the sure-fire knowledge that your house price will leap when the road is completed in 2 – 3 years.
When that happens, you owe me a couple of Ouzo’s.
Image of Pylos courtesy of Harald Rossa, distributed under a Creative Commons Sharealike 2.5 Licence.
Far be it for me to suggest that the amount of lawsuits being leveled at the major property developers in Dubai is the reason for this, but Nakheel, Emaar and Limitless have all pulled out of this years Cityscape Dubai.
One does wonder what the point of running cityscape this year will be, and the fact that these developers are not participating really does point to a disaster in the making in Dubai. With the ex pat exodus during the summer, manyt are interested to see just how many are left and the Muslim fundamentalists are already saying it is time for even more laws to curb the foreigner’s excesses.
With about every third hotel in Dubai being a thinly disguised brothel, I suspect that all that will happen is the “excesses,” are driven further underground. The latsest report from EFG Hermes does not sound promising either.
With relatively low buyers’ confidence in Dubai, together with our view that demand will continue to focus on the rental market as supply is absorbed, we do not anticipate any strong recovery in Dubai selling prices before H2 2010 at the earliest,” EFG said in a quarterly report on the UAE’s property sector.
The report said that prices in Dubai had, on average, declined 50 per cent from their peak last year. It added that current transactions were focused on completed projects and prime locations.
End-user demand in Abu Dhabi, however, is expected to rise as mortgage financing is more readily available and there is still a shortage in supply compared to demand, the investment bank said.
EFG said rents in Dubai had fallen “significantly”, and more than in Abu Dhabi. EFG also noted that a number of property owners in Dubai may be holding back from selling or renting, as they wait for better prices.
“Over the next six to 12 months, we believe we could see a further, possibly smaller, tranche of distressed transaction activity.
“This may negatively impact pricing and rental trends further, and so prolong any anticipated recovery for the market,” the bank said.
Separately, Dubai-based research firm Proleads said yesterday that the UAE’s construction sector had been hardest hit in the Gulf by the downturn.
So, it seems as though the authorities are finally accepting there is a problem. There is a lot of repossessed property in Dubai right now and the amount of investment property for sale in Dubai is threatening to flood the markets and bring prices even lower.
I don’t usually print other people’s articles, but as we all start looking towards the future (hopefully having learned something from the past) I thought it appropriate to do so. This is a letter by Prudential’s COO Bernard Winograd and worth reading. I will be seeking out other opinions in the future to republish.
Riders on the Storm: CFOs and the Credit Crisis (July 2009)
As the credit market storm of late 2008 and early 2009 fades, hopefully not to return, it’s time to take stock of where it has left us. The causes of this credit cycle are well-known and widely discussed. We have summarized our own views of the root causes of the crisis in a separate paper, “Turbulent Markets: Challenges and Opportunities for the Institutional Investor”,1 and do not think they need repeating here. At this point, to borrow a phrase, we think it’s better to look forward than to look back, trying to understand how the landscape has been altered by the crisis.
At Prudential, we have an unusual vantage point from which to assess the changes that have resulted. We are a significant investor for our own account and for other investors, a significant provider of long-term financing to corporate America and the commercial real estate market, and a provider of employee benefits and financing of employee benefits. For the CFOs of corporate America, this is a time of considerable reflection. Having had lots of discussions with them about their views across our various businesses, we thought it would be worthwhile to summarize what we are hearing and what the lessons learned appear to be.
Much has been made about how unusual this downturn is. There is certainly truth to that assertion, even though effects like the restriction of credit for riskier borrowers are hardly unusual. In fact, one of the recurring themes in our observations is that many of the lessons learned are not new. We have all been forcefully reminded of their importance, but many of the insights are simply reminders of what prudent CFOs have always known and practiced.
However, there is one unique element of this credit cycle that is likely to have long-lasting effects. For the first time, the fundamental viability of the securitization markets is being called into question. Securitized lending markets have collapsed as investors have lost faith in how these products are structured and the ratings agencies that rate them. Overall, net global securitization issuance fell by nearly 80% in 2008, removing about $1.7 trillion as a source of credit from the markets.2 While there is significant uncertainty in this market, we can venture the following pair of predictions with increased confidence at this stage.
- The most complex structured products are unlikely to return. Investors simply will not place much faith in any ratings on these products, and will believe that these products are too complex for them to analyze and value independently.
