Geographically the Caribbean is quite close to the doldrums. Metaphorically its second-homes market is bang in the middle of it.
Overseas second-home buyers stayed away from the region during the winter, traditionally the busiest time of year for this housing market.
They are slowly coming back into the market now, tempted by a round of cuts in asking prices.
"The buying season has started late this year," Georgina Richards, associate at estate agency Knight Frank, said. "It usually starts mid-January, but this year it started in March, because people were sitting on the fence. Prices were not coming down as fast as buyers were expecting, but they are coming down now. Vendors are offering 10 to 15 per cent reductions."
According to home finder Quintessentially Estates, vendors are slashing up to US$500,000 off prices.
Examples of big price cuts include Colina del Mar, a Barbados beachfront villa, which has had its price reduced from US$3.5 million to US$3 million.
The story is similar on the western side of the Caribbean. The asking price for luxury Casa Sul Mare on the Cayman Islands has been cut from US$1.9 million to US$1.53 million. Both properties are marketed by Knight Frank.
Ms Richards said Barbados and other islands that were easily accessible by air and had good infrastructure and security would survive the downturn best in the Caribbean.
"A couple of years ago people were looking for islands that were up and coming and where they could get more for their money, such as St Lucia and Antigua. But in the past few months they have focused on the more mature markets, such as Barbados and British Virgin Islands," she said.
Foreign buyers tend to buy beach-front homes in areas with low levels of development.
To cash in on this trend, international branded resort operators are unveiling beach-side developments offering on-site leisure facilities such as spas and championship golf courses.
Ms Richards was confident about long term prospects for the Caribbean second-homes market because favourable tax regimes on many islands and plenty of sunshine on all of them would ensure it remained popular with overseas buyers.
Growing numbers of Caribbean nations, heavily dependent on tourism, were opening their doors to overseas holiday homebuyers because construction of resort communities was a valuable source of new income for them, she said.
Even Cuba is allowing private developers to build residential communities for wealthy overseas buyers. The first of these will probably be the Carbonera Club where British-based Esencia Hotels and Resorts plans to build 720 villas and apartments, spa, hotel and golf course. The developer is offering homes to non-Cubans in pre-launch sales. Prices for villas start at US$1.3 million.
New projects are appearing in established Caribbean second home markets too.
Developer Cinnamon 88 is building 35 villas and a Four Seasons Hotel at its 13-hectare Clearwater Bay project in Barbados. Ten villas remain unsold at prices starting from US$11.5 million. Music impresarios Lord Lloyd-Webber, Simon Cowell and Formula One team owner Eddie Jordan were early buyers.
However, Lord Lloyd-Webber and other would-be residents were reported to be impatient about the slow pace of construction. The developer said building work would be delayed by a year following the Barbados government's decision to ban 1,000 Chinese labourers from working on the project as part of its "no foreign labour" policy aimed at protecting local jobs. The developer insisted it would keep to its scheduled 2011 completion date despite the hold-up.
Assuming all goes to plan, the estate's villas will be constructed in the same fashion as Alang Alang, the Balinese-influenced Barbados home of Cinnamon 88 partner Mike Pemberton. Homes at the developer's Grenada scheme, the Mount Hartman Estate, will be built in the same style, also with aged teak doors from Indonesia, Brazilian wood floors and French chandeliers. Residents will have access to the Four Seasons Hotel facilities at the Grenada and Barbados developments.
On the former British colony of St Lucia, Lord Glenconner, the developer who helped transform Mustique into a hideaway for the world's glitterati, is building seven multimillionaire homes on the island's southwest coast. The developer said the Glenconner Beach villas were the only homes in St Lucia with direct access to the beach. Prices start at US$7 million for a 1,239 square metre property. Construction is scheduled to start this month.
The Turks and Caicos Islands are rated by Conde Naste Traveller to be the Caribbean's best holiday destination. This British colony may have its constitution suspended by London while irregularities are sorted out. However, once the constitutional overhaul is completed, these islands will be much better place in which to invest estate agents say.
