Foreign property dreams crash: dismal reading from today's Sunday Indo 21-10-07

The SINDO biz section is hardly the bastion of nuanced reporting. This is a tabloid remember in a broad sheet format as once described as its own business editor. Articles that are too refined get dumbed down. That many overseas property martkets have topped out is not a surprise and has been well covered all over the place before the SINDO found it!

But property isn't some global integrated asset and there are plenty of markets that aren't as fully priced out as the ones featured. There also is commercial property etc. The latest fad is Asian property featuring in schemes by Merrion and Merril Lynch and large parts of Europe are in different parts of their cycles to places with artificial markets like Bulgaria where you need to be clinically mad to invest.

Germany and Poland are doing fine. There is no price fall in Lithuania where the residential market is steady if unspectacular. Someone mentioned Cape Verde - prices are up 15% this year and the tourist product is aimed at the mass affluent Europe & US market so less exposed to rising oil costs perhaps.

The benefit of the SINDO coverage is, however to call the end of the irrational exuberance period in overseas residential investment. Louise Mc Bride is in fact a very fine journalist, ex Consumer Choice CAI's magazine where she got her grounding as did Charlie Weston and ex-SBP where she learned her trade under Cliff Taylor an excellent editor. Her challenge now is to deal with Shane Ross who has a preference for hype and attention seeking heavily I think its fair to say. Nick Webb is his son-in-law btw. Ross is a director of several investment and hedge funds, none of them in property which is an asset he seems unenamoured with, classic of many equity fanatics. Louise won't stay too long is my guess.
 
Someone mentioned Cape Verde - prices are up 15% this year and the tourist product is aimed at the mass affluent Europe & US market so less exposed to rising oil costs perhaps.
Be careful where you get your figures from. Unless they are from second-hand sales they don't mean a thing. Developers can easily increase the price of subsequent phases (even if the early phases have not sold out) and it gets clocked as a "rise" of X percent. There is nothing to prevent this happening in Ireland either so bare that in mind when trying to work out the real resale value of your investments.
 
Much has been said about investing in Bulgaria, so just in brief here is my perspective: The times for the individual investors are indeed rather rough now but this is only because their tactics of payment by mortgage and relying on the rent is unreasonable, to say the least, as I have warned before. This is rather a speculation than “true investing.” If you can’t afford to wait long enough, that is, longer than what you’d normally like your waiting time for the asset’s appreciation to be, don’t risk your money.

Still, besides the speculative private “investing” the time has come now in Bulgaria for the larger, commercial projects, and these are up for a number of reasons: growing need for modern infrastructure in the larger cities and towns, EU funding for structural and other initiatives, etc.

Apart from above, which is clearly within the reach of groups of investors and/or funds only, there are two domains where individuals or small private companies can still invest without a risk: property in the largest cities and land. The latter is becoming very attractive for the local as well as foreign construction builders. If you know where and when and how, land is still the best bet for serious investors who can wait and not be tired by witing…

Ivan D.
www.dukaty.com
 
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