Irresponsible Commentary on Overseas Property

Once again in today's INDO there is blanket condemnation of investment in property overseas. Last week Brendan who occupies the important role as Chairman of the Consumer Panel at IFSRA described overseas property as "speculation" and "gambling". What does this tell us of the panel? It is the case that it is an unregulated market and that poorly researched investors can get had for large sums but as an overseas property investor, one of tens of thousands who has successfully invested and researched markets and opportunities abroad I find it extraordinary that Brendan and others should condemn the entire world!

Blanket comments about rip offs and bubbles displays plain ignorance of the subject. There are several overseas markets that are not in a bubble and there are ways to buy good value from reputable operators without being ripped off. I find it extraordinary that there is considered and well researched commentary on equity investment, deposits, mortgages etc but knowledge of investment property is limited to slogans like those used by Brendan who should know better. It was cringing to hear Brendan refer to a waterless wasteland land last week on the radio only to be corrected by one of its inhabitants on such a basic matter like desalinisation. Dubai is another example. There appears to be a lot of hot air being blown about presumably by non-investors ie have any of these critics themselves ever invested abroad, travelled abroad and researched opportunities?

A great number of Irish investors have successfully invested overseas for several years acquiring both capital gains and relatively higher rental yields than at home. Financial firms like, Quinlan Private, Warren, Davy's, Merrion, Irish Life, Hibernian, Friends First have collectivey raised billions for overseas investment and huge numbers of individuals have similarly invested. It is ludicrous for non-investors with little by way of research to dismiss these as gamblers and speculators in my view. More considered comment should be made to be credible but maybe it is too late.

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Suggestion to readers: substitute the word "dotcom" for "overseas" and "shares" for "property" in the above and read it once more.

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Ric, what overseas countries/areas do you consider have scope for capital appreciation in the coming years?

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Agree with you that there are of course opportunities to be had for well researched, well thought out investors abroad. The article, I would imagine, is aimed at those who maybe aren't as canny as you are.

There are a lot of unscrupulous people out there making money on gullible people. Just look at the property pages - a couple of months ago, Shanghai was being touted as a sure thing with huge capital appreciation 'guaranteed'. Now the market there is apparently going downhill. Similarly, there was a drive to recruit Irish investors into the New York apartment market in the last 6 months of last year and that seems to be going backwards also.

The best of all though was reading the account in one of the papers last week of a property expo in the US organised by an Irish Estate Agent to get Americans to invest in Irish property, telling them how great the returns are - sounds familiar?

Articles like the one you mention aren't going to cause property prices in Warsaw to fall but might have the benefit of getting Irish investors to look twice before they leap.

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advert on radio today ;
"prices in turkey rise 20-30 percent a year"
then it fails to say past performance is not a guarantee of future performance.
this is clearly misleading ,if these rates were to continue for a decade the houses would be worth nine times as much in ten years which is obviously nonsense,a 100k house in turkey worth nearly a million in a decade,brendan is right theres a lot of fools rushing in,obviously theres bargains and deals to be had all the time but the vast majority wont get these deals only the very savy will.

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Ric said:

It is ludicrous for non-investors with little by way of research to dismiss these as gamblers and speculators in my view.

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Are we a little bit touchy there Ric??? Have you a vested interest in foreign property investment, over and above purchasing one yourself maybe?

Describing the purchase of foreign property as speculation by speculators is in no way dismissive. See here for a definition of speculation. Isn't the whole thing known as "property speculation"????

Ric said:

More considered comment should be made to be credible but maybe it is too late.

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I think that there is much considered comment here on AAM by many of the frequent posters. Property speculation in foreign and 3rd world countries as an investment is being examined on it's merits.

It's the over the top comments by the many new posters on AAM defending such speculation that is, in my opinion, ill-considered.

As has been pointed out, reading advertising blurb from a company trying to take your money in exchange for an apartment in a country where you may not even have travelled to is the height of lack of consideration. There is no balance there. Just because something is said in the advertising blurb doesn't make something true.

Just because you don't like the comments made here by many posters doesn't mean it's not considered. You're entitled to your opinions, just as we're all entitled to ours.

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Yes I agree with you. The bull property market is at an end in many spots and yes there are sharks pushing stupid deals that prey on peoples ignorance and greed but you don't counter these with an equal amount of ignorance. When you do so you destroy your own credibility. You need to consider that a great many investors see these examples as transparently as you and probably even more so because of practical overseas experience. My point is that critics despite being well meaning show up their own ignorance of the subject and insult a great many investors by using slogans like Brendans.

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Ric said:

Once again in today's INDO there is blanket condemnation of investment in property overseas.