Homes on the Turks and Caicos Islands and other Caribbean destinations can be found at http://www.caribbeanhomefinder.net/
CARIBBEAN HOME BUYER'S GUIDE
Taxes, laws, languages and openness to foreign property buyers vary widely across the Caribbean.
Among the most tax friendly and welcoming to overseas buyers is the British colony of the Turks and Caicos Islands.
Foreigners can buy homes anywhere in the archipelago and there are no taxes on inheritance, capital gains, income or property. Stamp duty has been temporarily cut from 9.75 per cent to 6 per cent until the end of June to stimulate sales.
The Global Property Guide considers the Turks and Caicos rental market pro-landlord. However, home transaction costs are high, averaging 19 per cent of the value of a property when buying and selling fees and charges are combined. They include legal fees, estate agents fees and notary fees.
The situation is nearly identical in British colony the Cayman Islands. The cost of buying and selling a property can touch 20.5 per cent but there are no taxes.
Foreigners are free to buy property in Barbados. They need permission from the Barbados Central Bank, but this is a formality. There are no capital gains or inheritance taxes, but homeowners can pay 20 per cent income tax on rental income if they let their properties out.
Grenada is distinguished with having the Caribbean's highest combined buying and selling costs - equivalent to 43 per cent of a property's value the Global Property Guide reveals. But taxes are low.
The former British colony of St Lucia is more suitable for holiday homebuyers with money to spend than investors looking to make money because property purchase and sales costs are high - when buying and selling costs are added together they amount to 22 per cent of the value of the property.
Tax on rental income ranges from 10 per cent to 30 per cent. Foreigners need a Land Holding Licence to buy a home in St Lucia.
The legal systems in St Lucia, Grenada, Barbados, Cayman Islands and Turks and Caicos are based on English common law. English is widely spoken on these islands.
There are 10 projects in Cuba aimed at overseas buyers at various stages of planning and development. The only foreigners who cannot buy into these schemes are Americans because of their country's embargo. Little English or Chinese is spoken in Cuba, where the language is Spanish.
Caribbean rental returns are usually in single figures. Research from estate agency Cluttons Resorts shows gross yields on Barbados range from 6 per cent to 10 per cent. They vary from 4 per cent to 6 per cent on St Lucia, and 4 per cent to 5 per cent on Grenada.
Wednesday 13 May 2009
Friday 8 May 2009
WHERE WILL CHINA'S RICH INVEST?
PLEASE READ "WHERE CHINA'S RICH ARE INVESTING", 15th NOVEMBER 2010, FOR LATEST ANALYSIS
When a Chinese entrepreneur bought a French vineyard last year it made headlines around the world. Did it mean those much-hyped, big-spending, Chinese property investors had finally arrived? Well, they are not exactly turning up in droves, but they have been spotted in one or two places like London and Dubai. It may be a trickle now, but this investment will turn into a torrent. You can bet on it.
When Beijing lifted its ban on Chinese businesses purchasing property overseas in 2007, this signalled capital controls on its private citizens would end eventually. While they wait, some mainland businessmen use companies to quietly funnel their money overseas, some of it into tax havens, hidden away from China's mandarins. Other Chinese invest in overseas property via Reits.
The potential purchasing power of Chinese investors is great and growing. China has 373,000 HNWIs and their numbers are expanding 14 per cent a year, faster than anywhere else in the world. When capital controls are lifted investment overseas will surge as pent-up demand is released. Property will feature highly in a Chinese HNWI's portfolio.
Modern China like Hong Kong, Russia and Britain is property-mad. Twenty years ago nobody living in a Chinese city owned their own home. Now 80 per cent of urban households are owner-occupied. Between 30-50 per cent of a typical Chinese HNWI's portfolio will be bricks and mortar estimates Catherine Tillotson, head of research at wealth management company, Scorpio Partnership. "Property is one of the first things they want to hold," she says, "because it is tangible and has fixed value, making it stable and secure."
