42 | THREE WISE MEN WORDS | Bill Clover, John Howell, Tolga Disener
from the euro. Would this be a mortal blow to
Is the Euro dead? Q
uestion: Is the Euro fi nished? As I write, Greece drifts closer to default and an exit
the euro? Does it matter? How will this affect the international property market? How will it affect you and your business? At fi rst glance, the euro seems really
important for the overseas property industry. A large percentage of people buying overseas property live in countries in the eurozone. Many of the main property markets are in the eurozone. Even countries outside the eurozone can be linked to it, formally or informally.
If Greece manages to survive – and we should never underestimate the Greeks ability to survive – will the continuing uncertainty continue to hurt economic activity in general and the willingness of people to buy property in particular? Who from outside the eurozone, right now, is going to invest in an asset valued in euro if the value of the euro might collapse?
If Greece leaves the eurozone, is this the beginning of the end? Will speculators pick off the survivors one by one? Portugal, Ireland, Spain, Italy and even France?
What about Germany? Arguably, Germany has been the main country to
benefi t from the euro. It has allowed eurozone consumers to buy German cars and refrigerators far more cheaply that if the old Deutschmark had risen to its natural level. Most of that was funded by debt. Has Germany looted the economies of its poorer neighbours? In effect, sucking in private money at the expense of the states concerned? Will Americans see a collapsed euro as an opportunity to bag a bargain or will they see investment as pouring money into a black hole of falling real values? Is this good news for the Central and South American markets, long favoured in the US and Canada? And what about China? Will its economy continue to prosper if the eurozone hits choppy water? What impact will that have on the vast amount of interest the Chinese are showing in property in other countries? When we have so many diffi cult
questions it seems sensible to seek the views of experts.
This is the fi rst in a regular series of columns in which we will be doing just that.
We have approached our experts
entirely independently. None knows the views of the others before giving their opinion.
NEXT MONTH: Making money out of fractionals
Bill Clover
Bill Clover is president and chairman of Panorama International, which specialises in hospitality studies, packaging and fi nancing. Clover has owned or been a board member of companies involved in international real estate development, marketing, fi nance and consulting for more than 40 years.
clover@panoramaintl.com
W
hat a complex problem, and not one that belongs solely to the 17 euro-participating countries.
Greece may well trigger a Europe-wide problem. The real question is: “What debt is Greece capable of servicing?”. Severe austerity measures imposed combined with investment in key industries like tourism and exported manufacturing are logical, but not probable. In the much larger disaster scenario of a Euro collapse, traditional Europe is very expensive in the eyes of the world today. A devalued Europe would encourage exports, tourism and property purchases. A collapsed Euro may make investors think very carefully.
It is possible that Europeans, (who are much more worldly than most of the world) would see a sinking Euro as an opportunity to invest and live elsewhere, where a fi ne stable life style can be afforded at a very low cost. This shift in wealth could be very benefi cial to emerging markets. Americans would see certain countries as very desirable – as personal acquisitions but not necessarily as fi nancially based investments. History has shown that fear trumps greed every time. Wealthy Americans will immediately see opportunity to invest at the right time, but will take their time and consider partnerships with leaders from the country being invested in. They are worldly, sophisticated and their wealth is usually managed intelligently. Aggregators of wealth (funds and family trusts) will be more cautious as they will want to see an exit, but will be on hand to go “bottom fi shing” in such a scenario. For personal investment from American individuals and families, France
for a personal residence would be at the top of the list. The international diaspora would be attracted to a personal investment or second home in their ancestral homeland. As pointed out, it is arguable that Germany has been “looting of its poorer neighbours”. An opposing view might be that the work ethics remaining in Germany has kept the Euro afl oat and supported the Euro. Perhaps it is time for Germany to go back to the Deutschmark, and for the rest of Europe to intelligently devalue?
China as a net creditor may well have to scramble to protect its own position. Perhaps this means propping up currency, or investing greater funds (not in countries but private enterprise) that will no doubt be depended on to pay off the mistakes of government.
Individual Chinese investors are another matter. and as this market access becomes more accessible could supply substantial investors in residences, and the aggregated buyers could be logical bailout buyers at a price. Financial upheaval anywhere in the world is horrible for the development and real estate industry. It creates uncertainty and distrust. On top of this it also stimulates us all to create a better product and new markets. International development will take another hit, but within that depressing statement there may be great opportunity. Confi dence is always the key.
Perplexing puzzle | Is the eurozone beyond being pieced back together?
FEATURES
www.opp.org.uk | JUNE 2012
Welcome to our new feature where we ask three independent experts their opinion on the hottest topic in the international real estate industry today. It has been hard to ignore the enveloping crisis in Europe’s common currency countries. So, we asked our experts: “Is the Euro dead?” here are their responses.
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