Dubai Property: The Good the Bad and the Bare Naked Truth

There is a lot of hosh and poffel being talked about the Dubai property market at the moment. According to Colliers International prices were 2% higher in the first quarter of this year compared to last year, the 4% quarterly increase was the third consecutive growth recorded by the firm. Echoing Colliers findings of a market currently stabilising, Asteco said that prices were flat in the second quarter compared to the first.

But then comes a cold stark report in Bloomberg of a barren market with insufficient sales to allow buyers to gauge prices. If you ask me this is the most realistic story, and I am sure anyone who watched the recent Homes from Hell Dubai Dreams program on ITV will be of the same opinion.

Let us not forget that £50 billion worth of construction is on hold in Dubai, and that several of Dubai's largest developers are still juggling huge debts that could yet be defaulted. At a time when French leasebacks giving returns of 4% max are more popular than off plan properties capable of returning twice that, because investors just don't want to take any risk, it is hard to see sales increasing in such a volatile market.

Dubai property prices have fallen a reported 50% since the start of the downturn, but in reality that may only tell a fraction of the story; if a property is only worth what someone is willing to pay for it then how much is a property worth that no one wants?

Further, how much is a property worth that has views on 1-4 sides of unfinished foundations and uncompleted towers?

What's worse is I can't even see any hope in Dubai's future. Okay, if sales do increase on the towers that are complete or being completed and the market verifiably stabilises, then new developers will undoubtedly want to take over the uncompleted ones and get them up and going ready for the growth cycle. It is worth that initial sales spurt will come from that I can't envisage. Answers on a postcard, or in the comments, whichever is easier.

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.

Turkish Property Investment Making the News

Turkish property is currently among the most talked about in the world of overseas property, and for all the right reasons.

There are two main stories in the past week: Global Property Guide stating that the average rental yield on Turkish property is 5.48 per cent, which is much higher than the yields on offer in France (3.85%), Spain (3.81%) and Portugal (3.63%) and reports on the massive numbers of British people owning property in Turkey.

According to the Turkish Land Registry's latest figures, 32,000 Britons own Turkish property covering 6 million square meters. This is twice the area of property owned by Germans (3.5 million square meters), which is significant because Germany is Turkey's largest tourism market. The report received coverage in the Telegraph.

These reports follow several other features on the draws of Turkish property to appear in the national press, including one article calling the Turkish resort town Belek the next Algarve. If this had been a few years ago it would have been insignificant, but now, when the press is being extra cautious in its praise, this is all a big testament to the potential of Turkey.

Speaking of potential, nearly all the articles you read about Turkey, especially in the industry press, talk about the investment potential of Turkish property. However, this potential is being missed out on at the moment, because the majority of buyers are lifestyle buyers, with investment being a secondary consideration on their minds.

Sure, the majority of these people are still benefiting from the investment potential, because they are renting out their property when they or their family and friends are not using it. But the keywords there are "when ... are not using it", meaning they are not realising the maximum potential return from investment in Turkish property.

Survey Indicates UK First Time Buyers May Turn Back to Overseas Investment

OMG I thought I had fallen into a time conduit and been sucked into 2005 then... I read an article in Sky News pertaining to a survey in which nearly a quarter of UK first time buyers have said they would consider buying a home overseas for its greater investment potential and increased value for money.

Such articles were commonplace in the mid-noughties when it was thought that many first time buyers were investing in overseas property in order to use the rental income to boost their earnings sufficiently to get a mortgage in the UK.

So... seeing one now I immediately thought: what kind of source are we dealing with here; Friday night in the Tamworth Arms. I was wrong though, the survey comes from a more reputed base than any of those seen in the mid-noughties. In this case the survey was commissioned by Moneycorp and surveyed a pool of 2000 first time buyers.

Obviously it would have been better if the survey had been commissioned by someone less partial. That said: a pool that size has to be given a great deal of validity, especially when the survey's other findings are confirmed by many other sources.

Namely: the survey also found that 70% of first time buyers have given up on owning a home in the UK. This is confirmed by several other prominent sources recently.

Not least the recent report by Nationwide, which found that the average house price is now 5.5 times the average salary. This is far greater than the long-run (30year) average of 4 times. Add to that the fact that first time buyers need at least a 10% deposit in order to get a decent deal on a mortgage and you can see why owning a home in the UK is currently outside the reaches of most first time buyers.

With that knowledge the only surprise is the percentage of them considering a purchase overseas. Don't get me wrong it is a good surprise, because it confirms earlier reports that investors are once again entering the overseas property arena, after almost-nothing but lifestyle buyers since the crunch. Time will tell if considerations become determinations and desires result in increased sales.

New Development One of Finest Investment Opportunities in Florida

Azure Overseas is now marketing the Village at Town Center Development in the resort area of Orlando. The development offers 2 bedroom luxury condominiums just minutes from Disney World from the 70% discounted price of £40k. The resort-development also boasts an impressive array of facilities including: swimming pool, club house, state-of-the-art health and fitness centre, volleyball, basketball and tennis courts.

