Spotting Profitable Trends in 2009

Good morning and welcome to our Blog.


New Attitudes within the Industry
Someplace Else exhibited at an overseas property trade show called OPP Live last week. This was the fourth year I've been to the show and as usual it was very well organized and I met a lot of old friends plus a wide variety of interesting people who work in the industry.

The atmosphere at this years' show was very different to the previous ones though. Previous OPP Live shows were all held in very different economic environments, where profit margins were wide, the public's appetite for overseas property was insatiable, and financing for builders and buyers was very easy to come by.

As most employers reading this will no doubt agree - property companies who take too long to trim unnecessary overheads and refuse to adjust their product offering to suit a changing marketplace will soon find themselves out of business.

Meeting a Changing Markets Needs
We've certainly no intention of making those kinds of mistakes in my organisation, and judging by the recent media interest and the huge response to our Florida Foreclosure services, there is still a huge demand for property that buyers can identify as being a great value medium to long term investment. Some of our readers may also be interested in our Florida property of the week below.

Outside of the USA, Panama remains very popular due to its uniquely international economy, although there is a firm emphasis on purchasing developments that are already under construction.

Berlin, a sluggish market compared to some, with guaranteed long term rental yields that were written off by many as being too small, is now being seriously reconsidered. With many cities experiencing sharp contractions after a decade or more of growth, investors are now more confident regarding the long term value of buying high quality finished property in the capital of Europe's biggest economy at 25-30% of the cost of other major European cities.

Still The Best Asset Class
All in all, I remain convinced that property is by far the best asset class to invest in. It also remains a uniquely fulfilling experience. I just can't bring myself to leave surplus cash in a bank account with meager interest rates and I certainly won't be putting it in our ridiculously volatile stock markets.

But you have to choose carefully
Big profits are definately there for the taking in the property industry but your investments absolutely have to be in the right locations, at the right prices and you must research them thoroughly and examine your personal finances carefully before committing.

These are all fundamental rules to abide by in both booms and recessions. The difference is that people ignoring them will suffer a lot more now than they would have done 5 years ago.

Please feel free to comment and get in touch
As always, myself and my colleagues are always delighted to speak to investors or to hear your feedback and comments regarding these posts.

Warm Regards,

Colin Murphy
Director

Great Opportunities Presented by a Downturn

Hello and welcome to Issue 30 of the Someplace Else Blog

Firstly - I must apologize for the gap between this post and the last - these past two months have been much more hectic than normal.

Secondly - to all those who have gotten in touch with us and bought a wide variety of our Florida Foreclosed properties, many thanks. We have been amazed at the response and would ask that you please bear with us while we work though the backlog of enquiries.

Why Florida?
While Florida is certainly not an emerging market in the traditional sense, we are convinced that current market decisions are presenting some incredible investment opportunities.

The USA has been suffering from the credit crunch for almost 18 months now and yet it is still receiving half of the world's total foreign direct investment. That is an incredible statistic. This unique country has also consistently demonstrated a remarkable ability to reinvent itself and recover from economic slowdowns.

Florida, traditionally one of the strongest and most stable markets, with a diverse economy, fast growing population and year round tourist industry has been particularly hard hit over the past year with many regular families struggling to pay the mortgages on their homes. The average price of a Florida home has fallen between 20-40% and while they may fall a little further; we are very near the bottom of the market. One indication is that for the first time in over a year the amount of available property listed in central Orlando is decreasing rather than increasing.

The reason that foreclosed (i.e. bank owned) properties are such an amazing opportunity is that they are being sold by the banks at 60-70% less than their previous value. Below you will see a description of a 2 bed 2 bathroom property in the Metrowest area for $68,900. The previous sales price was $236,000 and the current appraised value is $137,865. Even if the appraised value does drop another 5% or so you still have an incredible bargain that is cash flow positive from day one (we provide complete turnkey solutions to all listed properties).

I must emphasize that there is a very limited window of opportunity to buy these distressed properties. The best will be snapped up by a wide range of national and international buyers over the next couple of months and the market will simply readjust. It is for cash buyers only (although financing is available further down the line) and is one of the fastest moving micro markets I have experienced.

Weekly Listings
We send out a list of 10 properties every Monday to people who have subscribed over the past few weeks and if you'd like to add yourself to the list please email investments@someplaceelse.ie with "Subscribe to Foreclosed Property" written in the subject heading. If you'd like to speak to myself or one of our consultants please include your phone number and a suitable contact time. You can also click here to see a copy of last week's version.

New Panama Project
Panama is also a fascinating option for would be property investors and in a global slowdown it is confirming our earlier emails that it is one of the world's most robust and diverse economies. One project I have always admired since I first looked at Panama has been Denovo Apartments, which you'll find described below. It has been sold out for quite some time and we have just received notice that six units have come back on the market.

Construction is well under way (they are up to the 14th floor) with an estimated completion of July 2009. The location is terrific and has just about everything an international investor will look for. Myself and my colleagues will be delighted to discuss further with those who are interested in learning more. Bear in mind that this is an extremely well known and respected project and we are certainly not expecting these units to be on the market for very long.

Downturn Opportunities
Just as the major Irish & UK developers sowed the seeds of their fortunes by purchasing land and property at knockdown prices in the 1980s and early 1990s when everybody else was selling, there are now market niches everywhere waiting to be exploited - especially in the US dollar economies.

Warm Regards

Colin Murphy
Director


Warm Regards,

Overseas Property: Telling it like it is

Well, it's certainly been a dramatic couple of weeks. The major governments and bankers have finally starting acting in concert. Let us sincerely hope that the coordinated interest rate cut yesterday combined with government bailouts and capital injections will steady the markets again. However, I think they're going to have to cut interest rates by as much as another point.

Telling it like it is
With many companies, both inside and outside the property industry, keeping their proverbial heads down until the economic skies are clear, I thought I'd do the opposite by telling you a little bit more about how Someplace Else have been doing over the last couple of months, and what our future plans are going to be.

There's nothing particularly special about Someplace Else Ireland and we've no closely guarded secret strategy. However we have always run a tight ship - before, during and after the boom times. We don't have dozens of costly admin and marketing staff on the payroll, we don't have plush offices that cost a small fortune to maintain, we don't hire celebrities to endorse our products, we don't waste money in glossy ego driven adverts in the national press or radio and we don't pay PR companies a fortune to make us feel good about ourselves.

Not doing any of the above means we can spend a lot more time (and money) on website improvements and optimisation, google campaigns, staff training, customer service, newsletter design, targeted emails, research, travelling to new locations, launching diverse new products, packaging them in an investor friendly way, meeting and forming exclusive partnerships with developers, lawyers, tax advisors and mortgage brokers etc. and finally - more research.

Recent Company Performance
Because we do all this and because we have very close relationships with so many investors - the recession and general gloom in the market hasn't caused our revenues to drop at all. In fact, we've sold more properties in more locations in the last three months than we did for the same period last year.

So what are we doing next?

1. Argentina
As you may have noticed last week, we've launched a very innovative vineyard product in Argentina (see main image above), which has two revenue streams and provides buyers with a lifetime supply of high quality and personalised wine - which, by the way, has proven to be an extremely recession proof industry. See detailed description below or download brochure.

2. Berlin
A bit closer to home, I'm very much looking forward to launching our new Berlin product. It's called PP Rubens, it's located in Schoneberg in the west of the city, and it comes with 10 year rental, maintenance, management and modernization guarantees. Prices start at just EUR 87,588. Download Preview.

3. Florida
Florida is another area I've been paying very close attention to lately, and many commentators (including myself) feel that the bottom of the market has almost been reached. We will shortly be launching a consultancy and management service for investors seeking to purchase foreclosed properties.

Properties like these will generate a positive cash flow at a fraction (30 to 40 cents on the dollar) of their previous market value. We've put together a short preview document which can be downloaded here. You'll need to email me personally if you are interested learning more about these opportunities and you'll need to be prepared to pay in cash and to move quickly.

