The situation in Paris and part of France, could be a sign of a slight recovery in the housing sector. Even though buying a property could be a safe haven for one’s money, one must wait and see how 2011 reacts, as one shall not forget that it is a fragile market unbalanced by the crisis and an economic situation filled with uncertainty. (All of this combined with a possible increase in interest rates and a partial reduction in government aid …… should warn investors to act prudently.

(Magazine Le Point.fr 19/08/10) This strong awakening of the real estate market after a latent period (in 2008), has resulted in a significant increase in prices, especially in Paris, which are being compared to the levels before the crisis, and makes people regret not having bought a property a year earlier, instead of having waited for prices to decrease even further.

But the big question now is: Faut-il acheter maintenant? (Should we buy now?)

This outrageous increase in value of real estate assets during 2010 is given only in large cities and some suburbs; whereas in small cities and rural areas of the country, the increase existed in a much smaller scale.
For investors who are buying fast and under pressure due to the small number of properties for sale and the speed in which are sold, I believe that rush always carries a risk and most of the times is not worth it. At first sight it is appealing to buy fast for the reasons that I previously stated, but to me it is not enough argument because buying a property takes time and market research, in addition to be disciplined to avoid buying overpriced and mediocre assets.
I agree that some tax incentives and low interest rates are appealing, BUT in a market with little supply there is a higher risk of getting anything at any price.  In this case, whatever gain obtained on one side with tax deductions can be exponentially lost on the other side due to the purchase of an asset that when is time to sell, does not generate capital gains because at the time of purchase was an overpriced asset.

“Pour les Notaires de France, cette hausse s’explique a la fois par la permanence des taux historiquement trés bas, mais aussi pour le valeur refuge donnée aux investissements immobiliers lors de periodes de crise”. Certain questions arise such as: what will happen to prices if rates go up?……. Can we anticipate another housing bubble? are wages capable of keeping up with current prices?

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.

Last week we were in the real estate fair Natal (Brazil), IX Salão Imobiliário DO RN, held in the Natal Convention Center, from 10 to 14 March 2010.

The sensations that caused us Natal just when we arrived in the city, is that it’s in urban development, where currently are construction a large number of apartment buildings, condominiums and other real estate developments, both to the consumption of Brazilian emerging middle class to foreign investors who see Brazil as a rising economy and potential return on investment within a short period.

Natal is the capital of Rio Grande do Norte in northeastern Brazil. Those who live here can enjoy over 400km of magnificent beaches, many of which are protected by reefs and natural pools, interspersed with rivers, freshwater lakes, sand dunes and cliffs of colors. Natal is very clear, cheerful and sunny.

In the real estate fair, we could see ourselves that Brazil is in a great economic growth. Building contractors, property developers and real estate companies were present to offer visitors the many real estate developments for sale in Natal city, as in the rest of the state Rio Grande do Norte.

All these real estate developments will be announced very soon in the New Homes Real Estate Portal.

About 10,000 homes, both new construction and second-hand, will be presented at the ninth edition of the Real Estate Fair in Natal (Brazil): IX Salão Imobiliário DO RN.

This fair will be held from 10 to 14 March 2010 at the Convention Center, in the area of Ponta Negra.

The public interested in buying their own homes or as investment property, will find more than 250 companies.

As indicated Ocimar Damasio, chief operating officer of the Communication and event organizer, this real estate fair is the second largest in Brazil in terms of turnover, after the real estate fair in São Paulo. Is expected to visit the show over 30,000 people during the five days it lasts. In addition, this year has increased the number of stands, even attracting companies from other countries.

During the exhibition, visitors will be informed of more than 200 real estate developments, for all tastes, from flats and apartments to houses and condominiums, even within the state.

During the week of 10 to 14 March, 14h-22h, visitors will find a complete environment with air conditioning, restaurant, wireless Internet and auditorium.

See you there!

It appears that the Florida real estate market, particularly Miami, is recovering from a hard crash.