Hong Kong's wealthy have invested in property outside the SAR for many years, especially in neighbouring Guangdong province. Singapore and Thailand are favoured, but Britain attracts most of their investment outside of Greater China, because of historical links and its open, stable economy. Other Anglo-Saxon countries are popular for similar reasons. Hong Kong investors are used to buying off-plan at home, and have few qualms about doing so overseas.
Foreign developers who spent the past 15 years targeting Hong Kong buyers will undoubtedly want to lure Chinese investors when Beijing allows them to venture abroad. They will enjoy some success, partly thanks to foreign education establishments.
Hundreds of thousands of Chinese students attend foreign universities and many of their parents would love to buy them a home in the country where they study. With 50,000 Chinese students Britain has the biggest potential market. Parents of the 9,000 Hong Kong students who come to Britain each year are already big customers of British developers.
Parents of children at Britain's public schools are another market. The scenario is similar in Australia, Canada and New Zealand, but the United States is making life tough - it has 42,000 mainlanders studying there, but parents who want to come over on home buying visits don't always get a visa.
When more Chinese parents get to splurge their children's accommodation budgets, many will buy in towns with universities specialising in sciences, the favourite subject of Chinese students. Britain, US, Switzerland and the eurozone will feature on investors' shopping lists - many Chinese HNWIs' have got rich from trade, so they understand doing business overseas and respect strong currencies.
High returns, ease of travel and cultural affinity mean the bulk of mainland investment will be within east Asia, especially Greater China, although Taiwan's restrictions on Chinese investors must end first. Most money will stay on the mainland. Naively, many Chinese investors consider the domestic property market "risk-free" following years of rapid price rises.
Wealth management companies are keen to "educate" Chinese HNWIs about the merits of other asset classes. Unless the recent 40 per cent fall in Shenzhen's residential property values spreads to the rest of China this may take some time.
We can expect Hong Kong HNWIs to ramp up their property investments as they get richer. Around 25 per cent of the SAR's residents have assets in excess of USD1 million today - the world's highest per head of population, and this will rise to 41 per cent by 2017 Barclays Bank forecasts.
To gain maximum face, super-wealthy mainlanders and SAR buyers will want trophy homes - Scottish castles, French chateaux, Kensington villas, New York penthouses, exotic private islands and more.
Holiday homes will be in vogue - even if hubby won't stop the deal making, the tai tai and children will want a break. Chinese businessmen love golf, so resort communities with 18-hole championship courses will be popular.
Design-orientated developers like Britain's Candy & Candy will attract Chinese customers when they hear that good layout and rich furnishing can add 60 per cent to a home's value.
Hong Kong and Chinese investors may hit the headlines again soon - French viniculture consultant, Joel Palous, has six SAR and mainland clients looking for vineyards in his home country. Clearly, new-found affluence has created a taste for fine wine and the properties where it is made. This is the tip of the iceberg.
PLEASE READ "WHERE CHINA'S RICH ARE INVESTING", 15th NOVEMBER 2010, FOR LATEST ANALYSIS
http://globalpropertynews.blogspot.com
When a Chinese entrepreneur bought a French vineyard last year it made headlines around the world. Did it mean those much-hyped, big-spending, Chinese property investors had finally arrived? Well, they are not exactly turning up in droves, but they have been spotted in one or two places like London and Dubai. It may be a trickle now, but this investment will turn into a torrent. You can bet on it.
When Beijing lifted its ban on Chinese businesses purchasing property overseas in 2007, this signalled capital controls on its private citizens would end eventually. While they wait, some mainland businessmen use companies to quietly funnel their money overseas, some of it into tax havens, hidden away from China's mandarins. Other Chinese invest in overseas property via Reits.
The potential purchasing power of Chinese investors is great and growing. China has 373,000 HNWIs and their numbers are expanding 14 per cent a year, faster than anywhere else in the world. When capital controls are lifted investment overseas will surge as pent-up demand is released. Property will feature highly in a Chinese HNWI's portfolio.
