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
Showing posts with label emerging markets. Show all posts
Showing posts with label emerging markets. Show all posts
Friday, July 11, 2008
Saturday, June 28, 2008
Refocusing after 12 weeks of media mayhem
Hello and welcome to the Someplace Else blog.
It’s certainly been quite a turbulent few weeks since the last post. All was quiet when I went to Greece on holidays in early June - it certainly wasn’t when I returned.
Uncertain Times
The Irish have voted No to Lisbon, and depending on which articles you read, this will either have dire consequences for Europe or it will make very little difference.
It doesn’t stop there though, oh no - Mervin King (Britain’s top banker) thinks the UK faces its most difficult challenges for two decades and the brightest minds in the ESRI (Irelands main economic think tank) have warned us to prepare for recession, job losses and renewed emigration. We probably could have survived any one of the above in isolation, but taken as a whole, well, perhaps we should all just give up investing altogether and spend our evenings in the pub reliving the good old days.
Authorities aren’t helping
The latest quarterly ESRI report was probably the most pessimistic I’ve read in years, and I’ve read most of them. These reports and the headlines they generate can be very misleading - not because they aren’t authoritative and useful sources of economic data (they are), but because the conclusions drawn from this data, which are widely reported in our media and debated in our Dail, seem to change from one extreme to the other within weeks, and nobody in the public sphere seems to notice, care or question why.
Flip flopping
It was a mere six weeks ago that the ESRI looked forward to 3.75% yearly growth predicted in positive view of the economy which was heading toward a bright future due to resilient economic growth over the next decade which will outperform most of our European cousins for years to come due to our “productive and diversified workforce”. Surely, this was some sort of short-term informal report, not to be taken too seriously? Apparently not. It was their Median Term Review for 2008-2015.
If anybody can cast their minds way way back into the misty Ireland of old … in March 2008, they may remember reading ESRI quoted newspaper headlines gravely predicting either an Economy Set to grow at slowest rate for two decades or Growth to Plummet as Economy Slows. That was their Quarterly Economic Commentary, Spring 2008 report. It could have been more accurately called their “Mid March to be dramatically revised in a few weeks and then again in June to cause maximum panic and confusion report”, but it was possibly considered a bit unwieldy by the editing department.
So what is a prospective property investor to do in these new and unpredictable domestic markets?
Our English cousins have had a tough time of it recently, but in the space of 12 short weeks, Irish residents have been told that there will either be (a) two decades of pain to look forward to, (b) a decade of resilient growth with a strong labour market or (c) inflation, unemployment and recession. Take your pick.
Sandwiched in between all that Ireland (and Ireland alone) had to vote Yes or No to the Lisbon treaty which will keep us in the heart of Europe or the edge of Europe, which might involve conscription to the EU Army or cement our neutrality, which will lose or gain our politicians power, and will involve increased or decreased taxation and will persuade more or less foreign workers to come to our shores. Hmm.
It is natural that people will react in their own ways to the above. What we certainly shouldn’t do however is throw our hands in the air and admit that our focus and decision making power has been robbed by this barrage of conflicting information. I doubt anybody can make sense out of it all, but that's not really important from this newsletters point of view as most of the above has absolutely nothing to do with whether or not some of your savings, earnings and borrowings should be set aside to create or extend a property portfolio.
Focusing on what is important
Building a property portfolio, or indeed achieving any difficult but worthy goal, involves focusing on what’s important and shutting out everything else. Have some money that you would have thought about investing? Write down what you would like to achieve with it on a piece of paper. Then look at what options your budget, income stream, attitude to risk and timescales will safely permit you to do. When you’ve narrowed that down to a few options, examine some of the factors that will determine those markets long term success: economic growth, education, infrastructure, employment, availability of finance, interest rates etc. This information is all freely available and with patience and advice it’s really not that difficult to make a sensible decision.
We have a website that may help – it’s called www.someplaceelse.ie .
For those who would like to focus on the above - make sure there aren’t any newspapers or televisions nearby to distract you, and give us a call if you need any help. Maybe you should go to Greece altogether, it’s a bit quieter there.
Kind Regards
Colin Murphy
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
Wednesday, May 28, 2008
What really affects the prices of overseas property?
Hello and welcome to the Someplace Else Blog
You may remember that last week I used the example of two very different ESRI reports and their corresponding headline summaries in the national press to illustrate the importance of using a variety of research sources before making a major decision.
