Why + who + what + how to invest in real estate today?

2 June, 2010 No Comments

We have been seeing for several months, studying, analyzing past, present and future problems of housing market.

Rarely could be made an optimistic forecast about it. But maybe today I would at least contribute something more positive after having reflected on past crisis.

… And considering some of the ideas of Warren Buffett, the Oracle of Omaha, which broadcasts to their customers / shareholders, where:

• It makes the anticipation that the U.S. housing market in 2011 will be out of the crisis, although prices are not still the ones of 2005.
• Advises that people always has to have a good cash position to take advantage of investment opportunities when they arise.
• Indicates that it is much better to invest in business models, which are easy to understand. 

ABOUT HOUSING, if we make a historical note that after previous downturns, people in general turned to buying a house or brick, whether to make a safe investment, have wealth in their old age, leave a legacy or make a donation their children.

For any reason whatsoever, prices are now falling. The problem is not to know if we bought an appartment or brick which is purchased from a market price today and is well bought, or bought only half right, since it is difficult to set prices in today’s market, in recession, because today taxation prices for sure in a month or two are no longer valid, and in most cases should be aware of the offer that makes you a potential purchaser to come to negotiate.

The good idea is to have purchased at the time the market price was low, so that in time, as happened after the other crises, we may see that real estate property will be worth double or triple.

I’m just speaking from the point of view of the experiences had during the time and that is expected to be repeated within + / – long time, as the housing market is cyclical, plus being one of the engines of our economy.

But always thinking in case that a real estate purchase has been made with an accouracy study, for example, in a city like Barcelona, buying in any of the areas that usually have been easy to sell, foreseeing that in future there will still be enough demand (in streets such as Passeig de Gracia, Diagonal, etc.).

ABOUT CONSTRUCTION OF HOUSES, reflecting the thinking that makes Garcia-Montalvo, economics professor at 23.05 Vanguardia, whether it is right to build in a place where there are many houses to sell, the immediate response that comes to the head is not.

But he believes it, and the example is Las Vegas, where despite having a large portfolio of empty houses, and prices suffered a decline of 60%, construction has doubled. And the trick? since the fall of the price of land and construction costs of the new homes are very competitive against surplus product already on the market.

This is a warning to Spanish developers who have not reduced prices below the mortgage value.

… Let no one take it as a council to follow, since it is only my view … a feeling + the history of past crises + the pulse of the street + how to invest today for wealthy + opportunities market price + Euribor down + …

Brick vs fortunes

13 April, 2010 1 Comment

A recently published report, Wealth Report 2010, explains how great fortunes invest at this time.

This report focuses on behavior that has developed the global real estate sector in the economic crisis, noting a positive outlook for the future.

Both sponsors of the Wealth Report 2010, Knight Frank and Citi Private Bank, indicate that, globally, this market spends 33% of the investment in property, 24% in bonds and 17% in cash. The rest of the money is distributed in hedge funds and others.

When investing in property, capital growth and stability of investments were considered more important than profitability.

This type of investor relies more on his own master at the time of making investment decisions. Investors with great economic potential in the world are cautious about their investments this year, but in the long term, real estate assets remain a key aspect of their economy.

Among Europeans, there is a clear preference toward the real estate investment, allocating large fortunes 48% in real estate assets.

A clear recommendation to invest at this time would be:

• Investing in emerging residential market.
• Investing in top-level areas of large cities developeds.

During 2009, 75% of residential products that worth more than € 1,000,000 were depreciated, while charging prices suffered a decline. In late 2009 it began a slow recovery in more dynamic markets, for example, New York. The regions of Asia Pacific, Africa, South America, rose in 2009 from 7% to 52%.

Highlight the revaluation of buildings in cities such as:

• Shanghai, 52%
• Pekín, 47%
• Hong Kong, 41%
• Johannesburgo, 17%
• Singapur, 17%
• Yakarta, 14%
• Munbai, 11%
• Rio de Janeiro, 10%

In contrast, prices fell in Dubai, Algarve and Dublin over 25%.

The more luxury housing demand is in cities like London, New York, French Riviera, Miami and Washington, because they have emerged as attractive investment opportunities in high-end residential market.

Also highlight the difficulty of access to credit by the private sector, which causes a drown for the new business and business growth, due to lack of liquidity.

In Spain consider that the number of persons of high economic potential has been reduced by 18%. But within an economic and political situation very delicate, is a country as an investment opportunity, mainly owing to the price correction has been the residential sector.

To view the full report, click here.