Newsletter - 2007 roundup

David Wade - Tropical Homes Newsletter

Readers of this newletter may have noticed the Property Insiders have
been a little absent lately.

I understand Nick is beavering away in Argentina and Michael has returned to
Bali and I have no doubt Martin has been busy the past few months. For Tropical Homes Real Estate the third quarter of 2007 was hectic to say the least. For most developers, agents and clients 2007 was a great year. If the start of the new year is anything to go by 2008 promises to be equally as good. Unfortunately the same cannot be said for many parts of the world so what better introduction to take a brief look around parts of the globe.

If you are not aware the US is in trouble you must have been locked in a darkened sound proof cupboard for the past few months. Whilst I have no doubt there are and will continue to be bargains to be had for the foreseeable future you are in for the long term if you buy there. An eventual recovery in the dollar as well as property values might see even greater gains for the foreign investor but there is certainly no surefire guarantee of recoveries in either for a long time. If you do choose to invest there buy in an area where property values have always been at a premium in the past, possibly a repossession, not where there is such an overabundance of new property that what appear to be unrepeatable offers by desperate developers lead you into buying one of a thousand similar properties. Similarly dollar based economies like the Caribbean could see reasonable gains but many of the islands are already overvalued.

Most of Europe, including Eastern Europe, is now overvalued and with a very strong
Euro I can see no worthwhile gains to be made there. The non Euro based
European countries are influenced heavily by the Euro with the exception of the UK which is in for a very lean time in 2008. Sterling has lost a lot of ground recently based on very real fears of a long lull in property values as the sub-prime market, whilst not as extreme as the US, takes its toll on the lenders and the market. This might influence Euro economies especially the Irish to try and pick up the odd bargain but again don't expect a quick return on your money. The UK has been overvalued for a long time and it will be an equally long time before property prices look cheap again.

The Middle East led by Dubai continues to baffle. Such a huge abundance of apartments due to be completed by 2009 would lead most to believe the bubble will
burst but many leading property pundits expect the upward values to continue until
2012 catered for by demand from the expected doubling in ex-pat population. For my
money Abu Dhabi and Oman offer the best opportunities for capital growth but as always location is of paramount importance.

The leading lights of Asia, Hong Kong and Singapore, are already so
expensive what gains may be possible must be small from a percentage point of view whilst prime property in India seems ludicrously expensive and remains something of a mystery to all but the Indians themselves. By comparison the leading lights of Thailand, the capital Bangkok and its ultimate tropical island Phuket, continue to look extremely good value. Prime Bangkok property is one sixth of the value of comparative property in Singapore and Hong Kong and the increasing number of buyer/investors that visit www.tropical-homes.net and meet us in person leaves me in no doubt that good property in Bangkok and Phuket will be even more sought after by those buyers . Phuket has so much to offer and as the facilities and infrastructure improve I see no end to the continual increase in property values for the foreseeable future. The difficulty in financing the acquisition of property in Thailand has been a major reason Phuket and the rest of Thailand has not been subject to the fluctuations and volatility of the western economies which are largely debt ridden. As a consequence it has remained undervalued but we are seeing some change in financing, albeit slowly, as possibilities become available. Government intervention is now much less of a concern for most buyers.

I have stated this before but Phuket's great advantage is that it draws its clients from almost every part of the globe. I have been in real estate for more than thirty years and witnessed it working first hand in many countries but I have never experienced the wealth of international clientele Phuket attracts. Only this week I have seen clients from Pakistan and Bulgaria and in the past month from Mongolia and Equador. The one thing they share has been their enthusiasm for Phuket. If one economy feels the heat, and I have no doubt we will see a decline in UK buyers this year, the hole they leave is quickly filled by one of the rising economies, which could be Germany or Australia, and easily surpassed by the emerging economies of Russia and India.

I am certain future growth will be assisted by better flight connections to the west.
Phuket is still hindered by the need for most western travelers to take a detour via Bangkok, Singapore or Kuala Lumpur. Without doubt it is only a matter of time before one of the major Gulf state operators fly direct.

I have traveled a great deal in the past year on business and pleasure and I have seen a lot of what the world has to offer, some of which I will be covering in greater detail in future columns, and with few exceptions Phuket beats them hands down.
Property values in real terms probably did not increase as much as expected in 2007 influenced by the coup and governmental policies but this will be beneficial for the outlook for sales in 2008. It means property values can continue to increase and still look great value. The opportunity to pick up a bargain for both the short and long term exists here without the sleepless nights. To give an example two months ago I secured an outstanding deal for a number of investors from the UK on a new development. Since that time the development has continued to sell extremely well and those investors could now very easily take a 30% profit. 30% in two months is big profit in anyone’s language. My biggest investor in 2007 hails from Dubai and looks like continuing through 2008 as I have just secured a great deal for him on a further three properties. He spent almost 6 million dollars last year.

If investment is of no interest then the variety in style, price, quality and location is enough to meet everyman's needs. Phuket is one of the few places on earth where most men can still own the dream!

Post - Articles by David Wade, Tropical Homes

081 787 1108
david@tropical-homes.net
www.tropical-homes.net

2007 roundup
Phuket vs Pattay - The Contrasting building laws
A thinner smile than before
Prestige developments still a good bet
Singapore V Bangkok
The Bulgarian comparison
The highs and lows of Phuket and Pattaya
There are two sides to every island
What price protectionism
Where it's hot