So, this week I thought I’d (very) briefly write about some of the factors that really affect the prices of property, in the hope that it may help some of our research minded readers focus their efforts in the right direction.
These following factors are listed in no particular order:
FDI & Economic Growth:
It is very important to examine from the ground up how the people are living and how their lives are improving in a country. Look at overall GDP to determine how much wealth the citizens have now but pay more attention to GDP growth and whether the reasons for this growth are sustainable.
Examine Foreign Direct Investment carefully, as FDI from other countries or multi national corporations can have a profoundly positive effect on a countries economy.
Employment
As more workers mean more potential buyers, investors have always been attracted to countries or regions where there is strong sustainable growth in employment and wages. An investment that has the potential to be resold to a local person is generally more secure than one that is depending on a future foreign buyer.
Availability of Finance
Whether or not financing is available in a country can have a huge impact on the property market. Without financing locals can rarely buy new property, and so the number of buyers (and the demand) will therefore be limited. When mortgages become available however, the property market and prices can accelerate very quickly in a relatively short space of time, as has been previously witnessed in the Baltic States. Also, if you have financed a property purchase, even if it is only a 50% mortgage, the effects of capital growth are doubled.
Interest rates
These rates (set by the ECB in Frankfurt for EU citizens) typically have an inverse relationship with property prices. When interest rates fall, property prices tend to rise as it is cheaper to borrow, when interest rates rise, property prices tend to fall as it is more expensive to borrow and cheaper to save.
Inflation
Setting aside the careless populist rhetoric we often hear on television and newspapers, it’s difficult to explain in a nutshell how inflation affects property prices, but here goes: it goes rises and falls depending on the factors affecting (a) the costs of producers (land prices, taxation, labour, cost of raw materials) and (b) the demand of buyers (interest rates, employment, market sentiment, economic growth, availability of credit)
In addition to the above, there are many other factors such as availability of land, planning regulations, membership of international organisations, infrastructure and government policy which are all worthy of further consideration.
That’s it for me, if anyone has any ideas or issues they would us to address in future blogs, please let us know.
Warm Regards
Colin Murphy
http://www.someplaceelse.ie/
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/
Wednesday, May 21, 2008
Confusing Headlines in the Press for would be Investors
Hello and welcome to the Someplace Else Blog.
A very pleasant surprise for me last week was a beaming headline from our friends at the Irish Times in the Wednesday edition (14 May). I could scarcely believe it – “3.75% yearly growth predicted in positive view of the economy” ran the headline based on the latest predictions from the ESRI, our highly respected Economic and Social Research Institute (who have a terrific website by the way – www.esri.ie). The article also went onto say that “the economy is heading toward a bright future” and discussed how we will outperform most of our European cousins for years to come due to our resilient economy and productive and diversified workforce.
Last Wednesday The Irish Independent also claimed that the economy was “on the way back” and our colleagues down south in the Examiner were happy to report “resilient economic growth over the next decade”
All in all, a very far cry from the headlines commented on just 8 weeks ago in Issue 7. The two main headlines that week in the Irish Times and Irish Independent were “Economy Set to grow at slowest rate for two decades” and “Growth to Plummet as Economy Slows” respectively.
Those who have been holding back on investing because of the negatively in the press recently can rightly feel a bit confused by the sudden change. However, the reason I’m writing all this has nothing to do with our national newspapers, most of which, including The Irish Times and Irish Independent, are excellent publications. It is more to stress the importance of using a variety of independent research sources before making a major investment decision.
Our own website has a small research centre that may be of use to some, which can be visited by clicking here. It is due for a comprehensive update in the next ten days, so might be worth bookmarking and returning to it from time to time.
Best Regards
Colin Murphy
Director
www.someplaceelse.ie
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
Monday, May 12, 2008
Is the Credit Crunch doing the industry a favour?
Hello and welcome to the Someplace Else Blog
Last week saw the demise of Inside Track, a large UK based company many readers will be familiar with that specialized in (very) expensive investment seminars. The market has certainly gotten much more discerning in the last two years and most investors are now able to either do their own research or find companies that will point them in the right direction without charging high fees.
Is the credit crunch doing us a favour?
