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US Housing Market Showing Signs of Recovery

2009-02-08T13:03:00.002Z

Good afternoon and welcome

At the end of a very harsh week, both in terms of snowfall and political fallouts, it is very easy to forget how flexible and adaptable the US economy is compared to our own. When I was in Florida a couple of weeks ago, I was immediately struck by the no nonsense approach individuals, banks and companies were taking in response to their property crisis. These were clearly people who had identified their problems and accepted the severity of the solutions needed to solve them.

Let me illustrate by way of examples I found on the ground:

- Property prices are considered overvalued? Keep reducing them weekly until people start buying. Those who reduce quickest will sell quickest.

- A huge property developer is struggling to sell the remaining 20% of a project? Reduce the prices by 40%, offer financing, pay the taxes for a year and offer free furniture.
- An investor defaults on a mortgage? Foreclose the property and sell it at a 55% discount. If that doesn't work, try 75%. It sounds brutal, and it is, but it looks like it is working.

Consider the following figures just released by the Orlando Regional Realtors Association:

1. After more than a year of monthly falls, December 2008 was the 4th month in a row that sales volumes increased, with January likely to be the 5th month.

2. There was 21% more properties sold in December 2008 than December 2007 and the average time a property spent on the market before being sold also fell in December 08.

3. The median price of a property sold in Orlando in December 08 was $169,900. This is 2.3% higher than the median price in November. Has the bottom of the market been reached?

4. The median price of the foreclosed properties sold to Someplace Else Investors to date is $70,300 - over 60% lower than the average price of all Orlando properties being sold. This very clearly demonstrates the value of the investments we are sourcing (which are all located in affluent neighbourhoods).

Because of the drastic measures taken to attract new buyers, it is starting to look like supply is finally starting to decrease again. This is a market that deserves to be taken very seriously. Once you've done your homework and purchased in the right areas, it is becoming increasingly clear that Orlando's economic strength will deliver both stable rental income and capital appreciation for you.

A Landlords Point if View

Let's take another look at this from a landlords point of view - even though prices have taken an absolute beating over the last 18 months, rental rates have remained remarkably stable. Why is this? The answer is simple: people need to live somewhere. Orlando's population continues to increase (it is the 2nd fastest growing city in the whole country), and as the numbers of foreclosures increased, mortgage lending standards tightened, forcing sales volumes down.

Regular people just can't get a mortgage right now. Most young professionals have to choose between living with their parents and renting a nice property.

How can Someplace Else help me make a profit from this?

We have a local team of professional and licensed experts on the ground in Orlando, who continuously research and carry out due diligence on well regarded and affluent local neighbourhoods with strong local amenities. We only list properties which have a high rental demand and are offered in excellent condition.

Absolutely everything we sell in conjunction with our local partners is 100% turnkey.

We source properties
We organise viewing trips (Aer Lingus have a great sale at the moment),
We process paperwork
We open bank accounts
We apply for non resident tax numbers
We find tenants
We offer rental guarantees
We file annual tax returns.

If this is something you want to get involved in, please download and read our brochure and have a look below at the properties available as of today.

Kind Regards

Colin Murphy

An attempt to explain a Recession Simply & Clearly

2009-02-08T12:59:00.003Z

Good afternoon everybody

Every ten blogs or so, I feel compelled to write a longer and more general note describing economic shifts and events (as I see them) rather than my usual focus on property and property markets.

However, please do feel free to skip straight to the property investment information by clicking on the links to your right or scrolling down to the bottom of this email.

Making sense of it all
Like many of our readers and clients, I'm the type of person who tunes in regularly to radio chat shows, current affairs programs and newspaper reports on how the global turbulence is affecting our house prices, our labour markets, our stock markets and our changing consumption habits. There are lots of commentators out there who seem very qualified and sound like they know what they're talking about when discussing concepts like recapitalisation, nationalisation, liquidity ratios, deflationary pressures, credit ratings etc. and yet, when I've finished listening to them, I've usually forgotten what the question they were supposed to be answering was. Sound familiar?

With that in mind, and throwing caution to the wind, I'm going to pose a few questions I think a lot of people would like answered, and I'll try and do as quickly and clearly as possible. Please bear in mind that all of these issues deserve much more comprehensive answers than the size of this newsletter or the limits of my ability permit.

