Iceland is facing a major financial crisis at this moment. With the country’s Krona currency losing 30% of its value in the last month, banks were forced into domestic ownership. This forced the Iceland stock market into a meltdown, leaving the Iceland government forced to ask for outside help.
The Russians jumped in as remedy rescue providing Iceland with an apparent €4 billion emergency fund to keep the economy from crumbling for good. Scandinavians were also reported to have helped by loaning some monies to the government. The crisis has been elevated due to the fact that Iceland is not part of the Euro. Standing alone the country was susceptible to currency fluctuations and now that the Krone has nose dived, many investors and property owners have lost their dreams.
Another worrying factor for many Brits is the news that folding Iceland bank Kaupthing is tied to many British entrepreneurs. People like Gordon Ramsay, Robert Tchenguiz and others have been bankrolled by Kaupthing who also owns UK rival Singer & Friedlander.
This whole situation has also soured relationships between the UK and Iceland when Landsbanki went into receivership. Some 300,000 UK depositors who had money invested in the Icesave account were told they would only get a guaranteed amount of £50,000.
Luckily though, the FSA took matters into their own hands and guaranteed all money deposited to investors by using terror laws to gain access to the finances. Naturally non of this serves to help relationships between the two countries.
With the icy wind blowing through Iceland and many investors and property owners scared for their livelihood, the situation is dire.
Despite all the negatives, there are also always those who win in situations like these. We wanted to dig a little deeper to see whether it would be worthwhile to invest money into the Iceland property market right now by those who can.
Our findings didn’t excite us too much as for starters, there isn’t much to be had in regards to finding English language property listings in Iceland. From the little bit we saw, listings aren’t that cheap either and with the falling Krone, they might become cheaper for outsiders, but then if the market is weak, it will be harder to rent out an investment property anyway.
Therefore we have come to the conclusion that unless investors are 100% familiar with the Iceland property market it might be a risky move right now trying to cash in on a very unstable and volatile market.
Photo Credits: Matt