- New rules of the road will be defined. The rights of investors with different levels of seniority in structured products will likely be clarified through litigation. In addition, new rules for how future products will handle loan modifications may emerge.
Accordingly, while the securitization market is likely to come back, it may very well be a smaller and less accommodating market than it was before. This will make financial intermediaries like insurance companies and banks more important to corporate America than they have been for some time.
If so, what are the key lessons about financing to be learned from this crisis? No list can be complete, but our nominees would surely include the following:
- A business is not likely to win by being very clever about the right hand side of its balance sheet, but mistakes on that side of the balance sheet can be fatal. This asymmetric risk highlights the importance of safety when designing a firm’s capital structure. In general, corporate success is much more durable if it is grounded in decisions about investing, the left-hand side of the balance sheet, than about risk-taking through clever uses of leverage.
- When evaluating potential sources of capital, availability is more important than cost, particularly during challenging times. Many businesses based their entire financing model on an assumption of permanent access to narrow sources of financing, such as the securitization markets, that turned out to be unavailable when the economy faltered.
- Credit ratings matter much more in negative credit cycles. During good economic times, credit ratings primarily impact the cost of capital. However, during challenging economic times, credit ratings can impact whether capital is available at any price. This cycle was an unusually severe demonstration of this lesson, in that even AA ratings were not necessarily good enough to assure market access at the peak of the crisis, although the better-rated issuers were the first to regain access to credit when liquidity reappeared. When economic conditions improve, issuers may need to run their businesses more conservatively to achieve higher credit ratings to protect themselves during adverse credit cycles.
- Relationships with lenders matter much more during negative credit cycles. As a direct lender, we are heavily focused on supporting our existing clients. It is clearly valuable during good times to develop close relationships with lenders in order to maintain access to an understanding source of capital when times turn.
- Not all lenders are created equal. Insurance companies such as Prudential manage their loan portfolio for the long term. As a result, we are generally able to be more flexible when our borrowers face challenging economic conditions. Issuers should think about their mix of creditors, and seek to diversify their sources of capital.
- Spreads matter to lenders, but absolute rates matter more to borrowers. Some issuers, particularly investment grade issuers, are hesitant to borrow when spreads are historically high, even if Treasury rates are so low that absolute rates are not high. When a financial institution like Prudential issues debt, we are very conscious of spread because a large part of our business model is built around products that earn a financial spread on capital. For an industrial company, the tradeoff is not the same, since the assets of a non-financial corporation are more likely to earn a less volatile return that is weakly correlated to spreads.
But there is more to the post-mortem analysis than financing lessons. Companies are facing up to the importance of effective risk management in a more holistic way than ever before. While this is not a new insight to financial companies, where the questions that are being addressed are aimed at how and why risk management practices failed, it is a fairly new concept in industrial America. Consequently, it’s worth summarizing just what is involved.
- First, effective risk management requires a comprehensive identification of all the risks that impact a business. At Prudential, we assess the potential impact of a wide range of risks in our businesses, including mortality, interest rates, credit, equity market performance, real estate market performance, and country-specific risks. We closely monitor each of these risks, seek to develop ever better insight into how these risks relate to each other, and ultimately use this understanding to inform, but not necessarily drive, both our investment and overall business strategy. We also make conscious decisions about which risks we should take, such as credit risk or mortality risk, and which risks we should avoid, such as betting on the direction of interest rates.
- Second, effective risk management requires a holistic approach to managing risk. Many industrial firms with businesses whose performance is tied closely to macroeconomic conditions invested aggressively within their defined benefit (DB) plans and also heavily leveraged their businesses. These decisions may have been reasonable and rational when viewed independently. However, when viewed collectively, it becomes clear that such firms put themselves in the position of having to deal with many problems at the same time when the economy faltered. We know that this dynamic is impacting many firms. For example, we recently surveyed more than 100 senior finance executives at medium and large companies, and learned that 40% of these executives reported that their DB plan was having a substantial impact on their firm’s financial results.
- Third, previously under-appreciated risks need to be incorporated into everyone’s thinking. For example, many organizations did not focus on liquidity risk within their investment portfolios. As a result, institutions that rely on investment portfolios to pay current expenses, such as DB plans making benefits payments or endowments disbursing funds, are facing a liquidity crunch. In assessing risk, liquidity is not just part of the asset allocation framework, or how much to allocate to stocks, bonds, cash and alternatives. It also needs to be separately planned to assure that liquidity demands will not interrupt the investment or business plans of the organization. Going forward, many organizations need to more closely monitor liquidity across their portfolios.