1. How did the subprime mortgage crisis in the USA affect property prices in Ireland & Britain?

2. Why are large international banking stocks trading at 30-60c per share when they were €20-€30 per share 18 months ago?

3. Why have banks moved so rapidly from loose lending criteria to excessively strict lending criteria?

4. Why is unemployment rising so quickly and why are our economies slowly so rapidly?

5. How can a person safely invest in a property market without falling victim to another property crash in 2010 or 2011?

How did the subprime mortgage crisis in the USA affect property prices in Ireland & Britain?

The subprime market, i.e. the practise of offering high interest mortgages to people with a high risk of missing future payments, was just the most extreme example of a mind boggling variety of mortgage products. It was viewed to be of low risk overall because it was assumed the value of the properties they were secured against would always continue to rise and could be resold if the client defaulted on his loan.

While there was a time when mortgage lenders like AIB, Bank of Ireland, Barclays & RBS etc. could only source funds from their local markets and would simply offer a multiple of the deposits received from savers to borrowers who wished to take out a loan, this has not been the case for many years.

Nowadays, banks based in net borrowing economies (like the USA) receive vast sums of money from banks in net saving economies (like China). These banks then repackage this money in horrendously complicated ways and give other international banks operating in borrowing economies (like Ireland & the UK) access to it.

If the banks who lent to people with a high default risk operated in the old fashioned way and were not so interconnected with the global economy, their boardroom and their shareholders would be duly punished when these loans were not repaid and we would all move on.

However, this was not the case as institutions everywhere had products linked to these subprime mortgages. Gradually (from August-December 2007), it was realised that an unknown but potentially catastrophic proportion of the money lent to people and institutions all over the world would never be repaid.

During 2008, when Irish & British banks had much more limited access to global funds, mortgage lending duly slowed, reducing the amount of people who could afford to purchase a home, thus reducing the demand for housing. If a market suddenly realises that there is a large and impractical gap between supply and demand of any product, prices will fall dramatically, and they certainly have this time.

Why are large international banking stocks trading at 30-60c per share when they were €20-€30 per share 18 months ago?

At the moment, large and diverse Irish and British banks are being valued by stock markets at about one years profits, which is astounding. These low share prices have more to do with the markets perception of a banks ability to raise new capital than any major faults in their business models. If a bank cannot borrow cheaply from other banks or raise money from wealthy individuals and institutions, then it cannot function properly. This is why governments are stepping in to provide funding to the banks so they in turn can pump it into the economy in ways only a bank can do (in the forms of mortgages, car loans, business loans, overdrafts etc.).

Major problems will arise and people will start dumping shares when banks do not pass this money onto customers either because it has so much debt already and/or governments become very dangerously exposed to these enormous debts by providing continued support without the markets help.

Why have banks moved so rapidly from loose lending criteria to excessively strict lending criteria?

Banks need to abide by very strict laws which only allow them to lend money as a proportion of the cash they have access to. As a rule of thumb, if a bank has €10 million in liquid assets, it can lend €100 million to people in the form of car loans & mortgages etc. If a fictional banks' cash dipped to €7 million towards the end of the business day, and they had already lent €100 million to their customers, they would need to borrow €3 million from somewhere to remain solvent. They might borrow this €3 million for a night, a month or three months, but the interest rates for doing so were far lower than the interest rates they charged the customers they passed it onto.

When banks realised that many of the loans they were giving were worth less than they thought because of falling asset values, they needed to hold onto more cash to preserve this 10% ratio. This in turn meant they charged higher interest rates to other banks who wanted to borrow, which created a vicious circle dramatically reducing everybodies ability to lend money to their regular customers.

Why is unemployment rising so quickly and why are our economies slowly so rapidly?

If businesses (large and small) have less access to the loans they need to expand and the overdrafts they need to meet day to day expenses, either their business models will no longer be viable and they will shut down, or they will reduce their overheads dramatically and continue as a smaller entity.

If the average man or woman on the street is fearful of their job and/or realises they no longer have access to the overdrafts & credit card facilities they previously took for granted, they will spend less money and purchase less goods and services.

If companies are getting smaller and people are spending less, an economy will slow and GDP growth will contract.

How can a person safely invest in a property market without falling victim to another property crash in 2010 or 2011?