4. Panama
The complete Fortune Plaza brochure is finally ready and can be downloaded here. This is one of Panama's finest hands off investment opportunities. Panama stacks up as an investment destination in so many ways as it has an extremely diverse and business friendly economy, it is a tax haven, and it benefits from strong trade relationships with both developed and emerging economies.

Quick Summary:

- Dos Rosas Vineyard Argentina: Download Brochure
- PP Rubens Berlin: Download Factsheet
- Florida Foreclosure Opportunities: Download Preview
- Fortune Plaza, Panama: Download Brochure

Keeping in touch
As always, myself and my colleagues are available to speak with and answer questions from new and existing clients. Our Dawson Street (Dublin) and Fulham (London) offices are always open for those who'd like to drop by and say hello.

I hope the above has been of some use, and I'll look forward to hearing from you soon.

Warm Regards,

Colin Murphy
Director
Someplace Else Ireland

Safe havens from the credit crunch

Hello and welcome to the Someplace Else Blog

I'd like to start by thanking all those who came to visit our stands at the recent property shows in London and Birmingham. We were absolutely delighted by the quality and quantity of people that can to speak with us about our new vineyard development in Mendoza, Argentina.

Amid all the financial turmoil and panic in the media, our staff were only too happy to speak face to face with people who were browsing the aisles and calmly considering and questioning the facts and figures put in from them by the various companies attending.

Argentina is where our latest project is located, and regular readers of these newsletters will know that we've been heavily involved in this country for two and a half years, investing millions of dollars in a range of resorts. The main reasons why we like Argentina so much, apart from its diversity and natural beauty, are also reasons why it is very extremely well positioned benefit foreign buyers seeking a safe market to invest their capital.

One of the most interesting aspects of Argentina is the fact that the property boom is not fuelled by lending or foreign speculation. It is down to local demand for both primary and secondary residences where purchasers buy with cash. This lack of mortgage debt has meant that the credit crisis has had hardly any affect on Argentina.

In our opinion, until the credit crisis is resolved, banks start lending to each other and the mortgage markets open up again; the safest places to invest are areas where the property market is not linked to or reliant on mortgages or foreign speculative buyers. Argentina meets the above criteria perfectly.

Our new project, called Dos Rosas, is upscale vineyard development, which combines premium wine, a boutique hotel and residential vineyards in a stunning location in Argentina's Mendoza wine region. With a dual income stream and 12 cases of high quality personalised wine every year, this is undoubtedly one of our most innovative and recession proof investments.

Detailed information can be found by reading below and by DOWNLOADING our full pdf brochure.

Looking forward to your thoughts.

Kind Regards

Colin Murphy

Emerging markets are a safe bet in turbulent times

Hello and welcome to the Someplace Else Blog

A topsy turvy week
Goodness me, what a week we’ve had. Stockbrokers and bankers across the western world must be going grey and losing their hair at unprecedented rates. With Wall St having one of its most tumultuous weeks ever, one could be forgiven for thinking we’re in the middle of a perfect storm where everybody will be negatively affected and that a “baton down the hatches” approach would be the best bet all round.

Cui bono - who is benefitting from the credit crunch?
Thankfully the Someplace Else team are a little bit more upbeat than most commentators and doomsayers out there and we try to spot opportunities in every situation. Firstly, let’s bear in mind that a crisis produces winners and well as losers. The people benefiting most from USA, UK and Irish economic downturns seem to be the low cost supermarkets (stealing market share from pricier rivals), sovereign wealth funds (snapping up valuable assets at bargain basement prices) and the super rich (whose wealth is actually increasing quite dramatically, especially the newly wealthy from emerging markets).

Much of the blame for this mess can be pinned on a banking system that permitted risky mortgage lending practices and so it stands to reason that countries that have a low percentage (less than 10%) of mortgage debt as a percentage of their GDP (China, India, Romania, Panama, Brazil, Germany) will suffer nowhere near the after affects that debt heavy (40-50%+) countries like UK, Ireland, USA, France etc.).

What other trends can we spot?
One of the big trends that stands out over the last decade are that world growth is nowhere near as dependent on a strong west as it used to be. Emerging market investors should be particularly pleased to learn that these countries have now gotten so big and powerful that they no longer need a strong United States to grow their economies. Domestic consumption in emerging economies is now rising three times faster than consumption in the developed world. Investment is even better according to HSBC, with capital spending up a massive 17% in emerging markets compared to 1.2% in rich countries.

Additionally - the four biggest emerging economies, which accounted for about 40% of global GDP growth last year, are the least dependent on the USA. Exports to America account for just 8% of China’s GDP, 4% of India’s, 3% of Brazils and 1% of Russia’s. Struggling global bankers should also be particularly grateful that liquid investors throughout Asia and the Middle East are on hand lend them money to help repair their balance sheets.

A safe bet in turbulent times
The point I’m trying to make is that emerging markets are a safe bet in turbulent times. Whatever angle you look at them from, they are in a fundamentally stronger position than the traditional “safe” property markets and will be for quite a few years. Why tie up your hard earned cash in struggling low interest banks, volatile stock markets and falling housing markets with low rental yields when it can be diversified and put to much better use elsewhere?

Someplace Else will be launching a series of very interesting and innovative new developments in over the coming weeks, and we are only too happy to discuss them with you in advance if you’d like to get in touch. There’s also great value to be had in current projects on the books, such as the Buenos Aires and Berlin.

As always, feedback (both good and bad) on this blog or our weekly newsletters is most welcome.

Regards
Colin Murphy

Where is the safest place to invest?

Greetings,

I was in sunny Berlin recently meeting with our local partners and discussing various plans for the future. Their offices have amazing panoramic views of the city, and judging by the number of cranes everywhere, I was struck by Berlin's suitability as the ideal place for a safe and secure property investment in uncertain times.

As discussed in Issue 23, I'm a big believer in hunting for exciting high growth opportunities abroad no matter what the conditions are at home.

Balancing a Portfolio
However, I'd also like to emphasise that it's just as important to create a balanced portfolio, where your money is spread between properties in a diverse range of economies and regions, some of which is spent on short-medium term opportunities (3-7 years) and others on long term opportunities (more than 7 years).

There are also a huge number of people out there whose overseas portfolio solely consists of properties in holiday investment destinations such as Portugal, Spain, Turkey, Morocco, Egypt etc.

In my opinion, (and please feel free to argue if you disagree) this type of portfolio is very unbalanced as it will always have an unreliable rental income and is quite vulnerable to changes in fickle tourist markets.

Capital growth could be strong if you bought in a special location (i.e. without thousands of similar properties next door) and sold at the right time, but to be on the safe side, it should ideally be balanced by something in an urban area, where the legal process is rock solid, where rental income is year round, where locals dominate the rental markets and where the economy (and wages) are strong enough to provide you with a local buyer when you choose to sell.

Where is the safest place to invest?
There is an economy in Europe which dwarfs all others, where 85% of locals rent property providing guaranteed income, and best of all, where high quality property can be bought for even less than the equivalent standard in Romania or Panama and at a mere fraction of the current prices in Ireland, UK, Spain or Portugal.

Of course, I'm talking about Germany, where one bed properties in the capital city with guaranteed income can be purchased for less than €75,000 (financing also available).

Someplace Else are in the process of completely revamping the German Section of our website, and we will soon be making new product announcements. I'm convinced that this is a market all of our clients should very seriously consider investing in over the next couple of months, particularly those who wish to put their earnings into a steady and secure long term investment.

Regards

Colin

Investment Holiday Homes

During the boom years, many of us had the luxury of treating ourselves to an investment holiday home. For me, that term always seemed like a cleverly disguised contradiction, as a property you use for your holidays will rarely, if ever, provide a rental income that covers your mortgage or a sound exit strategy when you've grown tired of using it.

There may be a couple of exceptions, but my view has always been that if you want to make money, you would be better off investing in urban locations, with strong local demand, year round rental income and a clear exit strategy. Use the rental income and profits to rent an amazing holiday home every year - there's no shortage of rental websites advertising empty properties out there.