- Fourth, risk management tools, such as Value at Risk (VaR) analysis, are useful when used to better understand and illustrate risk and can be helpful as part of a broader risk management framework to aggregate risk. However, many organizations developed a false sense of security by relying too heavily on these models. These tools measure risk based on historical data, and as a result, did not help risk managers prepare for the once-in-a-generation type of conditions that were far more frequent and severe than models predicted. It is therefore imperative for an organization not only to incorporate risk measures that they deem relevant to their business, but also to establish plans that prepare for foreseeable events and improve the chances of surviving when unforeseen losses occur.
- Fifth, removing liabilities from corporate balance sheets through the “selling” of liabilities can be prudent, and can have benefits other than the implicit cost of financing. For example, insurance companies are better positioned to manage certain kinds of risk than most industrial companies, especially for retiree populations for whom direct contact is less important than for active employees. Pension and Other Post-Employment Benefits (OPEB) liabilities (such as retiree life insurance) should be examined for possible outsourcing or financing with third parties.
- Finally, asset and liability imbalances persist and continue to create risks for many organizations and individuals. For example, many pension plans that invested for total return without regard to their liability structure are finding themselves in a challenging position today, although the severity of the effect varies greatly among firms, depending on the scale of their pension liabilities relative to the rest of their balance sheets. CFOs need to assess these issues in light of their organization’s overall risks, and consider policies that limit the mismatch. Likewise, individuals saving for retirement are not well-suited to manage the risks of their own longevity, and target-date funds in corporate defined contribution plans have been convincingly shown to be an inadequate solution to that problem.
We are all living with reminders of the dividends that effective risk management can pay, and of the depth of the problems that ensue when it is done badly. Many senior finance executives are increasingly focused on risk management across the enterprise, as well they should be. The good news is that there are ways available to diminish balance sheet risks. And, from a macroeconomic point of view, the systemic recalibration of attitudes towards credit and risk that is underway is likely to lay the groundwork for a durable economic recovery.
I think the key here is the question of how likely a “durable economic recovery is,” and certainly we need to take a good look at what our governments are doing.
This article is here
And a PDF download is available here.
Has the time come to take a second look at the fire sale property market in Queensland? Well I’m not sure but I think it might be time to check out a bargain, particularly if you are looking to live in a modern Queensland apartment for at least the next 10 years – and here’s why I say that.
The fire sales are coming quick and fast in the sunshine state according to The Australian
“In the past 12 weeks, more than 72 apartments and houses in new Gold Coast projects have been offloaded by receivers.”
There have also been 20 apartments sold in Townsville and over 1000 properties in the small Far North Queensland town of Port Douglas.
You haven’t missed the boat though as there are still another 500 properties which are already in the bank’s hands are need to be sold off before the end of the year.
Several high profile developers including Tom Hedley have gone into receivership. Hedley’s companies alone has seen 400 properties being up for mortgagee sale as the receivers try to cover the company’s outstanding debt.
Townsville property market
So what does all this mean to someone who may have looked longingly at an expensive apartment but couldn’t afford the million dollar plus price point? Well it means look again, to be honest.
New holiday units in Port Douglas are going for discounts of $100,000 plus.
The seriously luxurious Llana Aqua project on the Gold Coast’s Hope Island have been selling for less than half their $1.4 million asking price.
Some commentators are saying that this is your best buying opportunity in Queensland’s high-end apartment market since 2004. I must admit that I tend to agree with them and it all goes back to the fundamental of all real estate: supply and demand.
For years in the hot spots of Queensland there has been development after development – lets face it parts of the Gold Coast could be straight out of Miami! There was lots and lots of supply but the demand kept up for a while – now that the demand has dropped the over-supply has made this the ultimate buyer’s market.
The market will be back though – Port Douglas and the Gold Coast, although at opposite ends of the huge state, share several things in common: excellent weather, tourism and retirees. The weather isn’t likely to change much (lets not do climate change here OK), and the tourists will be back, particularly from the nearby Asian countries who are starting to recover faster than expected from the global financial crises.
