Distressed US Investment Property Supplies Increasing

Sales of distressed and bank owned property accounted for some 24% of all US home sales in the second quarter, down from 31% in the first quarter, according to the latest data from Realty Trac.

Of this bank owned properties accounted for 15% of home sales in the second quarter, and properties in some stage of mortgage distress for 9% of sales. This is down from 19% and 12% respectively in the first quarter.

This shows that sales are dropping. But the number of properties sold after receiving a default or auction notice was up 5% from the previous quarter, although it was 20% lower than last year. This would seem to suggest that supply may be rising.

Discounts on distressed and repossessed US properties are also falling, which also suggests that supply may be rising. According to the Realty Trac data, the average discount on sales of properties in default or scheduled for auction was 13% in the second quarter, down from 16% in the first quarter, and 19% in the second quarter of last year.

The average discount on bank owned properties in the second quarter stayed at the running average of 31%.

While supply of distressed and repossessed US properties rising is bad news for the US housing market, because their heavily discounted sale prices are factored into future valuations of other houses in the area, it is not such bad news for the droves of investors from across America and around the world who are getting some seriously good deals on US property.

Azure Overseas are currently marketing the Village at Town Center, a development of luxury condos just a few minutes away from Orlando's main attractions. The price of just £47k for a 3 bedroom unit is evidence of the fantastic investment potential of discounted US properties. Think of the yield you could make renting that out on a PPPN basis.

Turkey Property Investment Recommended by GPG and Me

The well respected Global Property Guide publication has given a glowing recommendation for investment in Turkish property, particularly Istanbul.

According to the firm's research for its mid-year investment recommendations, yields on Turkish property in Istanbul are currently averaging 5.48%, which is higher than average yields in Italy (5.04%), France (3.85%), Spain (3.81%) and Portugal (3.63%).

These yields, as with most -- if not all -- of the GPG rental yield figures is based on residential rentals, which means they do not give a clear indication as to the kind of yields a holiday property might make, which can often by higher than residential yields depending on a number of factors.

This is unfortunate, because most overseas buyers of Turkish property are currently aiming at holiday lets, and there have been several reports of those buyers earning yields of 6% net.

Basically, yields on holiday property in Turkey will tent to be higher, because property in the touristic areas tends to be cheaper than that found in Istanbul, while rental rates on holiday lets tend to be higher, which can actually be higher than residential rents in Istanbul or the same depending on the property and exact locations in question.

Given these truths it is only a matter of how much paying occupancy the holiday home owners can achieve, which then depends on the amount of time they want to spend in the property.

The best strategy for holiday home investors in Turkish property, like those anywhere else in the world is to rent out the property for the entire season and use it during low season. This is a problem for some owners who don't do sufficient research and subsequently find out that the area they have bought in is completely closed off during low season, with not even so much as a shop to buy essentials like milk.

This is in fact one of the reasons why Turkey is currently seeing its popularity with this type of investor soar: because most buyers are currently doing a lot of research, they are finding out that most of Turkey's touristic areas are open all-year round.

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.

UK Employment Data Turning Positive will Spark Rise in British Appetite for Overseas Property

Today the Office for National Statistics revealed the latest data on the UK labour market, and while it is a lot more positive than previous reports, overall it is still negative, as we can see from Sterling losing some ground to the Euro and the Dollar.

Positivity comes in the fact that 86,000 more people were in part-time employment in Q3 than in Q2. Unfortunately that is tempered by an 80,000 fall in the number of people in full time employment. The combination of the two gives a positive 6000 more people in employment in the July-September quarter than in the previous quarter. However, the number of unemployed people climbed 30,000 to 2.46 million.

While I said that the report was negative overall, which as you can see it is in terms of raw data, however, in terms of interpretation this can only be called a positive report. This is because the rise in unemployed people is a lot smaller than previous quarters, and it contains the words "increase" and "in the number of people in employment", in the same sentence. All previous reports this year have been a solid wall of negative data.

The fact that the number of people in part-time employment rose could be said to show that employers are beginning to test the waters of expansion by hiring part-time staff, although the report says it is simply people taking part-time jobs because they can't find full time ones.

Either way, like I said, this is the first labour market review to contain any positive data, and it confirms that the UK economy is passed its lowest point and on the road to recovery. How this relates to overseas property investment is simple.

Since the first UK economic indicators turned positive in April, demand for overseas property has been increasing as British buyers returned to their favourite foreign hotspots. This has primarily been well-off Brits, who weren't left in financial difficulty by the recession, but who were fearful of just how bad it could get; that they might become affected eventually. Now that the full effect can be measured more easily their confidence has returned.

However, many more potential buyers have been waiting for unemployment to run out of rocket fuel before they felt confident in the recovery. Now that the ONS has revealed clear data that suggests that point is upon us. It will likely mark further increases in demand for overseas property among British buyers.