Our property market is changing incredibly fast at the moment, and we understand that the combination of the global credit crunch and our struggling domestic property markets have changed the way many of our clients approach new investments. In order for us to better tailor our future product offers to your changing needs, please feel free to tell us which factors are most important for you when considering an overseas property purchase.

You'll find a list of these factors by clicking on the link below.
Preview Future Project Launches

Best Regards

Colin Murphy
Director
Someplace Else Ireland

Investor Reactions to a Domestic Slump

Good morning and welcome to the Someplace Else Blog.

Widening Economic Gap
This week, I thought I'd briefly write about the huge and widening directions the UK & Irish economies are moving in compared to the emerging markets myself and my colleagues discuss with clients every day.

The Irish economy, as we have been constantly reminded over the last few months, is heading in a very worrying direction. Unemployment is rising fast and foreign direct investment is falling fast. Public spending is being severely curbed because government tax receipts are rapidly declining. Much of this is down to the rapid deceleration of investment in the domestic residential market, which, as the Irish Times recently pointed out, represented a completely unsustainable 13.3% of our GDP in 2006 (IMF calculates 6.5% as a sustainable rate).

The UK is also in for a rough time. According to the Bank of England, mortgage approvals for home purchases in June fell to 36,000, a mere third of what they were a year ago. The combination of a slump in the housing market, a banking trauma that refuses to end and rising inflation is starting to make life very difficult for those with high debts and low incomes.

Investor Reactions to a Downturn
Experience has taught me that there are many types of investors out there who will react to a local downturn in a variety of ways. Some will be spurred into immediate action and will hunt for opportunities that will protect and grow the assets accumulated during the boom. Others will take a more cautious route and will cancel planned investments and wait for their domestic markets to recover. Others will form a compromise strategy where they will invest a portion of their cash into areas that should perform strongly while keeping the bulk of it in a low interest (but safe) deposit account.

Whichever type you may be, myself and my colleagues are more than happy to discuss both modest (eg Berlin) and ambitious (eg Panama) investment opportunities.

Looking Ahead
Before I sign off, it is perhaps worth noting that domestic consumption in emerging markets is now rising three times faster than developed markets and investment in capital expenditure is rising an incredible 14 times faster.

As the surest residential property investments are usually those with a strong local market where banks have plenty of scope to expand their mortgage books, the people currently investing in our projects in eastern europe and central & south america have every right to be optimistic in the face of tough conditions at home.


Kind Regards

Colin Murphy
www.someplaceelse.ie

What are the best property research sources?

Good morning and welcome to the Someplace Else Blog.

We had a great response to the launch of our first Panama project last week - many thanks to all who got in touch. Panama is just a fantastic investment prospect at the moment, and there is plenty of information at http://www.someplaceelse.ie/ for those who would like to learn more.

We are also in the process of finalising details for a commercial project, a 30 storey office building in the heart of Panama's banking district. Rental yields for these types of properties are about as high as anything I've ever come across, and we've been very lucky to secure a few floors at prelaunch prices for our regular investors. Please feel free to call the office if you would like to discuss further with myself or David Shaw, our Sales Manager.

Research
Focused research, as our regular readers will have heard me say before, is essential for those who want to maximise their savings and borrowings to build and maintain a balanced and profitable property portfolio. With August looming, I thought I'd briefly list my favourite research sources for those who'd like to spend a few hours during the holidays learning about emerging markets.

Starting with the Irish Media - The Sunday Times and The Examiner are the only two national titles publishing dedicated property supplements during the summer months.

The BBC Website is a fantastic source of free information, one of my favourite sections is their Country Profile page. The Economist website is also quite amazing. Particularly useful are their country briefings, city guides & special reports.

I also find the Global Property Guide a useful source of information on the average rental yields, tax regulation and legal fees for dozens of countries. For currency exchange rates, I find www.xe.com/ucc very user friendly. www.ft.com is the homepage of the Financial Times, and is much easier to read than the rather stuffy print version.

Staying closer to home, www.overseascafe.com has an abundance of property information tailored to an Irish audience and I'd highly recommend signing up to it.

www.myoverseasproperty.ie is also quite good.

The Someplace Else Website is a work in progress. Our research centre currently contains five of our previous print newsletters, four buyers guides and several articles in the industry. The Newsletter Archives contains the previous 21 newsletters (this is Issue 22). Our FAQ section is worth a visit, as is the Someplace Else Blog. Each of the country headings on our homepage also contains information on laws & taxes, general overviews, and of course, property listings.

Speaking of property listings, this week we're promoting Bellevue Residences in Romania, Tropical Hill in Panama, and Castle Loft Apartments in Berlin. Details all at http://www.someplaceelse.ie/

Kind Regards

Colin Murphy
Director
Someplace Else Ireland

How to Profit from a Domestic Downturn

Hello and welcome to the Someplace Else Blog.

Despite the uncertain times we currently face in the Irish & UK economies, there are a whole range of emerging markets out there offering exciting investment opportunities to those looking in the right areas.

Our domestic house prices are falling, that is very true, but those of us who were lucky enough to have lived through an economic boom have a very large disposable income compared to the average hard working citizen of an emerging economy.

The Irish are also particularly well placed to spot trends and opportunities in poor but very fast growing economies, and as one of the wealthiest nations in the world in terms of GDP per capita, we still have the ability to build a diverse portfolio in markets at a much earlier phase of the property growth cycle than our own.

No matter what happens to the Irish & UK economies over the next five years, we are in a unique position to capitalize on the huge growth in emerging economies that are, by and large, unaffected by the credit crisis. For example - about 2% of Romania's GDP is mortgage debt. Ireland & the UK? Over 40%.

I firmly believe that focused research aimed at achieving well defined goals and targets will be how savvy investors use current market conditions to their advantage.

Someplace Else has specialized in these high growth markets for the last four years and our doors are always open to those who would like an informal chat with one of our sales consultants. Speaking of which, I'd like to extend a very warm welcome to Genevieve Judson, the newest member of our sales team.

To view a selection of our latest investment opportunities please visit www.someplaceelse.ie.

Kind Regards

Colin Murphy

Launching Panama & Current Economic Woes in Ireland and the UK

Hello and welcome to the Someplace Else Blog. Panama is the big theme of today’s post and the Someplace Else team are all very excited by the release of our first investment project in this wonderful city. It is called Tropical Hills and the details are all below...

Before I begin though, I must offer an apology to our regular readers for the irregular frequency of these emails lately – these posts & newsletters are very much a team effort and are therefore disrupted during the holiday period. I’d also like to officially welcome Nick Beard to the Dublin office, who joins us from Trinity College and will be concentrating her many talents on the marketing and administration side of our business.

Panama – What’s so special?
While it’s no secret that current domestic economic woes have diminished the famous gung ho investment attitude of the Irish & UK buyer, it is worth noting out that there are still many cities in this world moving to a very different rhythm to our local markets. Some of them offer excellent investment returns to those willing to do their homework and buy the right type of property. Panama is one such city, and we’ve sourced some excellent property starting at just €100,000 ($157,000).

It is officially one of the best places to live in Latin America, and is hugely popular with foreign retirees because of the quality of life, dollar economy and status as a tax haven. Additionally, inflation is low, taxation is low, unemployment is low, economic growth is high and the government is stable, democratic and very open to outside investment. What’s not to like about all that!

Side Effects of a Property Boom
Before moving onto the further information on our Panama project (which you’ll in the new Panama section of our website); I’d like to acknowledge the huge change in our national optimism levels these last six months, which seems to have dramatically changed attitudes towards property and the people who sell it.

One of the drawbacks of our prolonged boom was that it gave unscrupulous agents and developers the opportunity to make a lot of what I would call easy money. Life isn’t so easy for these companies nowadays, which I’m quite happy about.

In my view (and it seems to be borne out by innovative colleagues in the industry who are thriving in the current environment), the only companies that will continue to be successful are those that have always protected their clients and advised them to buy only what suits their budget, timescales, risk profiles and income levels.

It’s all about trust
It’s not an easy thing for a property company to gain the trust of its clients, as it involves taking a long term point of view that doesn’t suit (or even occur to) everybody. You need to continuously source very good properties and research them to death, you need to take a modest commission, and you need to work very hard to ensure your clients get rock solid mortgage, tax, legal and aftersales advice.