Firstly, thank you to those who have gotten this far though our newsletter. Secondly, and harsh as it may sound, there are several ways those who are still liquid can profitably take advantage of a global downturn which is causing much suffering to others.

One of these ways, which Someplace Else Ireland identified about eight months ago and launched as a comprehensive service about three months ago, is to purchase highly discounted and undervalued properties from distressed sellers. To maximise the return of these types of properties, they must be purchased in wealthy, democratic economies, with a history of renewal and recovery from recessions, and in fundamentally sound cities and neighbourhoods where locals rent long term and have the ability to purchase and borrow against similar properties.

Regular readers will know of course, that I am referring to Florida. For the record, let me state that our focus is not on vacation homes. It is on long term lets to locals (only a small percentage of which work in the tourist industry). These properties are much more tax efficient, provide a much higher net rental return per square foot and are available at a higher discount than other property types.

Best Regards

Colin Murphy

Florida - Safe and Exciting Investment Option for 2009

2009-02-08T12:56:00.002Z

Good afternoon all,

I am very happy to report that 2008 was a profitable year for Someplace Else Ireland with turnover increasing significantly from previous years and for that we must thank all our loyal clients very sincerely.

Thoughts for the year ahead
While we pride ourselves on being more nimble and better able to spot trends than many of our competitors, 2009 is probably the first year for over a decade where all types of businesses will be forced to change their strategies and cost bases dramatically to survive (and hopefully thrive) this year. In terms of my thoughts for the year ahead, well, as I indicated in Issue 32, I don't think we will see much enthusiasm for offplan property at all in 2009, which will cause heartache for many Irish developers, estate agencies and investors.

Unfortunately, you cannot be certain anymore that financing will be available for properties on completion and they may not increase in value either during the construction stage. This is especially true if there is an oversupply in the area where you purchased and a high percentage of buy to let investors with short term exit strategies (the South of Spain and the Black Sea coast of Bulgaria are two stand out examples of the above).

Safer options
The truth, as I can see it, is that the economic crisis of the past six months has presented better and safer alternatives to placing a 20-30% deposit on a property that is supposed to increase in value during a 2-4 year construction period. Our focus in 2009 is very much going to be on promoting highly discounted, cash positive and finished properties in areas that should recover quickly from the global downturn.

If you'd like to view examples of these kinds of properties, please call us or visit our website to see some excellent properties in Central Orlando, Florida. Florida might seem a strange recommendation from an emerging market investment property specialist, but it is by far the most exciting place for cash buyers to invest at the moment and the time to take advantage of the highly discounted bank owned properties is now. In addition to this week's hot properties illustrated below we have a very wide range of information available to view and download on our website, including investment slide shows, podcasts, area descriptions, tax & legal information and much more.

Florida - Low prices, low taxes, high rental yields
Apart from having the comfort of investing in an area that has been offering foreign property investors security and legal protection for decades, there is no stamp duty or state tax in Florida and both income tax and capital gains tax can lowered to trivial amounts due to the sheer amount of allowable deductions available.

Someplace Else Investors are purchasing property at less than 30% of their previous sales prices, which ensures a high net rental yield. These properties are also much easier to rent as tenants prefer and actively seek properties owned by cash buyers. They do this because it minimises their chances of being forced to leave again if their landlord misses mortgage repayments and the bank forecloses. Accurate Sales Prices & Rental IncomeAs previous sales prices are on public record for every property in Florida and as the current market value estimates we provide are sourced from the Orlando Appraisers office, investors can easily calculate the huge value in the low purchase prices of the bank owned properties we carefully select.

While there are often large differences between a property agents optimistic rental income estimates and the reality on the ground, investors in Florida can verify that the gross and net income figures we quote are extremely accurate. Firstly, there is a monthly publication called Apartments for Rent that lists units for rent across Metro Orlando with guide prices. Secondly, our partner management company has many years experience of renting properties in the micro areas we focus on, and thirdly, there are many other rental companies offering units to rent across metro Orlando which can be quickly compared against our quoted figures.

Conclusion
In short, Someplace Else does a lot of work behind the scenes to provide a completely hands off purchase process for this unique and very time sensitive investment product. The best properties are selected daily, the legal paperwork is processed efficiently, tenants are in place within weeks of closure, accountants are in place to take care of tax affairs and secure online bank accounts are quickly opened.