Currently, the real estate market in Miami is increasing sales.

The average sales price in Miami rarely exceed €150.000, which is affordable for Europeans.

The sale of properties in Miami has increased due to:

1. The arrival of the U.S. President, Barack Obama.
2. La housing stock reduction, which the famous subprime foreclosures left in the hands of banks (the properties were auctioned).
3. The increase of malls and shops.
4. The decline in housing prices, added with the weak dollar, which has created a very attractive market to foreign buyers, which has led to a high percentage of international customer transactions.
5. The important market for luxury real estate, which has maintained its buyers due to falling property prices up to 50% exclusive. The buying clients come mostly from USA, Canada, Europe and Latin America.
6. The potential of the city to absorb the overbuilding generated in recent years due to its climate and as a greater international resort, cruise and shipping companies on the continent.

Both the Spanish Chamber of Commerce as the ratio of financial analysis by Standard & Poor’s, advise investing in Miami real estate market.

In new construction homes, promoters offers great incentives:

• bear the maintenance costs and taxes for 2 years.
• ensure the rent to the owners of the property for 3 years and if sales prices fall, guaranteeing repurchased by the same purchase price, proposed a housing finance with 35% of the down payment.

Miami has the Latin charm (65%, mostly Cubans) and the efficient and practical system of USA. With 2,400,000 people, Miami is a cosmopolitan city, full of celebrities, millionaires and a lot of visitors.

At this moment, it’s time to invest in Brazil, either as a buyer and promoter.

Brazil will host the 2014 Football World Cup and 2016 Olympic Games in the city of Rio de Janeiro.

These two events will involve the construction of stadiums, metro networks, new airports and hotels as well as updating existing ones. It will also require the construction of housing, along with the modernization of cities and real estate developments in today’s society due to the increase of the middle class.

In general, the Brazilian economy seems unstoppable (it’s the 9th economy of the planet), for his big break, with sustained economic growth, its ability to withstand the financial crisis, job creation, the image of stability against the Brazilian government foreign and oil resources in their coastal waters.

The foreign property investment in Brazil should consider the country’s characteristics: its size, different regions and products most commonly requested. The northeast area of Brazil had a huge real estate development in the middle of a virgin area.

The “real estate crisis” has affected several countries. We can make a comparison between Spain and the UK to see the evolution in each of these housing markets.

Referring to the residential housing market:

• In the UK, prices have fallen more quickly than in Spain, as sellers have assumed that without this prices decrease, the sale would not expedite. In addition, must take into account that the actual price drop by the devaluation of the pound, prompted investors to find properties with a discount of up to 50%. It has made that the real estate market in England is now already beginning to recover.
• In Spain the price reduction has been much lower and in the segment of luxury homes, this reduction has barely noticed. It is anticipated that the recovery in Spain will start between 12 and 18 months.
• Unlike the office market (see below), in the housing market there is a glut and excess debt; the worst is behind us yet. Even so, as discussed in the article of 26/11/09 La Vanguardia, in Barcelona and Madrid real estate begins to pick up.

About office market:

• In Spain, the real estate market is about to bottom out, as it has been noticed some cuts in prices for office, sometimes exceeding 40%. But this is clearly a market that has always had a shortage of supply.
• The office market in Spain has suffered the fall in rents, which has been linked to changes in the economy. When the rents are lowering, there is more risk for investors. If the economy recovers, rising consumption and improved incomes. Potential investors must be, therefore, very attentive to the evolution of the Spanish economy.
• Rental contracts in Spain are normally 3 to 5 years, unlike England, where contracts are much longer.
• Spain remains an attractive country for investment. A German investor particularly like to invest in Spain.

 The Spanish financial entities, and we talk about banking in general, seems unwilling or unable to dispose of their property, at least at current prices. The big question would be: Why should I sell now if within 8 months I get a 15% – 20% more? The answer is given: If these entities sell now, will always be at a price lower than that recorded in its books and, therefore, prefer to wait until the market recovers a bit.