In a boom you also often have to ignore requests to promote developments in areas which would be easy to sell but which you know won’t work out in the long term. Instead you must sometimes work extremely hard to convince clients that a city they’ve never even heard of will turn out to be a great property investment for them.

Thankfully, most people have heard of Panama, due to the incredible canal that cuts right through it. And in case anybody is interested, about eight of the apartments we’re selling have unobstructed views of it…

As always, all opinions and points of view are welcome in the Someplace Else Blog.

Kind Regards

Colin Murphy

Refocusing after 12 weeks of media mayhem

Hello and welcome to the Someplace Else blog.

It’s certainly been quite a turbulent few weeks since the last post. All was quiet when I went to Greece on holidays in early June - it certainly wasn’t when I returned.

Uncertain Times
The Irish have voted No to Lisbon, and depending on which articles you read, this will either have dire consequences for Europe or it will make very little difference.

It doesn’t stop there though, oh no - Mervin King (Britain’s top banker) thinks the UK faces its most difficult challenges for two decades and the brightest minds in the ESRI (Irelands main economic think tank) have warned us to prepare for recession, job losses and renewed emigration. We probably could have survived any one of the above in isolation, but taken as a whole, well, perhaps we should all just give up investing altogether and spend our evenings in the pub reliving the good old days.

Authorities aren’t helping
The latest quarterly ESRI report was probably the most pessimistic I’ve read in years, and I’ve read most of them. These reports and the headlines they generate can be very misleading - not because they aren’t authoritative and useful sources of economic data (they are), but because the conclusions drawn from this data, which are widely reported in our media and debated in our Dail, seem to change from one extreme to the other within weeks, and nobody in the public sphere seems to notice, care or question why.

Flip flopping
It was a mere six weeks ago that the ESRI looked forward to 3.75% yearly growth predicted in positive view of the economy which was heading toward a bright future due to resilient economic growth over the next decade which will outperform most of our European cousins for years to come due to our “productive and diversified workforce”. Surely, this was some sort of short-term informal report, not to be taken too seriously? Apparently not. It was their Median Term Review for 2008-2015.

If anybody can cast their minds way way back into the misty Ireland of old … in March 2008, they may remember reading ESRI quoted newspaper headlines gravely predicting either an Economy Set to grow at slowest rate for two decades or Growth to Plummet as Economy Slows. That was their Quarterly Economic Commentary, Spring 2008 report. It could have been more accurately called their “Mid March to be dramatically revised in a few weeks and then again in June to cause maximum panic and confusion report”, but it was possibly considered a bit unwieldy by the editing department.

So what is a prospective property investor to do in these new and unpredictable domestic markets?
Our English cousins have had a tough time of it recently, but in the space of 12 short weeks, Irish residents have been told that there will either be (a) two decades of pain to look forward to, (b) a decade of resilient growth with a strong labour market or (c) inflation, unemployment and recession. Take your pick.

Sandwiched in between all that Ireland (and Ireland alone) had to vote Yes or No to the Lisbon treaty which will keep us in the heart of Europe or the edge of Europe, which might involve conscription to the EU Army or cement our neutrality, which will lose or gain our politicians power, and will involve increased or decreased taxation and will persuade more or less foreign workers to come to our shores. Hmm.

It is natural that people will react in their own ways to the above. What we certainly shouldn’t do however is throw our hands in the air and admit that our focus and decision making power has been robbed by this barrage of conflicting information. I doubt anybody can make sense out of it all, but that's not really important from this newsletters point of view as most of the above has absolutely nothing to do with whether or not some of your savings, earnings and borrowings should be set aside to create or extend a property portfolio.

Focusing on what is important
Building a property portfolio, or indeed achieving any difficult but worthy goal, involves focusing on what’s important and shutting out everything else. Have some money that you would have thought about investing? Write down what you would like to achieve with it on a piece of paper. Then look at what options your budget, income stream, attitude to risk and timescales will safely permit you to do. When you’ve narrowed that down to a few options, examine some of the factors that will determine those markets long term success: economic growth, education, infrastructure, employment, availability of finance, interest rates etc. This information is all freely available and with patience and advice it’s really not that difficult to make a sensible decision.

We have a website that may help – it’s called www.someplaceelse.ie .

For those who would like to focus on the above - make sure there aren’t any newspapers or televisions nearby to distract you, and give us a call if you need any help. Maybe you should go to Greece altogether, it’s a bit quieter there.

Kind Regards
Colin Murphy

What really affects the prices of overseas property?

Hello and welcome to the Someplace Else Blog

You may remember that last week I used the example of two very different ESRI reports and their corresponding headline summaries in the national press to illustrate the importance of using a variety of research sources before making a major decision.

So, this week I thought I’d (very) briefly write about some of the factors that really affect the prices of property, in the hope that it may help some of our research minded readers focus their efforts in the right direction.

These following factors are listed in no particular order:

FDI & Economic Growth:
It is very important to examine from the ground up how the people are living and how their lives are improving in a country. Look at overall GDP to determine how much wealth the citizens have now but pay more attention to GDP growth and whether the reasons for this growth are sustainable.

Examine Foreign Direct Investment carefully, as FDI from other countries or multi national corporations can have a profoundly positive effect on a countries economy.

Employment
As more workers mean more potential buyers, investors have always been attracted to countries or regions where there is strong sustainable growth in employment and wages. An investment that has the potential to be resold to a local person is generally more secure than one that is depending on a future foreign buyer.

Availability of Finance
Whether or not financing is available in a country can have a huge impact on the property market. Without financing locals can rarely buy new property, and so the number of buyers (and the demand) will therefore be limited. When mortgages become available however, the property market and prices can accelerate very quickly in a relatively short space of time, as has been previously witnessed in the Baltic States. Also, if you have financed a property purchase, even if it is only a 50% mortgage, the effects of capital growth are doubled.

Interest rates
These rates (set by the ECB in Frankfurt for EU citizens) typically have an inverse relationship with property prices. When interest rates fall, property prices tend to rise as it is cheaper to borrow, when interest rates rise, property prices tend to fall as it is more expensive to borrow and cheaper to save.

Inflation
Setting aside the careless populist rhetoric we often hear on television and newspapers, it’s difficult to explain in a nutshell how inflation affects property prices, but here goes: it goes rises and falls depending on the factors affecting (a) the costs of producers (land prices, taxation, labour, cost of raw materials) and (b) the demand of buyers (interest rates, employment, market sentiment, economic growth, availability of credit)

In addition to the above, there are many other factors such as availability of land, planning regulations, membership of international organisations, infrastructure and government policy which are all worthy of further consideration.

That’s it for me, if anyone has any ideas or issues they would us to address in future blogs, please let us know.

Warm Regards

Colin Murphy
http://www.someplaceelse.ie/

Confusing Headlines in the Press for would be Investors

Hello and welcome to the Someplace Else Blog.

A very pleasant surprise for me last week was a beaming headline from our friends at the Irish Times in the Wednesday edition (14 May). I could scarcely believe it – “3.75% yearly growth predicted in positive view of the economy” ran the headline based on the latest predictions from the ESRI, our highly respected Economic and Social Research Institute (who have a terrific website by the way – www.esri.ie). The article also went onto say that “the economy is heading toward a bright future” and discussed how we will outperform most of our European cousins for years to come due to our resilient economy and productive and diversified workforce.

Last Wednesday The Irish Independent also claimed that the economy was “on the way back” and our colleagues down south in the Examiner were happy to report “resilient economic growth over the next decade”

All in all, a very far cry from the headlines commented on just 8 weeks ago in Issue 7. The two main headlines that week in the Irish Times and Irish Independent were “Economy Set to grow at slowest rate for two decades” and “Growth to Plummet as Economy Slows” respectively.

Those who have been holding back on investing because of the negatively in the press recently can rightly feel a bit confused by the sudden change. However, the reason I’m writing all this has nothing to do with our national newspapers, most of which, including The Irish Times and Irish Independent, are excellent publications. It is more to stress the importance of using a variety of independent research sources before making a major investment decision.

