APRIL 2011 |
www.opp.org.uk
The path of progress Dear Editor
Anything that improves the accessibility of a piece of real estate increases its value. By infrastructure I mean roads, bridges, airports, air and rail routes. Anything that improves amenities in an area will also increase real estate values. I’m talking about amenities like major resorts, theme parks and conference centres. We can profi t… by positioning ourselves ahead of the Path of Progress. Let’s take Cancún, Mexico. Cancún was “ a small, swampy fi nger of land in
an isolated part of the Mexican Caribbean”. Land here sold for a song. Folks thought it was good for nothing. That was before the Path of Progress came along, and turned Cancún into one of the world’s largest resorts. Today, Cancún airport welcomes 100 international fl ights each day. Those visitors need somewhere to stay and eat. Workers catering to those visitors also need somewhere to stay and eat. Real estate values went through the roof. More recently, the Path of Progress moved further down the coast to
Playa del Carmen. Today, a modern highway brings you right to Playa. Back in the day, $10,000 bought you a building plot in the unpaved village center. Today, a 1000 square-foot oceanfront condo could set you back $600,000. It’s not just Cancún. Remember what happened when direct flights from the US started landing on Roatan (in the Bay Islands of Honduras) and Liberia in Northern Costa Rica? Property prices went through the roof. To profit from a Path of Progress play you need credible research. In practically every locale that I scout I hear tales of a new airport…or road…
or bridge. To profi t from the Path of Progress we need to make sure that the funds are in place to deliver the new infrastructure and that the country or region has the capacity to deliver the project. You need to be able to detach yourself from what the area currently looks like and visualize what it could be with delivery of the new infrastructure and amenities. You need to be able to picture what that swampy spit of land could look like if the plan comes off . And you also need to be able to Stay the Trade. By this I mean you need
to be willing to sit on your investment for the medium term. Infrastructure projects take time, particularly if you are looking at a less developed country. Take a conservative time-line for exit…double it…and if you’re not happy with that timeline, walk away. Particularly in the pioneer days, you’ll see very little liquidity in the market. There will be few transactions and buyers. That can make selling tricky even
if you are sitting on a real nugget. As the Path of Progress comes rolling into town, we see the market move
through various phases. Each phase calls for a diff erent strategy. First comes Pioneer Land Banking. The early speculators swoop in, and snap
up large tracts of land. These guys take on the biggest risk, but can also make the biggest profi ts. As land values rise, we start to see Pioneer Retail Development. This
typically involves the sale of raw lots to speculators. Next comes Mid-market Retail
Development. Now we start to see some construction as part of projects. Finally, the Mature Market is
dominated by end users… people who will live or spend time in the units. End users pay a premium as they are buying to suit their tastes. At this stage, the early investors have taken their profits and moved on to the next place. Ronan McMahon
www.pathfi
nderinternational.net
By Alex Finkelstein on “The Real Estate Channel.” Home prices in Hong Kong rose 24% in 2010, down from 30% in 2009 and, at the very minimum, prices are expected to rise at least 10% in 2011. The government still doesn’t have a handle on how to reduce infl ation or how to defl ate the real estate bubble that burst in 2007. But it is probably is no hurry to do either, because the real estate boom is also fattening the government’s revenue purse, according to several analysts in Asia who regularly monitor the country’s fi nancial health. The Wall Street Journal reports the government is expected to report a budget surplus of between 60 billion and 80 billion Hong Kong dollars (US$7.7 billion - 10 billion) for the current fi scal year. It had forecast a defi cit of HK$25.2 billion, more than double the HK$25.9 billion surplus in the last fi scal year. And the government will provide more land sites for apartment development. But completion of any new projects would be at least two years away, say sources in Asia familiar with Hong Kong’s property problem. “We don’t expect any fundamental changes in the government’s overall housing and land policy,” Kevin Lai, a senior economist at Daiwa Capital Markets, told The Wall Street Journal. He said that he expects a 10% rise in Hong Kong property prices this year. The WSJ also reports plans to increase housing supply by boosting the number of sites sold in government-initiated land auctions to more than 10 in the coming fi scal year, which begins April 1. The government sold 10 sites in land auctions last year. Four of the 10 were initiated by the government, with the remainder initiated by developers. In November, the Hong Kong government took its toughest step yet to cool the property market by imposing an additional stamp duty, or transaction levy, of up to 15% on properties that are resold within two years and requiring higher down-payments for high-end home purchases, moves that were supported by the International Monetary Fund. Economists said they expect an increase in land supply to have only a moderate eff ect in the near term, due to the time needed to build apartments once the land has been sold.
YOUR SHOUT
BLOGS | 25
Runaway HK market still surging Best of the Blogs
Market turning a corner Dear Editor
I think the industry should be aware that the market is certainly turning a corner with Spain leading the way. There has been a considerable upturn in interest with internet enquiries increasing over 40% since the start of the year. Having representation across Europe like we do it has been particularly interesting to see the rejuvenation of the British market over the last 6 months with January being the busiest of those months. People are starting to realise that prices are now at a good level and not decreasing. This combined with the underpinning of the Euro at these levels is no doubt giving British buyers confi dence to dip toes back in the water again. James Dearsley, European Sales Director, Atlas International
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68