There's lots of further information on our website. As always, my colleagues and I look forward to hearing from you soon.

Regards

Colin Murphy

Spotting Profitable Trends in 2009

2008-12-06T19:17:00.001Z

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

2008-12-06T19:10:00.001Z

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

2008-10-10T09:54:00.004+01:00

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

2008-10-10T09:51:00.001+01:00

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

2008-09-18T09:43:00.003+01:00

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?

2008-09-17T11:14:00.002+01:00

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

2008-09-17T11:11:00.002+01:00

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

2008-08-11T08:32:00.002+01:00

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?

2008-07-30T11:53:00.007+01:00

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

2008-07-27T22:36:00.002+01:00

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

2008-07-11T18:18:00.004+01:00

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

2008-06-28T18:20:00.002+01:00

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?

2008-05-28T08:12:00.003+01:00

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

2008-05-21T12:03:00.002+01:00

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?

2008-05-12T08:11:00.005+01:00

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

2008-05-08T00:47:00.002+01:00

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

2008-04-25T16:18:00.002+01:00

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

2008-04-25T16:16:00.002+01:00

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

2008-04-11T17:48:00.002+01:00

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

2008-04-04T15:09:00.001+01:00

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

2008-03-30T15:37:00.003+01:00

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

2008-03-14T16:25:00.004Z

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?

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

2008-03-07T14:49:00.004Z

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

2008-02-14T16:07:00.004Z

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?

2008-02-08T08:59:00.000Z

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

2008-02-04T12:12:00.000Z

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.

Will stock market confusion affect Irish overseas property investments?

2008-01-25T08:36:00.000Z

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

Short note on the Berlin Property Market

2008-01-22T18:48:00.001Z

Hello and welcome to the Someplace Else Ireland blog.

As most of our readers will know, property prices are extremely low in Germany when compared to those of other European countries. Apartments in major cities can be bought from as little as €1,200-€1,700 per square metre. Why is this the case? If we cast our investment minds back to the Germany of 1980-1990, we might remember that it was one the best performing economies in the world with a very mature property market with comparatively high prices. In the aftermath of reunification however, Germany suffered years of economic decline and property price deflation. Today’s property prices are more or less the same as they were in 1997 and most experts will freely admit that they can’t predict exactly when prices will start to rise again.

Property can still be bought in the capital city of Berlin at emerging market prices, but Germany is no emerging market. It’s the third biggest economy in the world and the world’s biggest exporter. Most of those involved in the German property market, including Someplace Else Ireland, will predict that if the economy continues it’s long awaited revival under Angela Merkel, then long and sustainable property price increases won’t be far behind.

Those looking to make money and get out quickly won’t want to look at Germany, as it is a long term investment – we recommend 10 years. However, if any of our readers are happy to wait this long before selling, and are happy to take advantage of the local financing and exceptionally strong rental market available they may find this market to be one of the most hassle free and solid property investments in the world.

Over the long term, it is the capital cities that are most likely to provide the safest and most reliable return on investment, and it is for this reason that Someplace Else Ireland have put a number of guaranteed rent, maintenance and management schemes together to assist our clients in getting on the Berlin property ladder.

Consider our pros and cons of the German market:

Pros

- GDP Growth by 2.8% is the highest since 2000 (better than France or Italy)
- Shortage of skilled workers and low wage growth point to a sharp increase in migration to the city
- Growing housing demand in the right locations
- Hugely undervalued Capital city - and as the relatively new administrative centre of Germany matures we expect to see huge growth in housing demand
- Germany is still the 3rd largest economy in the world
- Stable inflation at 1.6%
- Declining unemployment as new labour laws make Germany more competitive on the world stage
- Government is cutting federal corporation tax from 25% to 15% from January 2008

Cons

- Tenancy laws and price regulation still favour the rental market.
- Foreign mortgages of just 60% are less favourable than other emerging markets
- Moderate (but stable) rental yields
- More economic improvements needed, and a large coalition government makes it difficult to initiate important legal, tax and employment reforms

If you'd like to learn more about Germany, please feel free to email me or visit our property listings.

Kind Regards

Colin Murphy
Director
Someplace Else Ireland

Why Belize is a solid investment bet

2008-01-22T18:16:00.000Z

Hello and welcome to the Someplace Else blog.

