S&P on Global Property Markets: Recovery Potential, but Not out of the Woods Yet

This month's grand prize for stating the obvious goes to Standard and Poor, when they said the following in a recent research report:

"As the global housing market shows some signs of recovery, markets are re-emerging at different speeds, depending on the strength of individual real estate fundamentals."

Well, dah! Of course property markets in different countries are going to recover at different speeds, just as prices grew at different speeds before the crunch, and fell at different speeds during it.

They also said that the recovery is likely to be hindered by caution from companies and industries surrounding property markets waiting for clearer signs of recovery before slackening their purse strings.

This more than likely refers to developers and house builders, and in the UK and US property markets. I say this because development was kick-started in most parts of Asia some months ago, when developers realised that they had neglected the massive domestic demand for affordable housing while they focussed on the foreigner.

The report had a common theme, things are good for now but the recovery is precarious. In fact the only place where more falls aren't a distinct possibility out of those mentioned is France, where they say prices have hit bottom and are likely to stay there for a while. The US, Japan, UK, and Ireland are all okay for now, but not out of the woods yet according to S&P.

I know I was a bit critical to begin with, but S&P is one of the best analyses of global housing trends that you will find. OK, that may just be because they agree with a lot of what I think current indicators mean, but hey, that's life.

Bulgaria Property: Ride the Rollercoaster Back Up in 2010

Bulgaria property benefited massively from the boom in overseas property investment. Foreign investors flocked in literally by the thousand for the massive rental yields the low prices offered and to earn while the investment doubled in capital value in a matter of years.

Now that all the world has been battered financially and property values have fallen in almost every region of every country, you could be forgiven for thinking that is what did damage to Bulgaria's popularity also.

It isn't. Something changed, and Bulgaria became somewhere that more people were selling in than buying in long before most overseas property markets saw falling demand.

A friend of mine was working for one of the overseas property portals at the beginning of 2008, and he said that the number of apartments and flats for sale in Bulgaria's hotspots, especially Bansko began to grow rapidly. Supply quickly overran the demand for such properties and prices began to fall. Fast.

The only possible factor I can think of for this phenomenon is that the people had heard that a recession was looming for Bulgaria and tried to sell up before it hit, and/or some of them had bought early in Bulgaria’s heyday and grown disappointed with capital growth.

But now, as demand for overseas property begins to grow again, Bulgaria has a chance of becoming very popular again, here are some of the reasons why:

• Bulgaria property is extremely cheap still, so rental yields are good on the right properties (research x2 but x1)
• Bulgaria is an EU member, which will jibe well with today’s risk averse buyer
• Bulgaria has not adopted the Euro, in other words it has the safety and stability EU membership affirms without the strong Euro upping prices

AS with anywhere, if you do your research well enough, you can get some good cash-flow rental properties in Bulgaria, and you can buy off plan now because demand is expected to stay low until the global economy recovers.

If Turkish Property is to Receive EU Accession Boost, Relations with Greek Cypriots must be Repaired

The EU Enlargement aficionado Oli Rehn has said that solving the Cyprus issue is one of the biggest Turkey can do to further its prospects for securing EU entry.

He said:

"You know well that due to the non-compliance of Turkey in relation to the Additional Protocol of the Ankara Agreement, the EU decided in December 2006 to suspend eight chapters. Therefore, the best way of having a positive impact on the opening of chapters and contributing as a confidence building measure to a comprehensive settlement on Cyprus, will be to start implementing the Ankara Protocol. That is my cordial and friendly advice to the Turkish Government."

The Turkish government, well those senior in foreign affairs are meeting today to discuss how they can accelerate the peace process with Cyprus.

Turkey really wants to become an EU member, so let's all hope that it can put one of its last disputes behind.

EU membership would be massively beneficial to Turkey's property market, and the economy. It is a proven trend: EU membership boosts economies and adds thousands onto property values. This is because of things like removing tariffs from cross-border exports, visa free tourism, and the ability for Turkish residents to travel freely throughout the EU to find work.