Perhaps the credit crunch is actually doing many of us a favour by narrowing the range of people who want to invest in property and the number of companies who can provide for them. From 2003-2006, when the Irish & UK economies were performing well and the overseas property boom was in full swing with property expos heaving, property supplements bursting with breathless adverts and people signing on the dotted line without a care in the world, it was very easy for property companies to rack up large volumes of sales without doing all that much selling, research or due dilligence.
With many previously gung-ho buyers now nervously scanning newspaper headlines for the latest doom and gloom stories (very easy to find these days), the only property companies that will be able to thrive (and some are definately thriving) will be those who can continuously offer a range of products and services to savvy buyers who are seeking out high performing markets, regardless, or maybe even because of, the prevailing conditions at home. These people also have the experience to know the value of the information being provided to them. Surely this is a good thing for the industry.
Someplace Else Projects During Summer Months
Getting back to emerging markets - Romania seems to be showing no signs of losing its popularity with our investors and with our Bujor development in Northern Bucharest practically sold out, we have been very fortunate to secure some units in another very similar one nearby from the same developer called Lilac Residences, details of which can be found below. The many people who replied to our teaser campaign for our new Ploiesti development (35km north of Bucharest) will hopefully be glad to know that the investment guide is almost ready and should be available to clients next week. It is called Prahova Residences and we feel that it is a great investment with superb payment terms (10/10/5/75)
I've also been quite busy this week in Panama (and am writing this note on my way back across the atlantic). It is simply an amazing country, and we will soon be announcing an exciting new venture with a local company who will be sourcing world class Panamanian developments for Someplace Else investors that will be available nowhere else in Europe. Full details won't be released for a few weeks, but if anyone would like to express an interest in being put on a preferential list, or indeed if anybody would just talk to me about the kinds of projects we will be releasing, then by all means give me a call on 1890 425 425 or me email on colin.murphy@someplaceelse.ie.
New Someplace Else Magazine Coming Soon
Finally, the next issue of the print edition of "Invest Someplace Else" will soon be ready and an email will be sent out shortly giving investors further details. In a nutshell though, it will be a 24 page magazine dedicated to emerging markets and will contain articles on Panama, Romania, Taxes on Overseas Property, Affect of Global Credit Crunch on Emerging Markets, Overseas Mortgages, updates on our own developments in Belize & Argentina ... and much more besides. We will post it out free of charge to anybody that would like to receive it. Simply email orla.doyle@someplaceelse.ie and put "subscribe to magazine" on the subject line and your postal address in the email if you'd like a copy.
That's it from me.
Warm Regards
Colin Murphy
Director
Someplace Else Ireland Ltd
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
Friday, April 25, 2008
Past & Future Holiday Investment Destinations
This week I’m going to address the very difficult task of blending a holiday home and investment property into one.
While most people (myself included unfortunately) simply cannot talk about property anymore without discussing how much profit you might make - let us not forget that people were purchasing holiday homes abroad long before the concept of buying foreign property in order to resell at a profit became an Irish and UK phenomenon.
Brief History of Property Investment
In the 1970s, 80s and early 90s purchasing property abroad was only for wealthy families with the money and knowledge (solid information was much harder to come by in those days) to purchase a dream property. In the mid 1990s, foreign property exhibitions and dedicated overseas property newspaper supplements first began to appear promoting both the holiday and the investment benefits of Spain, Portugal, Florida, Greece & Italy.
In 2003 came the emerging markets, with pioneering research and old fashioned hard graft from the founders of Someplace Else bringing the markets of Montengro, Belize, Latvia, Lithuania & Argentina to the ever expanding groups of overseas property buyers.
1995 – 2005 really was an incredible time and is very fondly remembered by veteran overseas estate agents, developers and investors. Never before have real house prices risen so fast for so long in so many countries. The total value of residential property in developed economies rose by more than $30 trillion between 2002-2007 - an increase equivalent to 100% of those countries' combined GDPs. The surge not only dwarfs any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) and America's stockmarket bubble in the late 1920s (55% of GDP).
Where to next?
Looking at what is happening to property prices in Ireland and what has happened to the once glorious southern coast of Spain, one could be forgiven for thinking that the days of purchasing a holiday property investment are long gone, and that one must venture into deepest South America or Africa to make those kinds of returns in a nice climate again – not so in my opinion.
For those who still yearn for a property investment in a beautiful location that they will actually want to use themselves from time to time, that is easily accessible, that isn’t swarming with white bellys, rough accents, fish & chips shops and where the government actually designs and implements sustainable planning policy that protects a beautiful coastline – then my suggestion is that you go and visit Montenegro as soon as possible.