This will be hindered by the fact that finance is still very restricted for property purchases abroad, just as it is in the UK. This is because, unlike the first group of returning buyers, those returning because fear for their job is subsiding are more likely to be looking for finance to make their purchase.

That said, while finance is hard to come by, it is not impossible, so there will be a rise in demand for overseas property from British buyers. This demand will continue to rise as unemployment falls, as mortgages get easier to obtain and as Sterling regains its former glory.

German Property Perfect for Today’s Breed of Investor – to benefit from Crunch

German property investment has totalled 1.9 billion Euros so far this year according to a new report by Savills. The investment consultancy says that the money spent so far has been mostly by German Real Estate Investment Trusts, but that it expects the return of foreigners in 2010.

German property could do very well in the coming years, and if it does then it will have the credit crunch to thank.

Before the credit crunch, German property was constantly losing out to the emerging markets, and even to its neighbouring established markets, when it came to overseas property investment, because investors will primarily looking for exceptional capital gain.

Now that people have seen in no uncertain terms how quickly any capital gain can be lost, today's property investor is primarily looking for solid rental performance in their property of choice. For that type of investor Germany is perfect.

In Germany only 42% of the population owns their own home, and 44% rent at the market rate (according to recent figures from Eurostat).

This means that the government has to restrict rental rates, and landlords are only allowed to raise rents if the economy is growing. That is where the downside ends. In Germany tenants are very loyal, and when one tenant leaves it is relatively easy to find another. Typical yields are around the 4% mark, or around 6% in some areas.

Another reason why German property is perfect for today's investor is the abundant availability of properties with tenants already in place. Today's investor is researching their acquisitions to within an inch of their lives. Having the tenant in place with a rent figure set allows the potential investor to have exact figures on which to calculate the cash-flow from their German investment property.

It is also worth mentioning the fact that there are very few -- if any -- off plan property in Germany. Especially in Berlin it is almost all resale apartments in buildings built 40-100 years ago. This is also highly suited to today's risk averse property investor.

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£700K Greek Property Sale to British Buyer Tells a Lot about the Overseas Property Industry Today

I just read a press release. Apparently Azure Overseas have sold a 3 bedroom villa on the Greek island of Samos to a Brit for £700k. As the press release rightly points out, this is a massive signal that the reports of increasing appetite for overseas property is increasing within Britain. This is undoubtedly as a result of major increases in consumer confidence in the last few months.

I have had a look in the Halcyon Hills development, obviously I don't know the full details of the sale, but the finance on properties is up to 80% LTV, which means a 20% deposit, which means this person -- a solicitor from Surrey according to the release -- paid a deposit of about £170k for this property.

But the biggest part of the story for me, is the fact that the property is off plan. During the worst of the credit crunch, when the reports of developments being postponed and cancelled in Dubai were never going to end, there were people who believe no one would ever buy an off plan property again. Then, a couple of months ago, Overseas Property Professional, in a report into increasing demand for overseas property, said that the demand for off plan was rising also.

However, the reports that the new breed of overseas property buyers would be doing their own research at great length, and not buying on the strength of the agent's word are also confirmed by the press release.

I always said that anyone who did their research would not have bought in Dubai, and that off plan property will always be a great investment if the research is done properly. Thank fully the new breed of researching overseas property buyer is not discounting the potential of off plan property simply because of the over-publicised risk.

Of course -- as the OPP article pointed out -- most properties currently being sold to the international buyer are off plan, which means it has to be considered to any consumer wanting a decent level of choice.

For anyone considering buying an overseas property, either as an investment or lifestyle choice, there is an excellent guide to researching an off plan purchase here, and for investors I recently found the most comprehensive guide to overseas property investment I have ever read.

Spain Property Set for Less Misery in 2010 as Brits Bag Bargains

Spanish construction is to fall by 25% by the end of this year experts have stated. The global financial crisis caused demand for Spanish property to all-but dry up, meaning a massive over-supply emerged causing prices to fall rapidly.

Developers were forced to continue working on developments that had been started, despite the over-supply. None the less thousands of jobs were lost, as developers cancelled projects in the pipeline, and found it nigh impossible to sell properties already constructed, and impossible to sell off plan.

However, now that development is finally calming down, and prices have fallen almost 30% from their peak, demand is slowly growing, especially when Sterling begins to claw back some ground against the Euro.

The shortening of supply combined should combine with the increasing demand to put a floor below prices next year.

The tide is changing in the field of overseas property; the Brits are once again getting out there and sticking a toe into the water.

You know things are improving when the Times runs a positive story on buying overseas property. The fact that Spain was mentioned several times in the article is evidence that things are also improving for Spain. This makes sense; Spain has always been one of the most popular countries for British holidays, and property buyers, so it is logical that when Brits start buying that Spain will be among the first to benefit.

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