Our own website has a small research centre that may be of use to some, which can be visited by clicking here. It is due for a comprehensive update in the next ten days, so might be worth bookmarking and returning to it from time to time.

Best Regards

Colin Murphy
Director
www.someplaceelse.ie

Is the Credit Crunch doing the industry a favour?

Hello and welcome to the Someplace Else Blog

Last week saw the demise of Inside Track, a large UK based company many readers will be familiar with that specialized in (very) expensive investment seminars. The market has certainly gotten much more discerning in the last two years and most investors are now able to either do their own research or find companies that will point them in the right direction without charging high fees.

Is the credit crunch doing us a favour?
Perhaps the credit crunch is actually doing many of us a favour by narrowing the range of people who want to invest in property and the number of companies who can provide for them. From 2003-2006, when the Irish & UK economies were performing well and the overseas property boom was in full swing with property expos heaving, property supplements bursting with breathless adverts and people signing on the dotted line without a care in the world, it was very easy for property companies to rack up large volumes of sales without doing all that much selling, research or due dilligence.

With many previously gung-ho buyers now nervously scanning newspaper headlines for the latest doom and gloom stories (very easy to find these days), the only property companies that will be able to thrive (and some are definately thriving) will be those who can continuously offer a range of products and services to savvy buyers who are seeking out high performing markets, regardless, or maybe even because of, the prevailing conditions at home. These people also have the experience to know the value of the information being provided to them. Surely this is a good thing for the industry.

Someplace Else Projects During Summer Months
Getting back to emerging markets - Romania seems to be showing no signs of losing its popularity with our investors and with our Bujor development in Northern Bucharest practically sold out, we have been very fortunate to secure some units in another very similar one nearby from the same developer called Lilac Residences, details of which can be found below. The many people who replied to our teaser campaign for our new Ploiesti development (35km north of Bucharest) will hopefully be glad to know that the investment guide is almost ready and should be available to clients next week. It is called Prahova Residences and we feel that it is a great investment with superb payment terms (10/10/5/75)

I've also been quite busy this week in Panama (and am writing this note on my way back across the atlantic). It is simply an amazing country, and we will soon be announcing an exciting new venture with a local company who will be sourcing world class Panamanian developments for Someplace Else investors that will be available nowhere else in Europe. Full details won't be released for a few weeks, but if anyone would like to express an interest in being put on a preferential list, or indeed if anybody would just talk to me about the kinds of projects we will be releasing, then by all means give me a call on 1890 425 425 or me email on colin.murphy@someplaceelse.ie.

New Someplace Else Magazine Coming Soon
Finally, the next issue of the print edition of "Invest Someplace Else" will soon be ready and an email will be sent out shortly giving investors further details. In a nutshell though, it will be a 24 page magazine dedicated to emerging markets and will contain articles on Panama, Romania, Taxes on Overseas Property, Affect of Global Credit Crunch on Emerging Markets, Overseas Mortgages, updates on our own developments in Belize & Argentina ... and much more besides. We will post it out free of charge to anybody that would like to receive it. Simply email orla.doyle@someplaceelse.ie and put "subscribe to magazine" on the subject line and your postal address in the email if you'd like a copy.

That's it from me.

Warm Regards

Colin Murphy
Director
Someplace Else Ireland Ltd

Thanking the Germans for the Irish Property Boom

Hello and welcome to the Someplace Else Blog.

Those of you who read these blogs on a regular basis (many thanks) will probably know that I am quite prone to wax lyrical about the booming property markets of Eastern Europe and South American on a regular basis.

There is one great country which I haven't been paying enough attention to lately though, and it's Germany. Most people with a passing or professional interest in Germany will know the basics by now: huge exporting economy, low property prices, low rental yields and a sophisticated banking system that is nonetheless universally reluctant to lend foreigners more than 60% for an investment mortgage.

We shouldn't complain too much though, if it wasn't for Germanys big and financally cautious population of over 80 million people, then Ireland (and to a lesser extent, the UK) would never have had such a huge property boom during the 1990s and early 2000s. It was low interest rates and the cheap availability of credit above anything else that enabled so many people to speculate and make fortunes on the property markets, which in turn granted ordinary homeowners huge equity in their own properties without really doing anything at all.

As the European Central Bank has one interest rate for the whole eurozone, it is the financial saving and spending habits of the big EU countries that determine what their monetary policy will be. When the world economy was booming and you had a large and very wealthy country like Germany saving lots of money in banks, then other banks had more to lend, interest rates were very low and little countries like Ireland could more or less borrow and spend as much as they wanted without having any significant affect on Europes overall borrowings and savings at all. So let us all please raise a glass and toast the wonderful Mr and Mrs Wadenburg, whose careful savings helped Mr and Mrs O'Connor borrow enough money to purchase two buy to lets in Rathgar, a holiday home in Marbella and piece of land somewhere in Brazil.

In all seriousness though - one of the dangers about so many people making so much money so quickly, is that future property purchases might be made on the basis of a similar quick and easy return. Is this the best way to sustain a profitable portfolio over the long term though? Might it be more sensible to invest part of your money in property markets where the short term outlook is very exciting but the long term outlook is uncertain, and another part in markets where the short term outlook is uncertain and the long term very exciting?

It is easy to cross Germany off your list as property prices are flat and rental yields are an unexciting (but very reliable) 3-5%. Think about it again though, and with a long term 8-10 year view rather than a 3-5 year view and the picture will start to look very different. To but it bluntly - Germany is a rich country with emerging market property prices and over the long term, I have no doubts that prices will go back to where they should be alongside those of other major countries. Is it not amazing that we have this huge and vitally important economy in the heart of the EU and yet a one bed apartment in a posh part of its capital city costs about 25% of an equivalent property in London, Paris or Dublin?

In conclusion, those who would really like to plan their purchases based not on what is hot now or what will be hot in six months time, but rather on what mixture of properties is most likely to provide a steady income stream for your family with the right balance of short, medium and long term capital growth should definately take a closer look at prime properties in the major cities of Germany.

All the best

Colin

Past & Future Holiday Investment Destinations

This week I’m going to address the very difficult task of blending a holiday home and investment property into one.

While most people (myself included unfortunately) simply cannot talk about property anymore without discussing how much profit you might make - let us not forget that people were purchasing holiday homes abroad long before the concept of buying foreign property in order to resell at a profit became an Irish and UK phenomenon.

Brief History of Property Investment
In the 1970s, 80s and early 90s purchasing property abroad was only for wealthy families with the money and knowledge (solid information was much harder to come by in those days) to purchase a dream property. In the mid 1990s, foreign property exhibitions and dedicated overseas property newspaper supplements first began to appear promoting both the holiday and the investment benefits of Spain, Portugal, Florida, Greece & Italy.

In 2003 came the emerging markets, with pioneering research and old fashioned hard graft from the founders of Someplace Else bringing the markets of Montengro, Belize, Latvia, Lithuania & Argentina to the ever expanding groups of overseas property buyers.

1995 – 2005 really was an incredible time and is very fondly remembered by veteran overseas estate agents, developers and investors. Never before have real house prices risen so fast for so long in so many countries. The total value of residential property in developed economies rose by more than $30 trillion between 2002-2007 - an increase equivalent to 100% of those countries' combined GDPs. The surge not only dwarfs any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) and America's stockmarket bubble in the late 1920s (55% of GDP).

Where to next?
Looking at what is happening to property prices in Ireland and what has happened to the once glorious southern coast of Spain, one could be forgiven for thinking that the days of purchasing a holiday property investment are long gone, and that one must venture into deepest South America or Africa to make those kinds of returns in a nice climate again – not so in my opinion.

For those who still yearn for a property investment in a beautiful location that they will actually want to use themselves from time to time, that is easily accessible, that isn’t swarming with white bellys, rough accents, fish & chips shops and where the government actually designs and implements sustainable planning policy that protects a beautiful coastline – then my suggestion is that you go and visit Montenegro as soon as possible.