Montenegro
I spend the bulk of my travelling time in overcast cities, but this week has been different as most of it was spent touring Montengro in the charming company of Sanja Todorovic, the general manager of our local office there. I have simply been bowled over by this tiny countries spectacular beauty (most of the photos in this newsletter were taken this week). Montengro is small but has a very diverse landscape with sandy beaches, majestic mountains, deep canyons, huge lakes and a unique cultural and architectural heritage from Roman, Venetian and Ottoman occupations.
It is one of the fastest growing tourist destinations in the world, with incredibly ambitious plans to develop world-class marinas and ultra luxury hotels in an effort to win back the prestigious reputation it once enjoyed as an enclave for the rich and famous.
It is also one of the few truly beautiful coastlines left in Europe where prime luxury property can still be bought for less than €150,000. More details to be found on www.someplaceelse.ie
Have an enjoyable weekend
Regards
Colin
While most people (myself included unfortunately) simply cannot talk about property anymore without discussing how much profit you might make - let us not forget that people were purchasing holiday homes abroad long before the concept of buying foreign property in order to resell at a profit became an Irish and UK phenomenon.
Brief History of Property Investment
In the 1970s, 80s and early 90s purchasing property abroad was only for wealthy families with the money and knowledge (solid information was much harder to come by in those days) to purchase a dream property. In the mid 1990s, foreign property exhibitions and dedicated overseas property newspaper supplements first began to appear promoting both the holiday and the investment benefits of Spain, Portugal, Florida, Greece & Italy.
In 2003 came the emerging markets, with pioneering research and old fashioned hard graft from the founders of Someplace Else bringing the markets of Montengro, Belize, Latvia, Lithuania & Argentina to the ever expanding groups of overseas property buyers.
1995 – 2005 really was an incredible time and is very fondly remembered by veteran overseas estate agents, developers and investors. Never before have real house prices risen so fast for so long in so many countries. The total value of residential property in developed economies rose by more than $30 trillion between 2002-2007 - an increase equivalent to 100% of those countries' combined GDPs. The surge not only dwarfs any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) and America's stockmarket bubble in the late 1920s (55% of GDP).
Where to next?
Looking at what is happening to property prices in Ireland and what has happened to the once glorious southern coast of Spain, one could be forgiven for thinking that the days of purchasing a holiday property investment are long gone, and that one must venture into deepest South America or Africa to make those kinds of returns in a nice climate again – not so in my opinion.
For those who still yearn for a property investment in a beautiful location that they will actually want to use themselves from time to time, that is easily accessible, that isn’t swarming with white bellys, rough accents, fish & chips shops and where the government actually designs and implements sustainable planning policy that protects a beautiful coastline – then my suggestion is that you go and visit Montenegro as soon as possible.
Montenegro
I spend the bulk of my travelling time in overcast cities, but this week has been different as most of it was spent touring Montengro in the charming company of Sanja Todorovic, the general manager of our local office there. I have simply been bowled over by this tiny countries spectacular beauty (most of the photos in this newsletter were taken this week). Montengro is small but has a very diverse landscape with sandy beaches, majestic mountains, deep canyons, huge lakes and a unique cultural and architectural heritage from Roman, Venetian and Ottoman occupations.
It is one of the fastest growing tourist destinations in the world, with incredibly ambitious plans to develop world-class marinas and ultra luxury hotels in an effort to win back the prestigious reputation it once enjoyed as an enclave for the rich and famous.
It is also one of the few truly beautiful coastlines left in Europe where prime luxury property can still be bought for less than €150,000. More details to be found on www.someplaceelse.ie
Have an enjoyable weekend
Regards
Colin
A Short Note on Financing
This week, I thought I’d write a little more about financing, as I feel strongly that agents and developers should be doing much more to ensure their clients understand how it works and how it will affect their investments.
I can’t emphasise how important it is to research how much finance you are likely to receive before putting down a non-refundable deposit on a property - and you won’t find many estate agents or developers who will write that to you in an email. Someplace Else has relationships with English speaking brokers and/or banks in all the countries we deal with that offer financing to foreigners, and one of our key aims in 2008 is to continue to strengthen these relationships, thereby ensuring that our clients always have quick access the best possible financial advice.