Modern China like Hong Kong, Russia and Britain is property-mad. Twenty years ago nobody living in a Chinese city owned their own home. Now 80 per cent of urban households are owner-occupied. Between 30-50 per cent of a typical Chinese HNWI's portfolio will be bricks and mortar estimates Catherine Tillotson, head of research at wealth management company, Scorpio Partnership. "Property is one of the first things they want to hold," she says, "because it is tangible and has fixed value, making it stable and secure."
Hong Kong's wealthy have invested in property outside the SAR for many years, especially in neighbouring Guangdong province. Singapore and Thailand are favoured, but Britain attracts most of their investment outside of Greater China, because of historical links and its open, stable economy. Other Anglo-Saxon countries are popular for similar reasons. Hong Kong investors are used to buying off-plan at home, and have few qualms about doing so overseas.
Foreign developers who spent the past 15 years targeting Hong Kong buyers will undoubtedly want to lure Chinese investors when Beijing allows them to venture abroad. They will enjoy some success, partly thanks to foreign education establishments.
Hundreds of thousands of Chinese students attend foreign universities and many of their parents would love to buy them a home in the country where they study. With 50,000 Chinese students Britain has the biggest potential market. Parents of the 9,000 Hong Kong students who come to Britain each year are already big customers of British developers.
Parents of children at Britain's public schools are another market. The scenario is similar in Australia, Canada and New Zealand, but the United States is making life tough - it has 42,000 mainlanders studying there, but parents who want to come over on home buying visits don't always get a visa.
When more Chinese parents get to splurge their children's accommodation budgets, many will buy in towns with universities specialising in sciences, the favourite subject of Chinese students. Britain, US, Switzerland and the eurozone will feature on investors' shopping lists - many Chinese HNWIs' have got rich from trade, so they understand doing business overseas and respect strong currencies.
High returns, ease of travel and cultural affinity mean the bulk of mainland investment will be within east Asia, especially Greater China, although Taiwan's restrictions on Chinese investors must end first. Most money will stay on the mainland. Naively, many Chinese investors consider the domestic property market "risk-free" following years of rapid price rises.
Wealth management companies are keen to "educate" Chinese HNWIs about the merits of other asset classes. Unless the recent 40 per cent fall in Shenzhen's residential property values spreads to the rest of China this may take some time.
We can expect Hong Kong HNWIs to ramp up their property investments as they get richer. Around 25 per cent of the SAR's residents have assets in excess of USD1 million today - the world's highest per head of population, and this will rise to 41 per cent by 2017 Barclays Bank forecasts.
To gain maximum face, super-wealthy mainlanders and SAR buyers will want trophy homes - Scottish castles, French chateaux, Kensington villas, New York penthouses, exotic private islands and more.
Holiday homes will be in vogue - even if hubby won't stop the deal making, the tai tai and children will want a break. Chinese businessmen love golf, so resort communities with 18-hole championship courses will be popular.
Design-orientated developers like Britain's Candy & Candy will attract Chinese customers when they hear that good layout and rich furnishing can add 60 per cent to a home's value.
Hong Kong and Chinese investors may hit the headlines again soon - French viniculture consultant, Joel Palous, has six SAR and mainland clients looking for vineyards in his home country. Clearly, new-found affluence has created a taste for fine wine and the properties where it is made. This is the tip of the iceberg.
PLEASE READ "WHERE CHINA'S RICH ARE INVESTING", 15th NOVEMBER 2010, FOR LATEST ANALYSIS
http://globalpropertynews.blogspot.com
Friday 1 May 2009
BACK TO THE LAND
The world's population is growing, so we must grow more food to feed ourselves. This means the value of good agricultural land will rise say land agents.
There is certainly no shortage of investment in farmland. The UAE government has purchased Pakistani farms and Chinese investors are buying African and South American land.
With bank lending hard to get, farmers need investors. In Argentina, which had a credit crunch ten years before the rest of the world, a novel scheme operates whereby foreign investors buy land from farmers who re-purchase it at a higher price over a period of time. The farmer uses investors' money to buy machinery and bring more land into cultivation.
