It was arguably the event that defined a generation; the 50's had the cold war, the 60's had love, peace and the Vietnam War. Our generation had the credit crunch. The financial world wrought, racked and left in ruins to remind everyone what greed can do if left unchecked in a capitalist globalised economy.
Now between 5 and 7 (depending on which country you are talking about) years later few can refute that the world is finally starting to recover. The early birds have already caught loads of investment worms, but it is far from too late to capitalise on the recovery to make some money from property investments. Here are a couple of places where you might want to start your research.
Talk about the early bird... The US market turned very quickly indeed, far the contrary to many analysts' predictions that it would bobble along the bottom for a very long time. The turnaround was brought about by unprecedented boom in the rental market, which led to massive buying sprees in the multi-family housing sector, and even mass-developments by big institutional investors and developers which was of course also a boost to the wider economy.
In the last 6-12 months the US housing market went off like a rocket, rising sales, rising prices and falling inventories. Indeed sales rose so fast that the lack of inventory began to become the biggest problem the market faced. But as we all know the US market is massive and it is still a long way of being fully recovered. Thus opportunities still abound for the keen-eyed investors.
For example Orlando and Florida have seen the biggest price increases of the US recovery, but there are still hundreds of thousands of underwater loans, repossessed homes and short sales. These have also seen price increases of late but nowhere near the level of the main market, leaving opportunities to buy a short-sale or bank-owned property, fix it up, maybe improve it a little and sell for a very big profit on the open market - once the market returns to normal.
Of course rentals are the main prize in the US at the moment, with rents having risen at an exceptional rate over the last 3 years and bank-owned properties still available at a synch. Undoubtedly some US markets are baron of investment opportunity but many cities still offer rock bottom and rising prices as well as a solid rental market.
According to a recent article on MSN 3 great cities for US property investment are as follows:
- Vacancy rate: 8.6 percent
- Average rent: USD 803
- Nations highest foreclosure rate 3.21 percent
One in every 89 homes in Las Vegas is being foreclosed upon. This has forced down the average price of existing homes from USD 220,000 two years ago to just USD 128,000 today. That is a bargain, especially with such a low vacancy rate.
- Vacancy rate: 7.9 percent
- Average rent: USD 871
With rents that have risen only 0.2 USD in the last year, Orlando, Fla., really is the most magical place on Earth.
"That's not much to call home about if you're a landlord," Canalog says. "The condo-conversion boom that happened during the housing boom really went bust as well, and the condo flippers ended up being reluctant owners who, if they haven't been foreclosed upon, probably ended up renting the properties out."
Colorado Springs, Colorado
- Vacancy rate: 5.3 percent
- Average rent: USD 713
The property world knows the story of Vietnam very well. It was one of a cluster of several southern Asia emerging markets to attract growing attention as the world went property mad in the noughties, but it barely got a chance to shine before it fell victim to the financial crisis in 2008. The latest reports indicate that it is getting back into high gear now though.
Earlier this month EXS Capital reported its formation of a USD 37 million pool of around 50 high net worth individuals to invest in the real estate developer Son Kim Land. The money, which could rise to USD 80 million depending on demand, will go fund the development pipeline of the company, the property subsidiary of the prominent retail-focused conglomerate Son Kim Group.
Before EXS capital at the end of May was an announcement by private-equity giant Warburg Pincus of its first foray into Vietnam, in the form of a consortium that is buying a USD 200 million stake in the retail property business of Vingroup, the country's largest private real-estate company.
In April, the Korean chaebol, or conglomerate, Lotte bought the luxury riverfront Legend Hotel Saigon. Lotte plans to open another hotel in Hanoi in 2014 and already has five supermarkets in Vietnam, a tally it expects to bring to 35 across the major cities of Ho Chi Minh City, Hanoi, Haiphong, Danang and Can Tho. The Japanese retailer Aeon has also announced plans to enter the market in 2014 with a large mall in western Ho Chi Minh City.
There are many more markets out there, which are either enjoying a consistent national recovery (not too many of these) or where markets and segments are recovering in pockets and creating great investment opportunities. It is simply a case of finding them.
- Thursday 01 August 2013