Firstly, the lending criteria for obtaining foreign mortgages is usually quite similar to what you are used to at home. Generally speaking, you must be over 21 years old, be in secure employment, prove that you have an ability to comfortably repay, have a good credit history and aged not greater than 70 at the end of the mortgage term.
We all know that most banks do their utmost to make their lending policies and how they make money out of loans them as complex and arcane as possible. With this in mind I thought some may find be useful to have the following clarified:
Nominal vs Real Interest Rates
The nominal interest rate is merely the interest rate before it is adjusted for inflation. After this adjustment, it is called the real interest rate. This helps a country measure its price and cost competitiveness compared to others.
Fixed vs Variable Interest Rates
Generally speaking, banks based in emerging markets offer variable interest repayment mortgages to locals and foreigners, although they are constantly improving and expanding their product range as they are operating in countries with tiny amounts of personal debt. By variable interest rate I mean that the rate can go up or down and is linked to the central bank controlling the country you are borrowing from. By repayment mortgage I mean that your monthly payments cover both the interest charged and the original amount borrowed.
Mortgages.ie have a very handy calculator for repayment mortgages that allows stress test for an additional 3% if interest rates go up. Click here to find out more.
Loan To Value
I think sometimes people get too focused on LTV. It is merely the percentage of money you want to borrow compared to the cost of the property. Many banks lend a percentage of what their valuation of the property is on completion, not the amount you bought it for offplan. This is great if the price of your property goes up during the construction period, and very bad if it goes down (as some unfortunate people in Dublin are now discovering).
In Conclusion
Financing, or leveraging as it is sometimes called, is and always will be an incredibly efficient way of maximising the return on your investment. As discussed in a previous newsletter most emerging markets are nowhere near as exposed to the global credit crunch as Ireland and UK. The good news for investors is that these foreign banks are expanding access to finance just as our own are making it more difficult. And thank goodness for that.
Kind Regards
Colin.
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.
Friday, April 4, 2008
Troubles facing Irish Developers
Firstly, I was very glad to see a bumper 30-page property supplement in the Irish Times this Thursday. About 18 pages of this supplement contained property adverts, and those of you who work in the industry will know that full and half page adverts in the national press don’t come cheaply.
Upon browsing quickly through such a supplement packed with real estate adverts, you might be forgiven for thinking that Irish developers have suddenly discovered a new found optimism and have been confidently screaming at their marketing staff to secure the best position possible to promote their fabulous development in Leixlip, Celbridge or Mullingar.
Look a bit closer though and you’ll notice something very different between these adverts and the ones of a couple of years ago. In the good old days, the developers used to state a price, insert a nice picture and give you until the following Monday to reserve it. Now they are offering huge discounts. “Now Reduced!” screams one headline “Save €80,000 off your new home!” screams another. The best has to be an advert for a development in Drumcondra. Not only are they offering up to €120,000 off the last remaining units, but they are throwing in free legal advice, a €3000 holiday voucher and a €2000 furniture allowance.
For those of us who are lucky enough to be liquid at the moment, it might be tempting to rush in and take some of these units off the struggling developers hands, but my own opinion is that the worst times are yet to come. We haven’t seen any big Irish developers going bankrupt yet, but we have in Spain and we have in the US and it can be argued that the Irish market is next.
The credit crunch is a major factor and is certainly the main reason why Irish developers are struggling to raise cash, but an equally big one is simple supply and demand. Too many units were built and bought in a very small country for investors seeking tenants to pay a low interest mortgage while their asset appreciates by double digits every year. When mortgage rates started to increase and property prices started to slow, it was far easier for investors to pull out than the dozens of developers who have committed to finishing big residential projects.
Perhaps these big adverts will result in the extra sales so badly needed. Either way, you’d be hard pressed to find an Irish publication (including dedicated property magazines) with regular adverts and editorial for the countries Someplace Else Ireland promotes – Argentina, Belize, Montenegro, Romania and Serbia to name but a few.
Maybe this is because we’re not working hard enough at PR, but the big money was made in Ireland long before the 30 page property supplements arrived, and it seems to be holding just as true in the emerging markets above.
Kind Regards
Colin Murphy
www.someplaceelse.ie
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
Sunday, March 30, 2008
Overseas Property Interest Rates v Rental Yields
Hello and welcome to the Someplace Else Blog.