Minimum investment in SCS Farmland, a fund operated by Argentine farming conglomerate, The Food, Water and Energy Company, is GBP12,000. It buys back investors' land through a series of annual payments over a five or ten year period. The fund's sales agent is British-based Worldwide Investments.
There is certainly no shortage of investment in farmland. The UAE government has purchased Pakistani farms and Chinese investors are buying African and South American land.
With bank lending hard to get, farmers need investors. In Argentina, which had a credit crunch ten years before the rest of the world, a novel scheme operates whereby foreign investors buy land from farmers who re-purchase it at a higher price over a period of time. The farmer uses investors' money to buy machinery and bring more land into cultivation.
Minimum investment in SCS Farmland, a fund operated by Argentine farming conglomerate, The Food, Water and Energy Company, is GBP12,000. It buys back investors' land through a series of annual payments over a five or ten year period. The fund's sales agent is British-based Worldwide Investments.
BAHRAIN TEES OFF
“Not since the Far East in the 1970s have I seen a market that has the economic potential that Iraq has today”. So says Sir Claude Hankes, adviser to the Bank of Iraq and founder of the first western investment funds for Singapore and Hong Kong 30 years ago.
If he's correct, then Iraqi property could make a good investment in the years ahead. For now, the Global Property Guide says lack of clarity about foreigners' property rights and a lack of security mean Iraq offers no opportunities for investors.
Bahrain is keen to offer itself as an alternative. Government-backed infrastructure projects, including airport expansion, bode well for its tourism industry and resort communities estate agents say.
International golf property specialist, Barton Wyatt International, is marketing Bahrain's first golf resort community, Riffa Views, which has a Colin Montgomerie designed, 18-hole championship golf course, Boris Becker tennis academy and 870 villas. Villa prices start at GBP515,000.
If he's correct, then Iraqi property could make a good investment in the years ahead. For now, the Global Property Guide says lack of clarity about foreigners' property rights and a lack of security mean Iraq offers no opportunities for investors.
Bahrain is keen to offer itself as an alternative. Government-backed infrastructure projects, including airport expansion, bode well for its tourism industry and resort communities estate agents say.
International golf property specialist, Barton Wyatt International, is marketing Bahrain's first golf resort community, Riffa Views, which has a Colin Montgomerie designed, 18-hole championship golf course, Boris Becker tennis academy and 870 villas. Villa prices start at GBP515,000.
MADEIRA'S DILEMMA
Medeira, the Pearl of the Atlantic, is renowned for being a civilised island where there are few high rise buildings and new hotels only get planning permission if they have at least four stars.
However, needs must. For the first two months of 2009, tourism numbers were down 15 per cent year-on-year and property prices down 20 per cent estate agents say, so plans are afoot to give its economy a boost.
Madeira is the main island in an archipelago which lies 300 kilometres off the coast of Morocco in the Atlantic, north of the Canary Islands. It is a semi-autonomous region of Portugal. Most of the islands are uninhabited with half of its 250,000 population living in the capital of Funchal on Madeira which is also the archipelago's main port.
To help revive flagging tourism (and the value of holiday homes) the number of golf courses are being doubled from two to five (four on Madeira and one on an outlying island) and there is talk of moving the liner terminal out of Funchal harbour, so large yachts can moor.
Some locals worry the islands' sedate way of life is being sacrificed to development – plans for a cable car running through Rabacal forest on Madeira island, a UNESCO World Heritage Site, have been slammed a “tourist gimmick” by islanders.
Less controversially, new holiday homes are being built. These include Palheiro Village which has 44 villas and 79 flats overlooking Funchal. Prices from GBP295,000 for one bed flats.
However, needs must. For the first two months of 2009, tourism numbers were down 15 per cent year-on-year and property prices down 20 per cent estate agents say, so plans are afoot to give its economy a boost.