Someplace Else has been selling in Belize since 2004 and our resorts and offplan developments have been hugely popular with clients, with the Belize Reserve easily being our most popular project to date. The purpose of this blog entry to remind Irish clients why we feel Belize still has enormous untapped investment potential.

Belize, formerly known as British Honduras, was the UK's last colony on the American mainland, gaining independence in 1981. Nestled between Mexico and Guatemala on the Caribbean coast, it is an adventurer's paradise and as far as Europeans are concerned, it is possibly Central America’s best-kept secret.

The coastline comprises many salt and freshwater lagoons, palm-fringed white sandy beaches and idyllic small islands, all surrounded and immersed in the crystal clear waters of the Caribbean. Rare and exotic species abound in Belize's fertile ecosystems; birds, mammals, fish - they all thrive in this pristine environment. And they will continue to thrive, as almost 42% of Belize's land is under protected status. Among some of these guarded treasures is the world’s only jaguar reserve (Cockscomb Basin Wildlife Sanctuary), the Hol Chan Marine Reserve, the Community Baboon Sanctuary and dozens of ancient Maya sites.

The sub-tropical climate in Belize is like a doctor's prescription: lots of sunshine and fresh air - no smog and no stress. The average annual temperature is 26° C. It is a democratic, stable, English speaking country, with a small population of 291,800, a booming tourist industry, good standard of heath care and a legal system based on British common law. Foreign tourism is booming (25% increase in just four years) and Belize is receiving huge interest from both foreign and local investors, with the real estate market rocketing over the past 12 to 18 months and annual capital appreciation upwards of 20% per year.

If you'd like to learn more about Belize, please feel free to email me or visit our website.

Kind Regards

Colin Murphy
Director
Someplace Else Ireland Ltd

Building an Investment Property Portfolio

2008-01-21T17:54:00.000Z

Hello and welcome to the Someplace Else Ireland Blog.

This article discusses property portfolios.

A portfolio enables you to:
- Maximise profits
- Minimise risk & increase potential
- Generate cash-flow and income

The aim of putting together a property portfolio is to make your money work the hardest it possibly can for you, in order to maximise the return on your investment. Why buy one property for €75,000 cash when you can buy several with exactly the same amount of money by obtaining hassle free financing, where rental income covers all costs, and the effects of capital growth are multiplied?

Two of the main reasons for investing in property in the emerging markets are low prices and high capital growth potential. The fact that financing is becoming more readily available means that your money can go much further. Whether you are looking to invest €35,000 or €8 million, we usually recommend spreading your investment across a portfolio of properties in different countries. Having a portfolio of properties also means that you can be much more versatile with your money; if your cash flow situation changes it is much easier to sell one of the smaller properties in your portfolio as opposed to selling your one large investment property.

Important factors to consider

The idea behind our portfolios is that they can flexible and fully tailored to suit your investment requirements. Before looking at investing in a portfolio of properties you should first think about several aspects:

Budget – how much do you want to invest? Budget is the first factor to consider, and many people are surprised to hear that investing in the emerging markets can start from under €12,000, and with €25,000 to €30,000 it is possible to invest in several properties in a number of countries.

Timescales – how long do you want your money invested for? How long are you prepared to have your money tied up for? If you know that within a certain period of time you will need to liquidate any investments that you will make, not all countries will be suitable for you. Some areas are more long term investments, for example, if you want to realise your investment within 3 years, then areas such as Romania and Argentina will probably be better than Berlin or Montenegro.

Income – do you want income or just capital growth? Are you able to invest the money you have and forget about it, or do you need to get some form of monthly or annual income from it? You may have borrowed money from a property in Ireland to finance you overseas investments, in which case you may need to be able to generate some monthly revenue to help cover your Irish mortgage. Alternatively you may just want to supplement your current income from your investment properties, or perhaps even hope to be able to live off your property investments entirely, which is by all means possible.

Risk factor – how risk averse are you? All of the countries that we deal with are emerging markets and so come with some inherent investment risks. However, if there were no risks at all then everybody would be buying there and there would not be such huge growth potential. It can often be the case that the highest risk areas generate the highest returns, but it is important to get a balance and spread your investment, no matter how convinced you may be about a certain area or development.

