Will stock market confusion affect Irish overseas property investments?

Hello and welcome to the Someplace Else Ireland blog.

This week I’m going to write about the stock market turbulence and how it may affect Irish overseas property investments.

It’s been a helter skelter week in the global stock markets and readers of the Someplace Else newsletter could be forgiven for wondering how all of this confusion might affect property purchases they have made or are thinking of making.

To get a clear picture of what’s going on, let’s try and steer clear of the colourful headlines. Recent ones that have caught my eye have been “Brokers bet on basket cases” (The Independent), “Recession fears spark selling bout” (The Independent), “Why Fed hit panic button” (The Sun).

So what has actually happened?
Well, the last year has been awful for the ISEQ, it's down about 30%. Last week and most of this week have also been terrible for global stock markets - billions were wiped off the ISEQ alone as confidence was low and traders were panicking. Then on Tuesday 22nd Jan the Fed Reserve dropped interest rates by 0.75% to 3.5% at an unscheduled policy meeting.

Yesterday, (Thurs 24th January) the European markets had a massive surge with the ISEQ up 5%, the UK FTSE up 4.3%, Germanys DAX up 5.4% and Frances CAC up 4.5% (despite a €5 billion fraud in their second largest bank). Certainly isn’t an industry for the faint hearted and despite yesterdays surge, these markets are all much lower than they were a year ago.

What about Emerging Market stock exchanges?
In case you were wondering, the Emerging market stock markets all enjoyed massive growth in 2007 – China up 100%, Turkey 40%, Indonesia 50%, Brazil 42% and India 45%.

To quote an expert: "The value in emerging markets is significantly greater than in developed markets and the risk of a downside is much, much greater in the U.S. and Europe than in emerging markets," said Jerome Booth, head of research at Ashmore Investment Management, an emerging market specialist firm.

Getting back to Property
Refocusing on the property market, there’s no doubt in my mind that Ireland, Spain and the US are going to have a very rough 2008, and probably an even worse 2009.

The way I see it, we can all sit tight for a couple of years and hope that things will be rosy again in the property markets where we have already made lots of money or we can seek out alternative markets now that aren’t overvalued, oversupplied and in too much debt.

There are an abundance of great investment opportunities outside the traditional developed markets. I’m talking about countries in the opposite situation to the Irish property market – i.e. undervalued, undersupplied and with negligible mortgage debts and fast growing economies.

We sell apartments in emerging markets with double digit capital appreciation and rental yields, we have others with up to 85% local financing, we have exclusive agreements with developers to sell apartments to Irish investors in areas where locals are crying out for modern accommodation.

In Conclusion
I believe we are in a very good position to steer Irish investors away from the mess at home and in the direction of property markets that are going to make them a lot of money, and we cater for all investment budgets and risk profiles.

All comments and feedback welcome.

Kind Regards

Colin Murphy
Director

Someplace Else Ireland Ltd