I’m writing this weeks note from Romania, and with property prices in Ireland, UK, Spain and the US all falling, it’s a relief to spend a few days in a country where the market is booming and locals are full of optimism for the future.
This week I’m going to briefly discuss the relationship between capital appreciation, interest rates and rental yields. Many of those reading this will be experienced investors who won’t learn anything new from this note and who may even disagree with me (the blog is up there if you want to do so publicly), but perhaps others might appreciate a couple of paragraphs cutting through the hype and spelling out the fundamental investment factors in plain English.
Basic factors to consider
At the risk of sounding like a simpleton – if your annual rental income is higher than your annual mortgage repayments, management fees and property taxes, then your property won’t cost you anything to maintain and you can sell it whenever you think it has reached a point where the equity can be better spent elsewhere and you have found a buyer to take it off your hands. Needless to say, you should always independently verify facts and figures on the above given to you by agents and developers.
Rental Income
For some properties annual rental income means income received during the summer holidays from local or foreign tourists, with little or nothing outside peak season and for others, you may have a long-term contract with a tenant paying a fixed monthly amount. The amount of rental income you will receive mainly depends on the market demand versus market supply of your particular property. For an person who feels cash flow is very important, my advice would be to purchase in a city and rent to a local paying all year round where the present and future supply and demand can be more accurately forecast than a seasonal resort.
Mortgage Repayments
The amount of your annual mortgage repayments depends on the value of your loan, the term of the loan and the interest rate. Value of loan varies from bank to bank and country to country. In Romania foreigners can get up to 75% (of the value on completion, not purchase cost), in Bulgaria it is about 70%, in Germany its difficult to get more than 60%, in Montenegro 50%. The term of the loan mostly depends on the purchasers’ age. Banks generally don’t want people over the age of 70 owing them money. If their net income is sufficient, a 35 year old shouldn’t have a problem getting a 30-year mortgage, but a 50 old would not get more than a 15 or 20-year mortgage. Of course, the monthly payments on a 15-year mortgage will be a lot higher than those of an equal 30-year mortgage.
Interest Rates
Interest rates are more complicated and you could fill a 3-bed villa from floor to ceiling with books on how the various types of them function (there are 3 types that affect the euro area). However the interest rates of your overseas mortgage will mostly depend on what their central bank fixes the rates at. Some central banks are worried about a possible recession and will lower interest rates dramatically to encourage consumer spending (like the Federal Reserve), while others are more concerned with inflation and are therefore extremely reluctant to lower interest rates at all (like the European Central Bank).
Bear in mind that a high interest rate will only be a problem for an investor if it is proportionally higher than their rental yield i.e. a 5% mortgage interest rate with a 4% rental yield is worse than a 7% interest rate with an 8% rental yield.
Capital Appreciation
Owning an apartment with a positive cash flow makes it easier for you to save up for a deposit to buy another one, and so present and future rental income needs to be carefully considered. However your long-term focus as an investor should always be capital appreciation. We sell in a very diverse range of emerging markets (you’ll see two very different ones described below) some of which provide great rental income and others which provide little or none. Either way, the first factor we as a company always look for when researching our next project is potential capital appreciation.
Finally…
Sometimes your personal circumstances will mean you can only purchase a product that that generates a steady income (city apartment), while others will have cash savings that they would like to invest in a pure capital growth product (land).
In conclusion, buying a property that suits your specific circumstances isn’t always as simple as estate agents make it out to be. However, we have products that suit investors of all types and we’re always happy to discuss further with those who’d like to learn more.
Kind Regards
Colin Murphy
www.someplaceelse.ie
investments@someplaceelse.ie
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
Friday, March 14, 2008
Never been a better time to invest outside of Ireland
Good afternoon and welcome to the Someplace Else Blog.
Well, it’s been another manic week for the Someplace Else Dublin office and another depressing week for those reading Irish newspapers. “Economy Set to grow at slowest rate for two decades” is the headline in today’s Irish Times. “Growth to Plummet as Economy Slows” reports the Independent. The Examiner leads with poor Bertie struggling to explain how €50k got into a bank account he forgot to tell us about. You’d think the journalists would at least try to find something to put us in a good mood for Paddy’s weekend.