Montenegro
I spend the bulk of my travelling time in overcast cities, but this week has been different as most of it was spent touring Montengro in the charming company of Sanja Todorovic, the general manager of our local office there. I have simply been bowled over by this tiny countries spectacular beauty (most of the photos in this newsletter were taken this week). Montengro is small but has a very diverse landscape with sandy beaches, majestic mountains, deep canyons, huge lakes and a unique cultural and architectural heritage from Roman, Venetian and Ottoman occupations.

It is one of the fastest growing tourist destinations in the world, with incredibly ambitious plans to develop world-class marinas and ultra luxury hotels in an effort to win back the prestigious reputation it once enjoyed as an enclave for the rich and famous.

It is also one of the few truly beautiful coastlines left in Europe where prime luxury property can still be bought for less than €150,000. More details to be found on www.someplaceelse.ie

Have an enjoyable weekend

Regards

Colin

A Short Note on Financing

This week, I thought I’d write a little more about financing, as I feel strongly that agents and developers should be doing much more to ensure their clients understand how it works and how it will affect their investments.

I can’t emphasise how important it is to research how much finance you are likely to receive before putting down a non-refundable deposit on a property - and you won’t find many estate agents or developers who will write that to you in an email. Someplace Else has relationships with English speaking brokers and/or banks in all the countries we deal with that offer financing to foreigners, and one of our key aims in 2008 is to continue to strengthen these relationships, thereby ensuring that our clients always have quick access the best possible financial advice.

Firstly, the lending criteria for obtaining foreign mortgages is usually quite similar to what you are used to at home. Generally speaking, you must be over 21 years old, be in secure employment, prove that you have an ability to comfortably repay, have a good credit history and aged not greater than 70 at the end of the mortgage term.

We all know that most banks do their utmost to make their lending policies and how they make money out of loans them as complex and arcane as possible. With this in mind I thought some may find be useful to have the following clarified:

Nominal vs Real Interest Rates
The nominal interest rate is merely the interest rate before it is adjusted for inflation. After this adjustment, it is called the real interest rate. This helps a country measure its price and cost competitiveness compared to others.

Fixed vs Variable Interest Rates
Generally speaking, banks based in emerging markets offer variable interest repayment mortgages to locals and foreigners, although they are constantly improving and expanding their product range as they are operating in countries with tiny amounts of personal debt. By variable interest rate I mean that the rate can go up or down and is linked to the central bank controlling the country you are borrowing from. By repayment mortgage I mean that your monthly payments cover both the interest charged and the original amount borrowed.

Mortgages.ie have a very handy calculator for repayment mortgages that allows stress test for an additional 3% if interest rates go up. Click here to find out more.

Loan To Value
I think sometimes people get too focused on LTV. It is merely the percentage of money you want to borrow compared to the cost of the property. Many banks lend a percentage of what their valuation of the property is on completion, not the amount you bought it for offplan. This is great if the price of your property goes up during the construction period, and very bad if it goes down (as some unfortunate people in Dublin are now discovering).

In Conclusion
Financing, or leveraging as it is sometimes called, is and always will be an incredibly efficient way of maximising the return on your investment. As discussed in a previous newsletter most emerging markets are nowhere near as exposed to the global credit crunch as Ireland and UK. The good news for investors is that these foreign banks are expanding access to finance just as our own are making it more difficult. And thank goodness for that.

Kind Regards

Colin.

Lessons from Corporate Spain

Good afternoon all and welcome to the Someplace Else blog.

For the third year in a row, I’m attending a huge trade show in Madrid called SIMA, and I’ve been struck by the positive attitude of the big Spanish developers in the face of a very difficult local market.

On the one hand, they have belatedly realised that the second home / holiday market is completely saturated. They are now refocusing the sale of their new developments to the local first time buyers market, with knowledgeable (and very good looking) salespeople manning some stupendous exhibition stands offering a wide range of sensible incentives and access to finance (unlike the Irish developments mentioned in last weeks note)

And on the other hand, these same Spanish builders are announcing bold and ambitious new developments throughout South America and Eastern Europe, with the biggest announcements being made in Panama, Mexico and Romania.

This all seems to be just the latest example of a quiet revolution in the upper echelons of corporate Spain. Since the return of democracy in 1975 Spanish companies have made some tremendous progress and the country is now home to some truly world-class corporations.

Spain is already home to the biggest bank in Europe (Santander), to five of the top seven European construction groups and to the third biggest telecommunications company in the world (Telefonica). The Inditex Group, which owns Zara among other brands, recently over took GAP as the world’s largest fashion retailer. Metrovacesa, a Spanish property company, bought the HSBC headquarters in Canary Wharf last year for £1.1 billion – Britain’s biggest ever single property deal.

Much of this recent expansion has come from audacious takeovers – Santander bought Abbey National in 2004 for €8 billion, Telefonica bought O2 in 2006 for €26 billion. Equally impressive was Ferrovials highly leveraged $22 billion takeover of BAA, the company that owns Heathrow, Stansted, Gatwick and four other British airports. Nightmare teething problems at Terminal 5 aside, this is an unbelievable acquisition for a family owned company that started out building railroads in Northern Spain 50 years ago.

So it seems that the Spanish conquistador spirit is alive and well in this wonderful country, and your humble correspondent is very happy indeed to discover that these huge corporations are bravely venturing into many of the same markets Someplace Else promotes to our UK and Irish investors.

Troubles facing Irish Developers

Firstly, I was very glad to see a bumper 30-page property supplement in the Irish Times this Thursday. About 18 pages of this supplement contained property adverts, and those of you who work in the industry will know that full and half page adverts in the national press don’t come cheaply.

Upon browsing quickly through such a supplement packed with real estate adverts, you might be forgiven for thinking that Irish developers have suddenly discovered a new found optimism and have been confidently screaming at their marketing staff to secure the best position possible to promote their fabulous development in Leixlip, Celbridge or Mullingar.

Look a bit closer though and you’ll notice something very different between these adverts and the ones of a couple of years ago. In the good old days, the developers used to state a price, insert a nice picture and give you until the following Monday to reserve it. Now they are offering huge discounts. “Now Reduced!” screams one headline “Save €80,000 off your new home!” screams another. The best has to be an advert for a development in Drumcondra. Not only are they offering up to €120,000 off the last remaining units, but they are throwing in free legal advice, a €3000 holiday voucher and a €2000 furniture allowance.

For those of us who are lucky enough to be liquid at the moment, it might be tempting to rush in and take some of these units off the struggling developers hands, but my own opinion is that the worst times are yet to come. We haven’t seen any big Irish developers going bankrupt yet, but we have in Spain and we have in the US and it can be argued that the Irish market is next.

The credit crunch is a major factor and is certainly the main reason why Irish developers are struggling to raise cash, but an equally big one is simple supply and demand. Too many units were built and bought in a very small country for investors seeking tenants to pay a low interest mortgage while their asset appreciates by double digits every year. When mortgage rates started to increase and property prices started to slow, it was far easier for investors to pull out than the dozens of developers who have committed to finishing big residential projects.

Perhaps these big adverts will result in the extra sales so badly needed. Either way, you’d be hard pressed to find an Irish publication (including dedicated property magazines) with regular adverts and editorial for the countries Someplace Else Ireland promotes – Argentina, Belize, Montenegro, Romania and Serbia to name but a few.

Maybe this is because we’re not working hard enough at PR, but the big money was made in Ireland long before the 30 page property supplements arrived, and it seems to be holding just as true in the emerging markets above.

Kind Regards

Colin Murphy
www.someplaceelse.ie

Overseas Property Interest Rates v Rental Yields

Hello and welcome to the Someplace Else Blog.

I’m writing this weeks note from Romania, and with property prices in Ireland, UK, Spain and the US all falling, it’s a relief to spend a few days in a country where the market is booming and locals are full of optimism for the future.

This week I’m going to briefly discuss the relationship between capital appreciation, interest rates and rental yields. Many of those reading this will be experienced investors who won’t learn anything new from this note and who may even disagree with me (the blog is up there if you want to do so publicly), but perhaps others might appreciate a couple of paragraphs cutting through the hype and spelling out the fundamental investment factors in plain English.

