The Property Inspector: What’s in store for 2012?

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    TheMoveChannel.com's Property Inspector: Taking a closer look at global real estate each month.

    As January draws to a close, TheMoveChannel.com's Property Inspector quizzes the agents who received the most enquiries on the overseas property portal last year. They talk exlusively about the successes – and failures – of 2011 and what's in store for 2012.

    Is America really recovering? Should buyers avoid Greece? Has luxury property in Portugal had its day? Can Spain's rental yields stay strong? The Property Inspector asks the experts to point investors in the right direction for 2012.

     

    Assetz (Overseas Property)

    How would you sum up last year?

    " 2011 was a year for buyers, not sellers. Returns on investment were mainly represented by rental income rather than capital growth and indeed most markets saw price stability or falls rather than growth. Some markets like Ireland and the US saw further falls, the UK and Dubai saw broad stability but few markets other than London saw strong growth.

    "Nonetheless distressed sale prices to investors, rather than high street pricing, have risen in 2011 and in due course we expect high street/ estate agent public facing prices to start rising again. This remains a market where good buys are defined by their defensive income characteristics that can underpin prices."

    What do you expect from 2012?

    "At Assetz we like to focus on investment rather than speculation when it comes to the overseas property market. Countries such as Spain present an excess of supply meaning that rental income levels can be weak for a long time, hence holding back prices in our view. This provides buyers with potentially low purchase prices, but due to this over-supply, rental yields will be limited and long-term growth would remain speculative depending on a country's economic state farther down the line.

    "One of the biggest challenges in 2012 will be the mortgage markets. In Europe we are seeing the beginning of a very bad year for mortgage availability with the new bank capitalisation rules crushing banks' ability to make new loans for at least 2012, if not 2013 and onwards. The US already has a dearth of any finance at all for investors and whilst we do not think Europe will be as bad we still expect problems."

    How much risk is there in Europe?

    "The greatest risk may be Greece who in our view is the most likely country to leave Europe in due course and if they did their currency could devalue by 50-60% leaving property owners nursing huge losses. Greece is a country to avoid until they exit the Euro and devalue or it becomes clear they never will. "

    What about the USA?

    "The USA provides a much stronger platform for traditional investors. Due to a large number of foreclosures, coupled with a decline to the point of halting in new builds, property in the USA has dropped significantly in price as it at the best affordability level ever. The concept of supply and demand is key in the US as, with few new homes being built, currently available properties which are heavily discounted, still offer exceptional rental yields as home-ownership has declined from 70% to 60% in just a few years.

    "Recent reports regarding key areas of the United States have begun to suggest that we have seen the bottom of the property cycle and are entering a period of slow, but steady growth. 2012 is a significant year in which to invest in the USA."

    How are you starting the New Year?

    "The rule of thumb remains that safer investments are where substantial rental demand still exists and very limited new supply is forecast. There are not an abundance of these locations but Florida is currently one of them and we have also started to develop a tourist resort in Cape Verde, Santa Monica Beach Resort and Spa, due to the rapidly rising tourist numbers and the almost non-existent property development on the islands creating a perfect supply demand imbalance. True investments are out there, you just need to find them with careful research."

    View property at the Santa Monica Beach Resort and Spa in Cape Verde.

     

    Best Overseas Property Investments (Spain / USA)

    How would you sum up last year?

    "It was good – the market conditions were as good as any I suppose. Primarily in the Costa Del Sol, where we had a number of good projects with 100 to 107 per cent mortgages, good discounts of 10 per cent or more. That's the core of our Spanish business. We do a lot of lifestyle buyers, interested in either very cheap properties or properties with potential for investment."

    What do you expect from 2012?

    "In December and January we've had about 150 enquiries for Costa del Sol. It's the perfect time to buy property in Spain because of the reductions and the mortgage deals. I read an article somewhere, but about 40 per cent of the new build stock in the Andalucía region has sold in the last 12 months. Banks are a little fussy but they're offering good mortgages."