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Exchange Rates Erratic, Watch the Lira for Instant Equity on Turkish Property Buys

I have just listened to a podcasted interview with Moneycorp. In the interview, David Kerns, a senior trader with the outfit spoke about the exchange rates between Sterling and the Euro, and Sterling and the Turkish Lira.

What he said on the Euro was hardly surprising. The Pound is weak against the Euro, because of the depressed UK economy that is printing money, and because the Bank of England want a weak Pound so ur companies can get a foothold overseas -- in other words they are quite happy to take advantage of the situation.

However, he did say that the Pound was going to go down to 1.05 Euros in the next month, but it has since rallied and is currently back up at 1.097. Kerns said that a fair price for a Pound is 1.15 Euros, so if the Pound does overshoot this when the UK economy recovers then it is definitely worth making then the time to buy a property in the Eurozone; to capitalise on instant equity.

It is the performance of the Turkish Lira that is the biggest surprise however. Kerns said that the Lira was going to stay strong, because its high yielding potential makes it a favourite for investment among the brave. Since then however, the Pound has climbed to be worth 2.393 Turkish Lira, up from 2.29 as Kerns spoke.

When the Lira strengthens it tends to go as far as 2.30 against the Pound, this is a kind of imaginary floor if you like, and 2.35 - 2.40 is the long term average. With that in mind anytime the Pound is worth more than 2.40, British buyers get instant equity in Turkish property purchases, and it could very well go higher than that in the coming weeks.

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What Does New Election Mean for Greece (From an Overseas Property Perspective)

The Greek election at the beginning of this month shocked many. The election had been called early by then Prime Minister Costas Karamanlis, who said that he was doing so because he could not effectively govern with a one seat majority, having lost several senior minsters to scandals over dodgy economic deals and handling of natural disasters like forest fires and riots.

I doubt he expected the centre left Panhellenic Socialist Movement (PASOK) to sweep to victory on a 43% majority, giving them 160 seats in the 300 parliament, enough for them to form a single party government.

But what does this mean for Greece, the economy and the property market.

I just dug out an article that PASOK leader George Papandreou wrote earlier this year, before the election was even announced.

He said that Greece must completely change its development model if it was to compete with emerging markets in Eastern Europe. He wants to put Greece at the forefront of the green generation to attract more foreign direct investment. He wrote:

"PASOK’s green development strategy is based on three central policy pillars: environmental protection and urban planning, energy, and transport. In order to promote sustainable development and eco-friendly businesses, we have designed a series of policies that include: subsidies and tax breaks for companies investing in environmental technology or renewable energy, shifting the tax burden to operations and products that are harmful to the environment, introducing sustainable construction standards for all public works, and improving the energy efficiency of all public buildings."

This was echoed in his first speech after the election, he said:

"We stand here united before the great responsibility which we undertake," he told cheering supporters in Athens.

He said PASOK had waged "a good fight to bring back hope and smiles on Greeks' faces... to change the country's course into one of law, justice, solidarity, green development and progress".

But in reality it was the 3 billion Euro stimulus package that really swayed the voters. However, one must worry if the stimulus is the right way to go with the international recession now easing, and the fact that Greece's second quarter growth means it has avoided recession so far. Thus by injecting a stimulus at this late stage, Papandreou joins the ranks of world leaders who now have a headache in trying to remove stimulating measures without stunting the recovery, in the great international game of Jenga.

As for the property market: property price growth coincides with economic growth, so if Papandreou can revive the economy then it is good news for the property market. It will also be interesting to see if his green policies materialise, the effect that they have on the economy and the property market; will green property development take off in Greece, and will green tourism increase are two questions that immediately spring to mind. Stay tuned on this blog as we watch the drama unfold.

