Despite the strength of the upper echelons of the property markets, concerns about the spreading effects of the US sub-prime mortgage crisis are having effects further and further afield.

Asian bond spreads widened in Hong Kong this week, with the popular iTRAXX Asia ex-Japan high-yield index widened by 20 basis points, in turn raising the costs of protecting investors against defaults or restructuring.

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British property investors are taking a long, hard look at the New York property market. With the dollar at a 20-year-low, for British investors with pounds in their pocket, the Big Apple just got a whole lot cheaper. According to the Financial Times, Steven Toumbas, an equities investor from London, has always wanted to own a second home in the US. “America is the engine for the world,” he says. “Everyone wants to have a holiday home in Florida, or an asset in New York. It’s the place to be.”

Mr Toumbas began looking at potential properties in New York City in mid-June 2006, but felt the timing was not quite right. The pound at that point was trading at about $1.84. “I held back because I thought there would be further dollar weakness,” he said.

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Donald Trump

No one could accuse Mr. Trump of not being prepared to blow his own horn, in fact, he even took a stand against Forbes magazine when they included him on their Forbes 400, claiming that Forbes had underestimated his wealth by $4 billion. We hesitate to call it class, but it has a certain flair. Despite nearly losing his shirt in the 1990’s real estate crash, “The Donald,” managed number 117 of this years Forbes 400 with an estimated wealth of $3 billion, although according to the man himself, “I’m worth $7 billion.”

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According to “Emerging Trends in Real Estate® Asia Pacific 2008,” just published by the Urban Land Institute (ULI) and PricewaterhouseCoopers LLP, Shanghai, Singapore and Tokyo rank as the three most promising Asia Pacific cities in terms of real estate investment prospects.

David Sandison, a Tax Partner with PricewaterhouseCoopers in Singapore said, “It is expected that even greater amounts of capital will be flooding Asia Pacific real estate markets in 2008. The real challenge for investors will lie in finding the right assets against the backdrop of yield compression and scrutiny by regional governments and tax authorities.”

Shanghai topped the list for investment prospects, edged up from its second-place ranking last year. Singapore received the highest rating of any of the cities included in the report in terms of overall risk.

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The Irish Independent had an article this Sunday that attracted our attention. With the massive increase in property values in Ireland recently, many Irish home-owners have jumped on the worldwide buy-to-let market abroad. Particular favourites have been the USA, Spain and Bulgaria.

All these markets are taking a beating at the moment, particularly the American market. GE Money Home Lending subsidiary “British Mortgages Abroad” recently pulled out of the Florida market and are not accepting any more mortgage applications on properties in Florida

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To a certain extent, the decision to buy off plan or a second hand home depends on the market concerned. In a fast moving market, off plan will be a far more appealing and practical investment than in a stagnant market. Here is a comparison and a list of potential advantages and disadvantages. First the difference between off plan and on plan needs defining. On-plan is a property that has already been constructed, perhaps even changed hands several times already. Off-plan is a property that is literally off the plans, meaning construction may not even have started yet. Some of the most important things to take into consideration when looking at off-plan investments are: The state of the market. Is it buoyant or stagnant? The reputations of the builder and promoter. Are they reliable? Do they have strong track record of completing projects on time and to specification?

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A Million Dollars. It certainly sounds like a lot of money. Just say it out loud: “A Million Dollars,” now say it slowly, “A Million Dollars.” It still sounds like a lot of money, but what will a million dollars buy in London, Europe or Africa or South America? As I began researching this article, the phrase, “One man’s meat is another man’s poison,” came to mind. Obviously, some countries vary widely from area to area, but here are some interesting properties for sale from around the world that all have the same price tag – A Million Bucks.

London. In London, one million bucks will secure a 3 bedroom flat in W6, a short walk from Hammersmith Broadway. This particular flat is offered by Foxtons and comprises one reception room, kitchen, three beds and one bath over 87 m sq. Leasehold with a share of the freehold.

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Every year, the World Bank produces a report on the ease of doing business in 178 countries, ranking them from 1 to 178. The World Bank uses several criteria to determine the rankings, but factors taken into consideration include the ease of hiring employees, the ease of starting a new venture to the ease of putting a company into bankruptcy.

Singapore tops the list as the number one place to start and run a business in the world, closely followed by New Zealand and the USA. The factors that helped Singapore to this slot are “Employing workers” and “Trading across borders.” Although, having recently discovered that the famous Raffles “Singapore Sling” cocktails are now automatically dispensed by a machine rather than hand made, I feel the position is unwarranted. What is the world coming to? Personally, I feel at least one of the criteria should be, “best cocktails.”

Perhaps more interesting to property investors is the top reformers report. Singapore has already been through a major property value upswing, whereas changes in the tax and property laws in places like Egypt and China will likely create a more investor-friendly environment.

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Kiev Ukraine - Place de l’Indépendance [Photo credits to Panoramas on Flickr]

Some might ask if ‘coming of age’ was a good thing as far as property investors are concerned; the answer is probably ‘yes’. Ewan McGarrie of propertyinvestment.co.uk recently described the East European city centre market as ‘large and stable’ and particularly highlighted Budapest as a stable residential market with good capital appreciation prospects. Yesterday we juxtaposed the possibilities of much smaller Zagreb with Croatia’s Adriatic coastline and made the point that Zagreb, as the capital city, is drawing in the country’s professional ‘cadres’. However, there is a bigger story to tell in the dynamic economic prospects of Eastern Europe, which have been largely overshadowed by commentators concentrating on the BRIC (Brazil, Russia, India, China) economies. Unlike Russia and China, East European businesses are well placed for attracting the profitable, well-paid (development and marketing) ends of the “smiley curve” as well as the less remunerative manufacturing.
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The latest issue of Industry Week included an article by Adrienne Selko on the advantages for companies of investing in newly developing industrial regions at an early stage of their growth in order to secure good sites and well built and well managed plant and warehousing. Does this theme suggest that there is scope for private investors in spotting the up-and-coming places with a view to residential real estate investments?

The July issue of Atlantic Monthly included an excellent assessment by James Fallows of industrialisation in the China’s Guangdong Province. Part of the article is a profile of Irish-born Mr Fixit, Liam Casey, whose business is sourcing suppliers for foreign businesses, at which he is highly skilled. However, although there are commercial real estate opportunities in Guangdong (science and technology parks, for instance), it doesn’t seem as if they will be open to overseas investors for while, and, as for residential developments, Mr Casey has been living in the Sheraton Four Points and other hotels for over 10 years. Although Shenzhen has a buzz, it is not a much loved city, business people visit but don’t stay; even the thousands of workers aspire to return to their own region when they’ve made enough money.

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