Predictions Confirmed So Far, So Sales Set for Big Increase in February… Maybe anyway

Today two things I had thought to be true about overseas property, were confirmed to be true.

A: I had been watching and reading, and surmising that rental rates had not fallen as fast as prices have, thus rental yields would mostly have improved around the world.

Today Invesco confirmed that rental yields across Europe were running higher than their long term averages.

B: from various sources and events -- not least the fact that investment oriented destinations began to dominate the top 10’s of various overseas property portals -- I had reckoned that the number of investors actively purchasing overseas real estate had increased in the final quarter of last year.

Today, the Royal Institute of Chartered Surveyors confirmed that indeed the number of people buying overseas property as an investment as oppose to a lifestyle choice had indeed increased in the final quarter of last year.

Now, if my other big predictions come true, that 2010 will be a good year for overseas property, and that sales will increase from February, it will be even better.

In fact, now that you mention it (yes, I know you didn’t but…) one of them already has. According to an article in Overseas Property Professional an agent in Sharm El Sheikh has been selling Sharm property to overseas buyers at a rate of 1 per day since the beginning of the year.

So, watch this space for the next big prediction, in fact… why wait: in 2010, I am forecasting a resurgence in the resort markets of Koh Samui and Phuket.

Polish Property Gets A Daft New Portal

As confirmation that Poland is currently one of the hottest overseas property markets, Daft Media have just launched a new portal for Polish properties.

Poland was one of the few countries in Europe to avoid recession altogether, and property prices in the country have also shown incredible resilience, and then even growth since early 2009. As a result millions of Euros have been invested into commercial property in Poland by funds, and a wave of private investment is expected to follow. Daft's portal however, is aimed at the domestic market.

Anyone who has been around the overseas property industry in the last 2 years has probably heard of daft.ie, the Irish property portal, well now there is daft.pl, the Polish property portal as well.

Daft Media were very adept at spotting the gap in the market that existed for an Irish property portal, in fact at the time they were the portal specialising in Irish property. One can only assume that a similar gap existed in the Polish property market, which has now also been filled with Daftness (sorry, couldn't resist any longer).

If the success of their Irish portal is anything to go by, then many a Pole will be buying his house using the Daft.pl portal. According to Alexa, which ranks websites on their traffic levels, Daft.ie is the 8,644th most visited website in the world.

The one area that Daft Media's Irish portal struggled in was its placements in the search engines. Not for terms relating to its core Irish market, but in its overseas section: I remember one of the agents I worked for doing an analysis of all the portals we listed on and finding that Daft were producing the least leads. A look at the search term overseas property for sale puts them in 42nd for overseas property for sale.

Back then they didn't allow users to upload multiple properties using a datafeed either, this may or may not have changed since then.

Bright Signs for Overseas Property in 2010: But What About the Second Bite?

There is no doubt about it: as of the end of 2009 and for at least the first quarter of this year, the fear over the depth the financial crisis could plumb has subsided and anyone who has not been put in financial straits during the last 2/3 years is making plans and taking actions as if things are completely back to normal.

Some people are shouting about a second bite, including me in some areas, but I just wanted to explore the possibility that people going back to normal as they are could feed economies sufficiently enough to avoid the dreaded second bite as the stimulus rugs are pulled out from below us.

Okay, firstly there was a report of massive traffic increases to the prominent UK portals: traffic up 25% to Rightmove Overseas, 32% to the Move Channel and 38% Property-Abroad.com, all in the first seven days of the year. Of course there is the possibility that it was as much to do with the freak weather giving people more time to browse, but one thing about the freak weather is that is will have also increased the inclination to browse for a home in the sun.

Now, we have 133% increase in the sales of Miami condos. You will hear a lot of over 100% rises in the first quarter of this year, but this one holds weight because it gave figures. Condo Vultures research showed that 1655 condos were sold in Miami in the "latter part" of the year, compared to only 711 in the first 6 months.