Never been a better time to invest elsewhere
In fairness to our business writers, they’re a moody bunch, but they’re usually right. Growth is down, inflation is up, property prices are flat or falling, unemployment is rising, the weather is terrible and our Toaiseach is a crook. Let’s look at this another way – there’s never been a better or more appropriate time to get your investment money out of Ireland and into a country with more optimistic growth prospects.
My colleagues and myself could talk to you all day (and we’re happy to do so) regarding countries that are heading in the opposite direction to Ireland, UK, Spain and the US. Emerging markets have now gotten so big and powerful that they no longer need a strong United States to grow their economies. Domestic consumption in emerging economies is now rising three times faster than consumption in the developed world. Investment is even better according to HSBC, with capital spending up a massive 17% in emerging markets compared to 1.2% in rich countries.
How about this one - the four biggest emerging economies, which accounted for about 40% of global GDP growth last year, are the least dependent on the USA. Exports to America account for just 8% of China’s GDP, 4% of India’s, 3% of Brazils and 1% of Russia’s.
Unfortunately you don’t read these kinds of articles in Irish newspapers and you certainly won’t hear about them in the RTE evening news; you’ll have to look at something like The Economist.
Where might you want to look?
So, if any of our readers are interested in investing their money outside Ireland, but not too far away, then you could do a lot worse than spend a few hours this weekend studying Romania. It is easily our most popular destination, and is in my opinion the most exciting market in Europe at the moment. Would you like ten reasons why?
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.
Friday, January 25, 2008
Will stock market confusion affect Irish overseas property investments?
Hello and welcome to the Someplace Else Ireland blog.
This week I’m going to write about the stock market turbulence and how it may affect Irish overseas property investments.
It’s been a helter skelter week in the global stock markets and readers of the Someplace Else newsletter could be forgiven for wondering how all of this confusion might affect property purchases they have made or are thinking of making.
To get a clear picture of what’s going on, let’s try and steer clear of the colourful headlines. Recent ones that have caught my eye have been “Brokers bet on basket cases” (The Independent), “Recession fears spark selling bout” (The Independent), “Why Fed hit panic button” (The Sun).
So what has actually happened?
Well, the last year has been awful for the ISEQ, it's down about 30%. Last week and most of this week have also been terrible for global stock markets - billions were wiped off the ISEQ alone as confidence was low and traders were panicking. Then on Tuesday 22nd Jan the Fed Reserve dropped interest rates by 0.75% to 3.5% at an unscheduled policy meeting.
Yesterday, (Thurs 24th January) the European markets had a massive surge with the ISEQ up 5%, the UK FTSE up 4.3%, Germanys DAX up 5.4% and Frances CAC up 4.5% (despite a €5 billion fraud in their second largest bank). Certainly isn’t an industry for the faint hearted and despite yesterdays surge, these markets are all much lower than they were a year ago.
What about Emerging Market stock exchanges?
In case you were wondering, the Emerging market stock markets all enjoyed massive growth in 2007 – China up 100%, Turkey 40%, Indonesia 50%, Brazil 42% and India 45%.
To quote an expert: "The value in emerging markets is significantly greater than in developed markets and the risk of a downside is much, much greater in the U.S. and Europe than in emerging markets," said Jerome Booth, head of research at Ashmore Investment Management, an emerging market specialist firm.
Getting back to Property
Refocusing on the property market, there’s no doubt in my mind that Ireland, Spain and the US are going to have a very rough 2008, and probably an even worse 2009.
The way I see it, we can all sit tight for a couple of years and hope that things will be rosy again in the property markets where we have already made lots of money or we can seek out alternative markets now that aren’t overvalued, oversupplied and in too much debt.
There are an abundance of great investment opportunities outside the traditional developed markets. I’m talking about countries in the opposite situation to the Irish property market – i.e. undervalued, undersupplied and with negligible mortgage debts and fast growing economies.
We sell apartments in emerging markets with double digit capital appreciation and rental yields, we have others with up to 85% local financing, we have exclusive agreements with developers to sell apartments to Irish investors in areas where locals are crying out for modern accommodation.
In Conclusion
I believe we are in a very good position to steer Irish investors away from the mess at home and in the direction of property markets that are going to make them a lot of money, and we cater for all investment budgets and risk profiles.
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
Director
Tuesday, January 22, 2008
Why Belize is a solid investment bet
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
Monday, January 21, 2008
Building an Investment Property Portfolio
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
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?
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.
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
Global Credit Crunch & Property Markets
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
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
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