As an investment the main points of the development are as follows:

• 70% below its peak selling price
• Net Yields 10% currently being achieved
• Tenants already in place (91% occupancy)
• On-site management & letting team in place
• 1, 2 & 3 bedroom units in private gated community
• Minutes away from Walt Disney World and Universal Studios
• Potential to generate over 100% on capital invested, excluding rentals

What is missing from the main points is the fact that the properties can be rented residentially or to tourists; Florida uses a zonal rental system, with owners of property in residential zones unable to rent to tourists and vice-versa. Having said that, this development being just a few minutes from Walt Disney World, Universal Studios and the new Wizarding World of Harry Potter it should do sufficiently well on holiday lets alone; giving the owner(s) some use of it themselves.

For anyone that can't already see that this is a bargain from the low price and location, the properties are being sold at 50% below their build replacement cost. This has become the yard-stick for buying discounted properties in America.

This is undoubtedly one of the finest opportunities in the Florida property market right now, and that is saying something. Right now it is almost impossible to find an expert or analyst who will advise against investing in Florida property, and, as anyone that knows overseas property will know, that is also saying something. It is little wonder though; prices are currently low, yields are therefore high, and Florida has a strong and proven growth cycle.

Turkish Property Sales Increasing, Set to Continue Growing

Conti, one of the largest mortgage brokers for foreign property purchases has revealed that it issued twice the quotes for mortgages on Turkish property in May than in April.

The firm said that this huge growth followed steady growth over the last year, which it put down to the strong Euro highlighting the better value for money Turkey offered as a tourism destination and in property purchases.

Clare Nessling, Conti's operations director, says: "These factors, combined with low interest rates and some bargain property prices, have made Turkey increasingly attractive, as well as more affordable, for UK buyers. Property purchase costs and taxes there tend to be lower than other popular hotspots. Accessibility is important too and the country has a wide choice of airports which are well served by flights from the UK. Bodrum, for example, is only half an hour's drive from the international airport."

While Conti pointed out the steady growth in demand for Turkish mortgages over the last year, looking back to June last year, we can see that Conti then released data revealing a 143% growth in Turkish mortgage quotes in the previous two months, and a 65% increase comparing the opening 5 months of 2009 to the closing 5 months of 2008.

This is a very positive sign for Turkey, especially at a time when overseas property sales in the lower-budget category -- which Turkish property falls into -- are on the increase.

Of course, with the pound now strengthening against the Euro, Turkey will have to compete with Eurozone destinations.

This shouldn't be a problem though, Turkish property sales accelerated rapidly between 2005 and the second half of 2008 when the crunch went global, so it is a safe bet that Turkey will see strong sales again as part of the natural progression of recovery in overseas property demand. In fact if anything, the downturn will prove to have done Turkish property a favour, by increasing its status as a global property destination.

Repossessed US Properties to be Plentiful Until 2013

US foreclosure tracking agency RealtyTrac has told the US real estate press that it will be at least 2013 before the repossession problem is back under control. This is ultimately very bad news for the US housing market, and for homeowners, but the silver-lining for property investors is that there will be plenty more bargain US properties coming onto the market in the coming years.

The statements were made by a Rick Sharga of RealtyTrac in a conference with the National Association of Real Estate Editors, in which he talked about the so-called "shadow inventory". Sharga said that of the 3.5 million homes repossessed in 2009 only about 20% of those were listed for sale, as the banks were overwhelmed by the sheer volume and speed at which the problem escalated.

Needless to say the shadow inventory was huge coming into 2010, and there have been hundreds of thousands of homes repossessed already in 2010. The fact that over 370,000 homes were repossessed this March alone compared to RealtyTrac gives us an idea of the size of the current shadow inventory.

As time progresses the channels to bring these homes to market are getting better. However, the banks and lenders will always give up the best properties for first refusal in their own ranks before listing it to outside investors, and this will therefore always slowdown the process of these homes coming to market.

One thing that is not slowing down is demand to buy these properties as confidence in the international recovery brings increasing numbers of property investors.

Arguably, repossessed property in America is one of the top property investments on the global market right now. Many of the properties are being sold for up to 50% below their replacement build cost, which makes them a no-brainer if we dare call any property investment that after such a catastrophic crash.

In fact, replacement build cost has become the way of measuring the discount being offered by repossessed and other below-market-value properties for sale. As people started buying property again, people would hear that a property was being offered at 20% below market value, and they would soon find out that it was 20% below the peak market value, not the current market value. In the fast-paced world of repossessed sales, replacement build cost is a good measure of current value, with no time to do a proper valuation.

On this measure, a property being sold for 40% below its replacement build cost is most likely at least 20% below its current market value, and could be up to 50% or even 100% below its current market value, depending on the quality of the property, and the neighbourhood etc.

Most repossessed properties are being sold at such low prices that their being a bargain is undeniable. The question then becomes, is it going to regain its former value, and when it comes to America, that is unquestionable in most places. So then the only thing stopping people is their financial situation, or lack of confidence. So, now that both of these things are improving, so the number of potential investors in repossessed US property is also on the rise.