HolidayLettings.co.uk, Rightmove's sister site has now reported an increase in traffic of 55% as over 1 million people visit the site in the first ten days of the year.

Yes, again this can be put down to the winter blues as Britain experienced freak weather, but I was here during the freak weather, and so was all my family and none of them were on holiday lettings booking trips or looking into buying property overseas on Rightmove.

The fear over the second bite comes from the fact that, at some point, probably within the next 4 months central banks, including the bank of England will start to pull back from their stimulus. This will lead to rising interest rates and falling liquidity. It will also mean more job losses as the government starts paying for the stimulus.

However, everyone knows this is going to happen. The people who work in the government departments likely to be affected by the cutbacks know that they work in the departments likely to be affected by the cutbacks. Therefore it is fairly safe to assume that those currently doing the browsing are able to spend in relative security.

Of course people will get caught out, but no more than normal. And of course there will be people browsing for the sake of browsing, but also, no more than normal.

I think that this current surge of activity is genuinely a very bright sign for the overseas property and tourism industries in 2010.

Overseas Property Industry Trends from 2009 to Influence or Expand in 2010

I just read a great article in Overseas Property Professional titled: LESSONS FROM 2009 TO PROSPER IN 2010. The article linked to several other articles explaining what had been selling in 2009, how this would carry forward into 2010, and some of the difficulties that would still be faced by some markets in 2010.

Actually one of the articles given as an example of the latter was most interesting of all: in the last few months the rebound in British and foreign demand for international property developed so quickly, that the reports can easily blind us to the fact that 2010 is still going to be a very difficult year for some parts of the industry.

The most enlightening was the one on Portugal, which told of a conference held by major players in the Portuguese tourism and realty industries on how they could work together to increase foreign trade and purchases of property in Portugal. The conference spoke of the pressure being applied to developers for them to cut prices, which many still refuse to do.

Since April the reports have been circulating of increasing British buyers in the Portuguese property market. However, these reports all involved UK based agents who are obviously finding it easier to attract the UK buyer.

Another hot seller in 2009, to continue doing well in 2010 is repossessed and distressed sales in established markets, namely Spain, America and the UK. America is expected to be particularly hot next year, with a record 3.9million repossessions expected according to RealtyTrac. The article said that distressed opportunities in Florida would dry up pretty quickly, while there would be opportunities to buy distressed property in Detroit for sometime.

It is no secret that America will be offering some pretty fantastic buy to let yields for as long as the repossessions continue, and that is why America was 3rd on our list of top investment destinations for 2010.

Another trend we have commented on here was highlighted in the OPP article:

“Our clients are pulling away from any risk, and are looking for guarantees. This is why we have decided to only recommend key-in-hand developments, and those that also offer a guaranteed leaseback are top of the list,” said Daniel Wentworth, International Sales Manager, Promonova.

We have written many articles on the risk-aversion of the buyers currently active in the market, and of the offers developers are having to lay on in order to increase sales, as is covered in the article linked by OPP as related news.

One trend missed by OPP that we are sure is in emergence (though it is covered indirectly in a few of the related articles and quotes) is the rise of buy to let investment in overseas property. This was again confirmed by Germany being 3rd most popular on portal Property Abroad.com in December.

The single biggest reason foreigners buy German property (obviously there are exceptions) is for buy to let investment. Germany is also known as one of the safest and most stable places in the world to invest, which ties in with the risk aversion also.

Another thing tying 2009 to 2010 missed by OPP was the chance given to Turkey to shine. Turkey property had been growing in popularity with foreign buyers for some time, but the effect the credit crunch had on foreign exchange rates has benefited Turkey in 2009 and will do so even more in 2010.

The strong euro/pound rate caused British tourism to Turkey to see accelerated growth. It also led to British sales of Turkish property surviving better than many European favourites.

We have just taken on a new development in Turkey that is certain to be a favourite in 2010: 2 bedroom apartments by a reputed developer in the South West Aegean Coast resort of Akbuk for £50k. Click here to find out more.