Basic factors to consider
At the risk of sounding like a simpleton – if your annual rental income is higher than your annual mortgage repayments, management fees and property taxes, then your property won’t cost you anything to maintain and you can sell it whenever you think it has reached a point where the equity can be better spent elsewhere and you have found a buyer to take it off your hands. Needless to say, you should always independently verify facts and figures on the above given to you by agents and developers.

Rental Income
For some properties annual rental income means income received during the summer holidays from local or foreign tourists, with little or nothing outside peak season and for others, you may have a long-term contract with a tenant paying a fixed monthly amount. The amount of rental income you will receive mainly depends on the market demand versus market supply of your particular property. For an person who feels cash flow is very important, my advice would be to purchase in a city and rent to a local paying all year round where the present and future supply and demand can be more accurately forecast than a seasonal resort.

Mortgage Repayments
The amount of your annual mortgage repayments depends on the value of your loan, the term of the loan and the interest rate. Value of loan varies from bank to bank and country to country. In Romania foreigners can get up to 75% (of the value on completion, not purchase cost), in Bulgaria it is about 70%, in Germany its difficult to get more than 60%, in Montenegro 50%. The term of the loan mostly depends on the purchasers’ age. Banks generally don’t want people over the age of 70 owing them money. If their net income is sufficient, a 35 year old shouldn’t have a problem getting a 30-year mortgage, but a 50 old would not get more than a 15 or 20-year mortgage. Of course, the monthly payments on a 15-year mortgage will be a lot higher than those of an equal 30-year mortgage.

Interest Rates
Interest rates are more complicated and you could fill a 3-bed villa from floor to ceiling with books on how the various types of them function (there are 3 types that affect the euro area). However the interest rates of your overseas mortgage will mostly depend on what their central bank fixes the rates at. Some central banks are worried about a possible recession and will lower interest rates dramatically to encourage consumer spending (like the Federal Reserve), while others are more concerned with inflation and are therefore extremely reluctant to lower interest rates at all (like the European Central Bank).

Bear in mind that a high interest rate will only be a problem for an investor if it is proportionally higher than their rental yield i.e. a 5% mortgage interest rate with a 4% rental yield is worse than a 7% interest rate with an 8% rental yield.

Capital Appreciation
Owning an apartment with a positive cash flow makes it easier for you to save up for a deposit to buy another one, and so present and future rental income needs to be carefully considered. However your long-term focus as an investor should always be capital appreciation. We sell in a very diverse range of emerging markets (you’ll see two very different ones described below) some of which provide great rental income and others which provide little or none. Either way, the first factor we as a company always look for when researching our next project is potential capital appreciation.

Finally…
Sometimes your personal circumstances will mean you can only purchase a product that that generates a steady income (city apartment), while others will have cash savings that they would like to invest in a pure capital growth product (land).

In conclusion, buying a property that suits your specific circumstances isn’t always as simple as estate agents make it out to be. However, we have products that suit investors of all types and we’re always happy to discuss further with those who’d like to learn more.

Kind Regards

Colin Murphy
www.someplaceelse.ie
investments@someplaceelse.ie

Never been a better time to invest outside of Ireland

Good afternoon and welcome to the Someplace Else Blog.

Well, it’s been another manic week for the Someplace Else Dublin office and another depressing week for those reading Irish newspapers. “Economy Set to grow at slowest rate for two decades” is the headline in today’s Irish Times. “Growth to Plummet as Economy Slows” reports the Independent. The Examiner leads with poor Bertie struggling to explain how €50k got into a bank account he forgot to tell us about. You’d think the journalists would at least try to find something to put us in a good mood for Paddy’s weekend.

Never been a better time to invest elsewhere
In fairness to our business writers, they’re a moody bunch, but they’re usually right. Growth is down, inflation is up, property prices are flat or falling, unemployment is rising, the weather is terrible and our Toaiseach is a crook. Let’s look at this another way – there’s never been a better or more appropriate time to get your investment money out of Ireland and into a country with more optimistic growth prospects.

My colleagues and myself could talk to you all day (and we’re happy to do so) regarding countries that are heading in the opposite direction to Ireland, UK, Spain and the US. Emerging markets have now gotten so big and powerful that they no longer need a strong United States to grow their economies. Domestic consumption in emerging economies is now rising three times faster than consumption in the developed world. Investment is even better according to HSBC, with capital spending up a massive 17% in emerging markets compared to 1.2% in rich countries.

How about this one - the four biggest emerging economies, which accounted for about 40% of global GDP growth last year, are the least dependent on the USA. Exports to America account for just 8% of China’s GDP, 4% of India’s, 3% of Brazils and 1% of Russia’s.

Unfortunately you don’t read these kinds of articles in Irish newspapers and you certainly won’t hear about them in the RTE evening news; you’ll have to look at something like The Economist.

Where might you want to look?
So, if any of our readers are interested in investing their money outside Ireland, but not too far away, then you could do a lot worse than spend a few hours this weekend studying Romania. It is easily our most popular destination, and is in my opinion the most exciting market in Europe at the moment. Would you like ten reasons why?

1. A stable financial system and 75% LTV mortgages available for foreigners
2. Realistic rental yields of 7-7.5% - your rental income is higher than mortgage payments from year one.
3. Annual capital appreciation of 20-25% for years to come
4. Little exposure to global credit defaults (2-3% of their GDP is mortgage debt compared to 30-40% in Ireland/UK/US)
5. A booming economy - 7.7% last year
6. Attracting billions of euro of high value jobs - the country is home to most of the major multinational technology companies
7. €31 billion of EU infrastructural development funds in next 5 years
8. 4.6% unemployment (compared to 17-19% in Poland)
9. Huge gap between the supply and demand of new residential and commercial property
10. A stable and ambitious government who realise their country is exhibiting all the signs of a tiger economy.

What can countries do if the developed economies continue to slow?
If the worst happens, Someplace Else investors may be comforted by the fact that most emerging market economies now have large current account surpluses and large foreign reserves, meaning that for the first time ever, developing markets can make full use of monetary and fiscal policy to cushion their economies if the developed countries economies continue to slow.

Unfortunately for Mr. Cowen, our Finance Minister who is in charge of our large current account deficit, our tiny foreign reserves and who has little or no control over our monetary and fiscal policy, no such get out clause exists. Who can blame the poor man for heading off to Kuala Lumpur for the weekend; he’d be too depressed by the headlines if he stuck around.

Enjoy the bank holiday folks.

Colin Murphy

Property Exhibitions and Property Hotspots

Hello and welcome to the Someplace Else Blog.

This week I'm going to talk a little bit about property exhibitions and how property hotspots can come and go so quickly.

I’ve attended at least 10 exhibitions per year for the last 5 years (I know, I should get out more) and I’m constantly surprised at how quickly a country can become a hotspot and fade away again. In the early days of property expos, at least 70% of all exhibition stands were Spanish companies, now it’s closer to 10 or 15%. Even though France has always been the 1st or 2nd most popular destination for UK & Irish buyers, it has been very poorly represented in the main shows, possibly because there are 1000s of tiny companies selling properties who only have the budgets to attend France only shows, if any.

I remember when Someplace Else first promoted Brazil in May 2005 in Earls Court, London – most people thought Brazil was too far away. The following September we had visitors queuing up at the stand to speak to us about it. Or take Bulgaria - there was an explosion of interest in 2005, which seems to have peaked about 8 months ago. Now interest in the coastal resorts has dropped off dramatically and companies are struggling to diversify in order to survive. How about the tiny group of islands off the coast of Senegal which is difficult to get to, is poor in natural resources and prone to drought came that out of nowhere to storm up the emerging market charts in 2007. It is called Cape Verde. Will it still be a hotspot in 2009? Time will tell.