Madeira is the main island in an archipelago which lies 300 kilometres off the coast of Morocco in the Atlantic, north of the Canary Islands. It is a semi-autonomous region of Portugal. Most of the islands are uninhabited with half of its 250,000 population living in the capital of Funchal on Madeira which is also the archipelago's main port.
To help revive flagging tourism (and the value of holiday homes) the number of golf courses are being doubled from two to five (four on Madeira and one on an outlying island) and there is talk of moving the liner terminal out of Funchal harbour, so large yachts can moor.
Some locals worry the islands' sedate way of life is being sacrificed to development – plans for a cable car running through Rabacal forest on Madeira island, a UNESCO World Heritage Site, have been slammed a “tourist gimmick” by islanders.
Less controversially, new holiday homes are being built. These include Palheiro Village which has 44 villas and 79 flats overlooking Funchal. Prices from GBP295,000 for one bed flats.
GREEK MAMMA MIA!
It might seem crazy, but some Swedish songwriters have sparked a housing boom in Greece.
According to property portal, the PropertyIndex.com, the film, Mamma Mia!, has sparked a 120 per cent jump in online property viewings in Greece by potential holiday home buyers, especially for abodes on the island of Skopelos where the film was set.
Based on the musical Mamma Mia!, the film features songs by Swedish pop group, Abba.
There were 24,852 viewings of Greek property on the property portal in March 2009, compared with 9,812 one year ago. Budget airlines flying to Greece report higher passenger numbers since the film was released.
“Greece offers a fantastic climate with mild winters and 3,000 hours of sunshine a year, resulting in a long rental season from April to October,” says Lee Bramzell, chief executive of PropertyIndex.com, “The cost of living is low and property prices are affordable with two-bed properties costing in the region of GBP165,529.”
Time will tell whether these virtual viewings turn into actual purchases.
According to property portal, the PropertyIndex.com, the film, Mamma Mia!, has sparked a 120 per cent jump in online property viewings in Greece by potential holiday home buyers, especially for abodes on the island of Skopelos where the film was set.
Based on the musical Mamma Mia!, the film features songs by Swedish pop group, Abba.
There were 24,852 viewings of Greek property on the property portal in March 2009, compared with 9,812 one year ago. Budget airlines flying to Greece report higher passenger numbers since the film was released.
“Greece offers a fantastic climate with mild winters and 3,000 hours of sunshine a year, resulting in a long rental season from April to October,” says Lee Bramzell, chief executive of PropertyIndex.com, “The cost of living is low and property prices are affordable with two-bed properties costing in the region of GBP165,529.”
Time will tell whether these virtual viewings turn into actual purchases.
SICILY TO JOIN ITALY
They've been talking about it since Roman times and now, finally, it may happen. As part of the Italian government's GBP16billion public works programme to lift the economy out of recession, a suspension bridge will be built across the two mile-wide Messina Strait to link the toe of Italy with Sicily.
Long queues to join the 20 minute ferry ride across the strait deters many people from making the journey, so the bridge could boost Sicily's tourist industry and wider economy. Sicilian holiday home owners looking for tenants could benefit says the themovechannel.com.
However, there could be delays in the bridge's construction which is opposed by environmentalists and anti-mafia campaigners - the latter worry the mob may syphon off cash for the project.
If it does go ahead, the bridge may take ten years to build, so a sudden rise in property values is unlikely. But then, when you've been waiting 2000 years for a bridge, waiting a few more years for your home to gain in value is not so bad.
Long queues to join the 20 minute ferry ride across the strait deters many people from making the journey, so the bridge could boost Sicily's tourist industry and wider economy. Sicilian holiday home owners looking for tenants could benefit says the themovechannel.com.
However, there could be delays in the bridge's construction which is opposed by environmentalists and anti-mafia campaigners - the latter worry the mob may syphon off cash for the project.
If it does go ahead, the bridge may take ten years to build, so a sudden rise in property values is unlikely. But then, when you've been waiting 2000 years for a bridge, waiting a few more years for your home to gain in value is not so bad.
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