The retiree market has always driven Queensland’s property market though – particularly the accessible Gold Coast’s. Australia’s population is aging, and with Australia looking as it will avoid the rest of the world’s recession, it looks like there will still be many from the southern states and New Zealand looking to offer that ultimate Queensland lifestyle – sunshine! If you want a piece of the action I would seriously look at real estate investment in Queensland apartments in 2009. Remember someone else’s mortgage distress can be your opportunity.
Property Investment Peloponnese: Tripolis – One For The Future
For many years, Greece has been a prime destination for Northern Europeans and Americans wanting to live the dream and buy a holiday home in the sun. However, successive Greek governments have instilled measures to deter investors and prevent ‘flipping.’
A capital gains tax wipes out any potential profits from Greek property investments, unless you are prepared to wait for five years. Certainly, around the traditional hotspots in the islands and on the coast, it really is not worth investing in Greek property unless you have an eye on the long term.
Property Investment Peloponnese – Playing the Waiting Game
For those prepared to wait a while, there is the potential to make a little money, if you are prepared to think sideways and explore some of the relatively untapped areas. The Peloponnese is one such area, and there are some untapped areas that are worth exploring.
Before elaborating, I would like to point out that this information is largely based upon the notorious Greek gossip, and Greeks are famous for their exaggeration and gift for putting two and two together to make five. However, I found these revelations to be worth investigating, certainly worthy of giving you a heads-up.
Property Investment Peloponnese - Tripoli could be the next big thing.
The Peloponnesian Oil Hub
Greece is diversifying and looking for new ways to make a living in this fast changing world. One thing that Greeks have learned from the economic crisis is that the traditional staples of Greece, shipping and tourism, are not enough to guarantee a stable and robust economy. These industries leave Greece far too reliant on other countries and, if the UK and US suffer economic difficulties, so does Greece.
In a dangerous and contagious outbreak of foresight, the Greek government decided to utilize the prime strategic location of Greece, astride the crossroads of the Eastern Mediterranean. Whilst the country is a proud member of the European Union, the Greek politicians understand the importance of courting the Russians, and this policy is beginning to bear fruit.
Greece is well on its way to becoming an ‘Energy Hub,’ acting as the last port of call for Asian oil and Russian Gas before these resources are sent into the European Union. Along with Turkey, Greece is profiting from this boom and the economy is benefiting greatly. More pipelines and oil terminals are planned, as well as moves towards expanding container ports to serve the rapidly developing Balkans.
What Does This Have To Do With Property Investments in the Peloponnese?
After the little trip around the scenic route, this has a lot to do with property investments in the Peloponnese. Simply due to location, the peninsula looks set to play a prime role in this move towards investing in energy infrastructure. The talk amongst the local politicians is that the port of Gythio will expand, to accept oil tankers, and the town of Tripoli, in beautiful Arcadia, will become the new capital of the Peloponnese. For investors, this is a potential bombshell and certainly worth investigating.
Tripoli – The New Commuter Belt
As any Brits will be only too aware, the commuter revolution changed the housing market forever in the UK. Villages in the provinces suffered a long and slow decline as young locals migrated to the cities in search of work, leaving many rural villages practically dead. Fast forward a few years, when house prices in London, Manchester and Leeds became prohibitive, and people began to look further and further afield, fuelling a boom in many rural areas and pushing up house prices.
In Greece, mainly due to poor transport networks, this process lagged, but the recent improvements in infrastructure have driven an expansion, as young Athenians begin to look further afield for a home. Tripoli, once a quiet and unassuming town, is now starting to become a decent prospect, lying just a couple of hours from Athens. Home to the new University of the Peloponnese, Tripoli is a growing town.
This is not just conjecture, because there are some big players moving into the area. Local entrepreneur and billionaire, Bakos, is investing heavily in the area, partly out of philanthropy but also because he sees the area as a long-term investment. He oversaw the rise of the local football team from the Greek regional leagues to the Greek premier division, and has built a new stadium, the one that hosted the recent England U-21’s match in Greece. Add to this a mysterious Arab sheikh building a casino and his own private hunting reserve, and things are looking interesting.
Property Investment Peloponnese – Where Do I Sign?
Before you get carried away, this is not a surefire winner or a cash-cow, but it is one area that is worth looking at. Even looking at the bottom line, here on International Property Investment, we are firm believers that average house prices should be no more than 3.5x the average wage. In that respect, houses in and around Tripoli are underpriced. Add to that the potential for expansion in the area and looking inland, away from the coast, could be a sound investment.