    Can Spain recover from the Euro crisis this year?

    "I think Spain will recover tremendously this year. The fact that the number of off-plan and new build properties has reduced so significantly in the last 12 months is going to be good even for retail vendors."

    How are you starting the New Year?

    "In Spain, we're getting the most interest in Costa del Sol. Mallorca is exceedingly popular, that's our number two area. But a lot of our work is in America, in North Dakota, a development which has gross yields of 47 per cent and net yields of 37.7 per cent. They've worked out how to access the oil there by a process called fracking and there are basically 15,000 miners camped out there in cars and caravans… it's just the best investment that's been on the market for the last ten years."

    View properties ready to let in North Dakota .

     

    Aspen Woolf Europe (Brazil)

    How would you sum up last year?

     "2011 was our best year on record for property in Brazil. With nothing but bad news coming out of Europe, it's been a pleasure to work in a part of the world that's actually booming. Brazil enquiries were up 40% on the previous year so it's clear we're not alone in choosing Brazil as our leading market for investment."

    What do you expect from 2012?

    "Brazil ended 2011 well, jumping to 6th place in global economic rankings and all the indicators are there for another strong year for growth, maybe even 4%. I think the next 3-4 years will be the key time to take advantage of the property market. Prices are still very affordable – you can get a house close to the beach for under £60k – and some developers will offer financing so you can spread payments over a number of years. After the Olympics in London, the spotlight will be very much on Brazil as they prepare to host the world's biggest events, the World Cup in 2014 and Olympics in 2016."

    How are you starting the New Year?

    "2012 will be a very strong year for Aspen Woolf with new offices opening in Brazil as we expand our operations outside Europe. We'll be introducing some new low cash-input projects in and around Natal and Fortaleza and we look forward to launching our very own Brazil project in Q2. We've also highlighted 3 other markets which we believe will offer good opportunities in 2012: the US, UK & Turkey!"

    View two-bedroom apartments in Brazil .

     

    CSF Property (Portugal)

    How would you sum up last year?

    "2011 was a steady year for Portuguese property. To give you an idea, in 2009 we had people coming over wanting to borrow 80 per cent, in 2010 that started to change a little bit: more people with more cash. 2011 was more people wanting to take 50 per cent mortgage, 50 per cent cash, but wanting more expensive properties. Towards to the end of 2011, banks started creeping back, lending 70 per cent. Now they're lending 80 per cent again. In the beginning of 2011, we had the bail-out, but it's starting to get better, you know?"

    What do you expect from 2012?

    "This year, at the start we're selling not so many villas – it's more townhouses."

    Has luxury property had its day?

    "Yes. There's not a lot moving above £500,000. Albufeira in the Algarve has become more attractive from a price point. Back in the peak of the market in 2006, a nice townhouse was €300,000. You can pick that up now for €220,000. It used to be that a two bedroom apartment was €220,000, so you're getting a house with a pool for the price of a two-bedroom apartment."

    How is Portugal responding to the Euro crisis?

    "Portugal has been quite sensible. They've raised taxes, they haven't spent as much on Christmas and roads and things like that and we're starting to see some light. "

    "We sell property in Spain's Costa del Sol as well and the big thing about the Algarve? There are 54 new developments on the books at the moment, each one with an average size of 40 properties. In the Costa, there are 1,600 developments, each with an average size of 200 units. There's no oversupply here and that's the one thing that's saving the market."

    What are your plans for the New Year?

    "We've got a frontline beach development we're pushing heavily in Lagos – Lagos was voted the number one place to be by The Independent. We've got the last ever beachfront properties that are new build for sale. There are no more licenses being granted in Lagos for beachfront properties. And they're two-bedroom apartments at €345,000. They're being built at the moment – they're finished in March this year. It's only 20 units, but it's nice. We're taking reservations now. They pay 30 per cent now and pay the other 70 per cent on completion."

    View two-bedroom properties in Lagos .

     

    Where are you planning to invest in 2012?

    Browse our listings of houses, apartments and other overseas property:

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