Welcome to today’s news and views…
It’s often said that the first question you should ask when looking at an overseas property investment is, ‘What’s my exit strategy?’ As often as not, it is much easier to buy in than it is to get out at the other end. By and large, of course, it is ‘the other end’ where you make your profit. If your ‘other end’ has been Bulgaria, Dubai and, say, Spain in recent years, you may well be sitting on, and often part-financing, a depreciating asset which, other than for family holidays, is a pain in the neck/driving you mad/making you poor/making you feel ill. Insert your own worst case scenario.
It’s certainly a question that should be asked – and answered to your own satisfaction via due diligence and using a property lawyer etc – before you invest in any market. Turkey is, as an example, a market that interests many members at present, some for investment (mostly in Istanbul) and others for lifestyle (mostly along the coasts). Clearly, your criteria for each will be different although the ‘exit strategy’ question is valid to both.
How easy is to get to that exit point? As one member asked the other day, ‘What about the political situation?’ Those of you who have been with us this past decade will know by now that foreign investors – that’s us – are often welcome in the early stages when the economy needs a hand but become less popular, even unwelcome later on, typically with a change of government. Talking Turkey, we note a recent survey by the Association of Real Estate Investment Companies (GYODER) reveals that two-thirds of Turkish people are against property sales to foreigners. This is not a pop at Turkey – it has very many attractions – just a suggestion that you take an ‘exit strategy’ view from the start.
Zillow, over in the US, has come out with a set of ‘hotspot’ predictions for 2014. Overall, they say US prices will rise 3 per cent in 2014. ‘In 2014, home value gains will slow down significantly because of higher mortgage rates, more expensive home prices, and more supply created by fewer underwater home owners and more new construction. For buyers, this is welcome news, especially for those in
markets where bidding wars were becoming the norm and bubble like conditions were starting to emerge.’
As ever, one average covers a huge area of often contrasting fortunes. To name their hotspots, Zillow considers a range of factors including population growth, employment/unemployment rates, supply and demand etc. The top 10? Salt Lake City, Seattle, Austin in Texas, San Jose in California, Miami, Raleigh in North Carolina, Jacksonville in Florida, San Diego, Portland in Oregon and Boston.
Luxury property agents Engel & Volkers report that there has been a 20 per cent rise in prices in the top ski resorts of Davos and Klosters over the past 18 months or so. The trigger was the Second Homes Initiative which has effectively cut off the supply of new properties.
‘People looking for a holiday home in these ski regions are particularly interested in high-quality equipment, a location close to the slopes, plenty of hours of sunshine and good views. Buyers pay exceptional prices if it means acquiring the exceptional.’
‘The largest buyer group in these regions has a permanent residence in Zurich and the surrounding area. International clients from Germany, the Netherlands and England are also demonstrating a confidence in the stability of these property markets.’ Interested? Let us know. We have contacts who are keen to write a short report; there will be a slight sales spin – a trade-off for a freebie – but not too much of one
That’s it, see you soon.