Hope this gives you some food for thought. All comments are welcome.

Kind Regards

Colin Murphy
Director
Someplace Else Ireland Ltd

How did the property boom get started?

2008-01-21T17:20:00.000Z

Hello and welcome to the Someplace Else Ireland blog.

I think it’s fair to say that Irish estate agents, both local and overseas, have had a very easy time of it in the last ten years. There seemed to be a never-ending supply of new customers as disposable income increased dramatically and cheap credit was very easy to come by. Anybody could sell overseas property, and it cost very little to get started. Everybody - buyers, agents, developers, (not to mention politicians!) seemed to be making a fortune. It was never going to last, but how on earth did it all get started?

Let’s remind ourselves for a moment that income in Ireland didn’t increase gradually over the years like it did for most of Western Europe during the 1990s. Hundreds of thousands of Irish people moved from surviving on a low wage to wondering what to do with large amounts of excess cash in a very short period of time. The figures are amazing. Between 1992 and 1997 disposable income for the average Irish person increased by 44%. Between 1997 and 2002 it increased a further 70%. Trade surpluses accumulated into billions, employment boomed and emigrants poured into the country.

But that was then, and this is now. The Celtic Tiger stopped roaring some time ago and the days when you could buy an Irish or foreign property with little or no independent research or legal advice and yet still make a large profit are over.

Does that mean that we can’t double our money every five years on property anymore? Does that mean that we can’t use the huge equity held in our banks and properties to continue buying investments overseas? I certainly don’t think so. There is absolutely no reason at all why you can’t continue to build valuable and diverse property portfolios with your cash and equity – we just need to ensure that a more professional and thoughtful approach is made by both buyers and sellers.

Firstly, (and I can rightly be accused of bias here considering what I do for a living), the only place where you can find the capital growth and rental yields of 5-7 years ago is in Emerging Markets. It’s not Ireland, it’s not the UK and it’s certainly not holiday resorts like coastal Spain, Florida and Turkey.

Secondly, the shrewd investors out there have gotten very choosy about which emerging market and which area within an emerging market suits them best. They are researching and having in-depth discussions with a variety of companies regarding what product best fits their budget, income level, timescale and attitude to risk. For example, an investor who released €100k in equity from his house to buy abroad and needs some sort of income to help cover the extra mortgage payments would be buying something completely different to another who has €50k cash in his current account and wants to put it somewhere for 5 years and is more interested in capital growth than rental yield.

Thirdly, I think investors seeking a strong return increasingly need to decide on a target market and exit strategy for their investment and stick to it. It is also much safer to depend on local markets than a fickle foreign one. Why rely on another Irish person to buy or rent an apartment when it is just as easy to identify an area where locals are buying 90% of all new apartments, where locals can get financing to buy property and where the economy (and wage levels) are rising every year?

Fourthly, I predict that investors, both novice and experienced, will start moving (or at least seriously looking) outside their property comfort zone. After all, there is a lot more than buy-to-let’s out there. Land plots and property funds can often yield many times what an apartment will, and a diverse portfolio is much safer and more flexible than one which is dependent one a single type of market.

Whilst I would like to think that everyone who has bought and sold in the booming property markets at home and abroad in the last 10 years have done so for sound investment reasons, I suspect that many were making decisions based on newspaper headlines (good or bad), back of the envelope calculations and barstool advice. Well, it worked for many, and well fair play to everyone that made a profit! However, I don’t think too many property millionaires would disagree when I say that investing, serious investing, means putting significant time and energy into figuring out which country, product, agent and lawyer are best suited to your circumstances.

Thankfully, the attitudes of Irish investors are rapidly changing for the better, and people are demanding much more information (and accountability) from their estate agents than they used to. Investing in property can and will continue to be an intensely rewarding experience for the Irish. Providing you do your homework and identify solid grounds for investment, or speak to people like ourselves that do it for you and have a great deal of experience on the ground in these countries, emerging markets can definitely be worth the effort.

No matter what the newspapers are now saying, the Irish did take the property world by storm and previous successes have just made us more determined to become the most adventurous overseas property investors of them all.

Kind Regards

Colin Murphy

Director

Someplace Else Ireland Ltd

Global Credit Crunch & Property Markets

2008-01-21T14:16:00.000Z

Hello and welcome to the Someplace Else Ireland blog.