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German Property Becomes Popular as Investors go for Rental Yields and Security

Portal Property Abroad.com revealed its top ten most popular locations among those searching for overseas property on the site in September. The chart proved what has been suspected about overseas property buying trends since the industry began to recover: that people are buying based on stability, security and rental income as oppose to a quick buck.

The biggest indicator of this was the fact that Germany entered the chart at no. 8. Now, German property has always had its fair share of fans; those who saw the benefit of buying in a country with a renters culture. However, people buying in Germany were under no illusions of soaring capital growth, or even massive rental yields.

But when you look around now at the devastation left by the international downturn; at property prices in established markets lying in tatters, and you see German property still selling at similar prices to what it was in 2007, you realise that the forecasts of stability and security were not mistaken.

That said, Germany wasn't in the top 10 most popular countries very often (before I get my head in my hands I know it was in the APITs top 10 and climbed quite high in 2007).

The fact that it has now entered the Property Abroad.com chart at no 8 confirms that today's investors are a risk averse bunch looking closely and methodically at rental figures.

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UAE and Dubai Property Markets Stabilising

According to new research by the Landmark Advisory, one of the largest real estate investment consultancies in the Emirates, property prices in the UAE and Dubai are starting to stabilise.

According to the firm there was even a moderate 7% increase in the prices of Dubai villas. It said that the supply and demand ratio for villas was pretty balanced and forecast stability on the price of villas in the short-term. "If investor confidence and inventories are stabilizing, then we may have possibly reached a price floor for villas," Commented Jesse Downs, director of research and advisory services for the firm.

Unfortunately the same cannot be said of Dubai apartments, though apartment prices declined just 3% in Q3 after a decline of 16% in the second quarter, and much bigger falls in previous quarters. Explaining the reasons behind this, Ms. Downs said: "Apartment inventories remain stable, with the majority of sellers holding prices, and because many distressed sales that were available over the past 3-6 months are no longer available."

This report by Landmark Advisory comes just days after Jones Lang la Salle released a massive report, highlighting Dubai and Abu Dhabi as having the best long term investment potential in the entire Middle East and North Africa region. This was based on the forecast of increasing businesses renting the cheap office space in the UAE, and the incoming staff providing long term high yield lets to residential property owners -- what it called a change of mindset for the industry.

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Turkey and Egypt Property Markets Benefit from Strong Euro

The property markets of Egypt and Turkey are benefiting massively from the current strength of the Euro against Sterling, which is forcing Brits outside the Eurozone for their -- practically mandatory -- two weeks in the sun each year.

The main benefit that the strong Euro is having is to increase tourism growth to Egypt and Turkey, which were growing rapidly already. But this is also putting them into the spotlight as second home destinations.

The question that many overseas property investors will be asking is: what are the chances of the Euro dropping its value anytime soon. The truth is: it doesn't matter, according to the Association of British Travel Agents tourism to Egypt and Turkey from Britain has been growing at an average of 20% for the past few years. All the Euro strengthening did was accelerating this to a forecasted growth of 25% this year.

Over the long term, the Pound will never get you as much in Euros as it will in Turkish Lira or Egyptian Pound, so of all the people currently choosing Turkey or Egypt, who would normally have holidays in the Eurozone, there is more chance that they will become their destination of choice even if Sterling does regain the ground it has lost against the Euro.

Another benefit of the increased tourism from people who would normally have holidayed in the Eurozone, is that property is a lot more affordable in Turkey and Egypt than it is in Spain or the other Eurozone hotspots. So, if 10% of holidaymakers to Spain could afford a second hokme and bought there, then maybe 60% can afford to buy in Egypt and 35% can afford to buy in Turkey, and maybe 20% will buy.

At any rate the increased tourism is always going to be good for rental yields in the countries and for the economies. As economies grow property values increase automatically; the two go hand in hand. All in all the numbers of Brits buying property in Egypt and Turkey is set to increase massively in the coming months and years.

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