Panama is another interesting one. Visitor statistics from the Sunday Business Post Expo in September 2007 in the RDS showed that it was the 32nd most popular country out of a list of 36. In the February 2008 show in the same venue with the same list, it was 5th most popular. What an unbelievable turnaround. Someplace Else Ireland was very pleasantly surprised indeed, as we’re about to launch a range of commercial and residential investments there. If you’d like to be in the pre-launch client list, please let us know asap.

Thankfully, the biggest change I’ve noticed over the years is the ever-increasing knowledge and persistence of the visitors attending these shows. In the “good old days” agents and developers could take reservations on the spot from people intoxicated by the thought of a dream holiday home investment just a stones through from the beach/golf course/new airport. Nowadays exhibitors are bombarded with questions like “What is the capital gains tax?” “What are the GDP and employment figures?” “Does this country have a dual taxation agreement with Ireland” “How does the financing work and which banks are providing it?” “What is the track record of the developer?” “What are the closing costs?” etc etc.

All of which is absolutely fine by me and by other agents and developers who have been supplying clients with this information all along and who encourage them to do their own research before committing to a purchase. Those still working in the industry who can’t answer these types or questions or who couldn’t be bothered to find out won’t be around for much longer.

In conclusion, there’s no doubt in my mind that the opportunities for investing in emerging markets have never been better for those prepared to do their research.

Hope you enjoy the rest of the newsletter, and please keep in touch.

Kind Regards
Colin.

Latin American Investment - 2008

Hello and welcome to the Someplace Else Ireland blog.

If any of our readers are thinking about attending this weekends Sunday Busines Post Expo in the RDS, we’d be absolutely delighted to meet with you. More details on opening times, our stand location and my emerging market seminars are below.

But back to business – last week some of you might remember that I spoke about the much stricter lending conditions Irish and UK property buyers are facing at home and how lending conditions in countries like Romania with much lower mortgage debts and booming economies are the complete opposite.

There is another category of countries I’d recommend investors study closely – those who don’t yet offer reasonable mortgage products to locals or foreigners but could be doing so in the very near future. If you can locate a market with a fast growing ecomony, low property ownership, relatively high but falling interest rates and a government that implements sensible fiscal policies then it is probably only a matter of time before affordable financing become available.

Can anybody remember what happened in the Baltics 4-5 years ago? Interest rates in the region fell from 12% to 4% enabling banks to offer mortgage products to hundreds of thousands of people who previously would never have been able to afford to buy a property with savings alone. The supply of new property more or less stayed the same while demand shot up dramatically. Result? Property prices increasing 30-40% per year. Someplace Else investors made a fortune because we were the first into the market.

Take a closer look at the much bigger and more powerful Brazil – banks don’t yet offer financing to foreigners but an economic boom and easier credit terms for locals have caused a “consumption frenzy” as millions of Brazilians qualify for loans for the first time. The people that are now taking out loans to buy new cars will eventually take them out to buy new houses.

Or take Argentina – ultra modern tower blocks are springing up all over Buenos Aires and the vast majority of them are snapped up by well heeled locals buying with cash. Think about that for a moment – there is a property boom in Argentina being driven not by overseas investors but by Argentineans buying with cash. When lower interest mortgages become available to Argentinean professionals who don’t have $150,000 in cash lying around, property prices will absolutely soar.

What I’m writing here will be nothing new to adventurous Irish investors, in the last three months alone I’ve met Irish people who own hundreds of city centre apartments and thousands of acres of land. I also spoke to a gentleman last week who is planning to buy 100,000 hectares in Bolivia.

Want to learn more about €60,000 apartments and land with planning permission for $11 per square metre? Just give us a call - 1890 425 425.

Best Regards

Colin Murphy
Director
Someplace Else Ireland Ltd

Lending conditions are tight in Ireland, but what about emerging markets?

If any readers of the Someplace Else Ireland Newsletter are fans of Little Britain, they might remember a very funny sketch where a bank manager refuses to give a loan to a customer because “the computer says no”. That seems to be very close to reality these days, with lending conditions both here and in the UK the tightest they’ve been for almost a decade.

It feels like only yesterday that banks were falling over themselves to offer us financing. Young couples in their early twenties with relatively low salaries had no problems getting 90-100% mortgages on properties that should have been way out of their league.

Nowadays, it’s the exact opposite – I recently had a client on the phone with a mutimillion euro portfolio who told me he was refused a €40,000 topup on his mortgage – “not right now” was what they told him, but it may as well have been “the computer says no”.

It seems like the Irish banks are telling us to come back another time when we’re considered less risky - but why on earth should we do that?

Another option is to forget about Irish and UK banks and approach their global competitors that offer financing for property in countries that are undersupplied, underpriced, with very low mortgage debt and who are more than happy to lend to foreigners that meet their (very reasonable) lending criteria.

Romania falls very firmly into this category (75% LTV 30 years, 6-7%), as does Bulgaria (75% LTV 25 years, 6-8%), Germany (60-70% LTV 25 years, 5-7%) and many more.

There’s a lot of negativity out there at the moment, and it’s tempting to shrug our shoulders and wait until things get better in Ireland, but in my opinion that won’t be for a long time. In the meantime however, myself and my colleagues will continue sourcing exciting property opportunities and building relationships with banks in countries that have much better investment potential.

If anyone is interested in learning more, please give us a call, we’d be delighted to hear from you.

Kind Regards
Colin Murphy

Irish Tax Implications of Foreign Property Ownership

Hello and welcome to the Someplace Else blog.

This week I’m going to briefly address a hugely important subject that seems to be widely misunderstood and misinterpreted by the overseas property industry – the tax implications of foreign property ownership.

Although I’m going to provide various links for further information, I’d like to limit this article to two issues solely from an Irish residents tax perspective.

Paying tax on rental income earned from an overseas property, and
Paying capital gains tax on the profits from the sale of an overseas property.

1. Paying Tax on Rental Income
In a nutshell, if you receive rental income from a foreign property, you will have to pay tax on the net profit to the Irish authorities on or before 31st October of each tax year. It doesn’t matter whether you bring the money into Ireland or leave it in a foreign bank account. For a detailed guide to taxation on rental income, please click here.

If you are already paying income tax in the country where your property is being rented, you are still liable to pay income tax in Ireland, although you will be able to reduce your tax liability to take into account some or all of the income tax already being paid abroad. The actual amount of this reduction mostly depends on whether or not Ireland has a double taxation agreement with the country where your property is. Click here for a list of these countries.

For a detailed example of foreign tax liability in a country with versus a country without a double taxation agreement with Ireland, please view page 14 of this document.

2. Paying capital gains tax on a foreign property
A simple rule of thumb for an Irish resident is as follows: if you sell a foreign property for a profit, you are subject to Irish capital gains tax within that tax year. The standard rate is 20% and it doesn’t matter whether you bring the money into Ireland or leave it in a foreign bank account. For a detailed guide to capital gains tax, please click here.

If you own your foreign property through a foreign company, it is more complicated, but generally speaking, you will still be liable to pay Irish capital gains tax on the disposal of your share in this company.

If you buy a property offplan and sell (flip) it on before completion, any increase in value is still liable to Irish capital gains tax.

As per the income tax paragraph above - if you have already paid capital gains tax (or equivalent) in the country where your property is based, as an Irish resident, you are still liable to pay capital gains tax in Ireland. However will be able to reduce your tax liability to take into account some or all of the capital gains tax already paid abroad. The actual amount of this reduction mostly depends on whether or not Ireland has a double taxation agreement with the country where your property is. Click here for a list of these countries.

For a detailed example of capital gains tax liability in a country with versus a country without a double taxation agreement with Ireland, please view page 18 of this document.

3. Conclusion
That’s it. I hope some of you found this useful. Nobody likes thinking about or studying taxation, but if your aim is to make lots of money on the overseas property markets, I’m afraid it’s something you are going to have to spend time on.

For information on all of our projects, including a new project in Bolivia, please view our website.


Kind Regards

Colin Murphy.



Disclaimer: I would like to state that I am not a qualified tax advisor and that this short article is merely my interpretation of information freely available from the Irish Tax authorities. Responsibility cannot be accepted for any losses suffered as a consequence of relying on the information contained in this article.