Let’s start this post with the elephant in the corner that a lot of estate agents will try to avoid discussing with you – the global credit crunch. Started by the subprime lending mess in the USA, it’s now causing great concern among investors and financial institutions all over the world.

It will take time to untangle this complicated financial mess and discover the extent of the damage that’s been done to property markets, but we can forecast that outside the USA, it will probably have the biggest impact on the European property markets that have expanded quickest using an abundance of cheap credit – i.e. Ireland, Spain and the UK. Anybody trying to lure investors into these property markets in 2008 is going to have a very tough time doing so as I simply can't see any point investing in them. It will take years for these markets to recover, and those suffering most will be young first time buyers facing negative equity and increasingly difficult mortgage payments.

With the worlds biggest and most developed economies (USA, Japan, UK, France) all performing woefully, isn’t it ironic that we are now relying on the new emerging market consumer giants of China, Brazil, Russia, India and the Central & Eastern European countries to drive the global economy in 2008 and beyond? The concept of what is risky and what isn’t has completely been turned on its head – investment experts across all financial categories now consider emerging markets to be safe havens!

What is certain is that investors will have access to less credit in 2008 than they had in 2004-2007. This certainly won’t stop them investing, although it will probably mean that they invest a little bit less in total. Overall however, we will see large increases in the amount of capital flowing into emerging property markets and the opposite in the troubled Western European and US markets.

So, how are the markets Someplace Else promotes likely to fare next year? Argentina is on a roll at the moment, with consumer confidence reaching new highs and its robust recovery set to continue with the election of Cristina Kirchner last October. 2007 was a great year for Someplace Else’s Belize operation, with our Bella Maya resort winning Gold at the Homes Overseas Awards. Following unprecedented sales of land plots and cabanas, construction is also due to begin shortly on our 1000-acre ecological resort – The Belize Reserve.

Romania is going to be huge in 2008, and the investment activity in the last six months has been simply unbelievable. Outside of Bucharest, the secondary cities of Cluj, Brasov and Iasi will all be the lucky recipients of larges amounts of foreign capital. What about Berlin? In my opinion (with the possible exception of Buenos Aires), this is the most undervalued capital city in the world. It definitely falls into the long-term investment category, but the capital city of the world’s third biggest economy will not always contain property that is five times cheaper than London, Paris and Dublin.

Kind Regards

Colin Murphy

Director

Someplace Else Ireland Ltd

Emerging Market Multinationals

2008-01-21T13:57:00.000Z

Hello and welcome to the first Someplace Else Ireland blog.

This week I’m going to write about the new breed of multinational companies in emerging markets that are storming into Europe and America.

Take Indian giant Tata Motors as a prime example - it now looks likely to purchase Jaguar & Landrover, two legendary British brands from Ford, America’s stumbling giant. How many people have heard of Embraer, a Brazilian aircraft company? It is now the third biggest in the world (after Boeing & Airbus), has 95% of it’s sales outside of Brazil and has overtaken Canadian based Bombardier as the worlds leading maker of regional jets. Consider Cemex, the Mexican cement giant with $18 billion in sales last year, who astonished industry experts by purchasing UK based RMC for $5.8 billion in 2005.

These companies are exceptional but they are merely leading as opposed to bucking the trend of emerging market corporations strutting the global stage. According to a recent article in The Economist, foreign direct investment from developing countries in 2006 reached $174 billion – 14% of the worlds total, up from just 5% in 1990. Cross border Mergers and Acquisitions from developing countries increased from $20 billion in 1998 to $120 billion in 2006! What an incredible performance.

It seems like developing economies have never had it better. Even though emerging market corporations are investing huge amounts abroad, their governments are receiving much more from wealthy countries - €200 billion more flows into developing economies than flows out (UN statistic). For a European example look no further than the capital city of Romania, which is attracting billions in FDI from corporate giants such as Nokia, Microsoft, IBM & KPMG.

While people can be forgiven for getting down on the constant negative media coverage of the Irish property market, the Irish manufacturing industry and the possibility of a recession in the US, it seems to me that the opportunities for making money have never been better.

It can all be boiled down to a simple message - study and invest in emerging markets.

Best Regards

Colin Murphy
Director
Someplace Else Ireland Ltd