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If you mean this article (free registration required) then it does not contain any such blanket comdemnation. Rather it warns about possible scams in this area. Surely a prudent piece of advice?

Last week Brendan who occupies the important role as Chairman of the Consumer Panel at IFSRA described overseas property as "speculation" and "gambling".

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Can quote verbatim what he said please? I would be very surprised if Brendan issued a blanket dismissal of any investment (other than really whacky stuff) as always being speculation or gambling. Perhaps there was some qualification of these comments?

What does this tell us of the panel?

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Was Brendan speaking in an official IFSRA Consumer Panel or a personal capacity? This is important.

I find it extraordinary that Brendan and others should condemn the entire world!

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I find it so extraordinary that I don't believe it. Convince me otherwise if possible.

Blanket comments about rip offs and bubbles displays plain ignorance of the subject.

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From whom and in what context?

I find it extraordinary that there is considered and well researched commentary on equity investment, deposits, mortgages etc but knowledge of investment property is limited to slogans like those used by Brendan who should know better.

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Perhaps you are confusing blanket dismissals/condemnations with people highlighting possible caveats, pitfalls, risks etc. with any investment (including property - domestic or foreign) in order to challenge people considering such investments to think for themselves about all of the issues - in particular the potential cons as well as the pros. Any investment involves weighing these up, analysing the costs/benefits, crunching the numbers and taking an objective rather than an extremely positive or negative approach. AAM and the many contributors who post challenging and informative comments on such matters helps individuals to reach this goal.

It was cringing to hear Brendan refer to a waterless wasteland land last week on the radio only to be corrected by one of its inhabitants on such a basic matter like desalinisation.

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Perhaps you can explain the context here. Where was Brendan speaking and about what?

Dubai is another example. There appears to be a lot of hot air being blown about presumably by non-investors ie have any of these critics themselves ever invested abroad, travelled abroad and researched opportunities?

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Critics or those posting about the possible risks, pitfalls, issues?

A great number of Irish investors have successfully invested overseas for several years acquiring both capital gains and relatively higher rental yields than at home. Financial firms like, Quinlan Private, Warren, Davy's, Merrion, Irish Life, Hibernian, Friends First have collectivey raised billions for overseas investment and huge numbers of individuals have similarly invested. It is ludicrous for non-investors with little by way of research to dismiss these as gamblers and speculators in my view. More considered comment should be made to be credible but maybe it is too late.

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Please point out where any AAM contributor has issued a blanket dismissal or condemnation of foreign property investment.

Isn't this arguably more of a Letting Off Steam rather than a Great Financial Debate issue? It seems to be more of a rant than an argument based on facts such as specific examples and quotes supporting the points raised. Perhaps you can rectify that?

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ronan_d_john said:

As has been pointed out, reading advertising blurb from a company trying to take your money in exchange for an apartment in a country where you may not even have travelled to is the height of lack of consideration. There is no balance there. Just because something is said in the advertising blurb doesn't make something true.

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Very true. These companies are advertising a "product" they want to sell but label it as an "investment" to the consumer. If the word "investment" was taken out it wouldn't sound as catchy or appealing would it?

Investment property, its just another product at the end of the day... and most products decrease in value over time.

ric are you or any or your family or friends involved in selling foreign property in irish market?
i have a feeling you are.

Clubman, there was an interview with Matt Cooper last week. Brendan needs to take greater care.

Let's stick to the topic in hand. If Ric has genuine and supportable concerns/criticisms in this context let's discuss/address those. However Ric really needs to provide some supporting evidence/quotations for his accusations/insinuations before they can be taken seriously. Over to you Ric...

Ric said:

Clubman, there was an interview with Matt Cooper last week. Brendan needs to take greater care.

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Please provide a link to the content or specific verbatim quotes. I have asked Brendan if he would like to clarify/challenge any of the issues raised here.

Please also address the issues that I raised in response to your first post above otherwise this thread might be dismissed by some as some sort of mindless rant rather than a reasoned critique supported by evidence.

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ubiquitous said:

Suggestion to readers: substitute the word "dotcom" for "overseas" and "shares" for "property" in the above and read it once more.

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In fact,, many dotcom companies have done extraordinarily well. (FTD.com, eBAY, yahoo.com, google.com, i could go to valuelines and list about 50 others but my point is made). The crowd only hears about the failures, and the crowd generally relies on the newspapers and rte for their information. The crowd sit on the fence and the crowd make 5% p.a. on their so called managed fund investments because that's what the average crowd expects.
Meanwhile, real investors are researching the market for themselves and investing what the crowd would see as substantial sums of money in their education, but what the crowd doesn't see is the return on that education that is being made.
The OP is absolutely right. The best way to weed out those with blanket opinions is to ask them how their investments have done. If its 5-8% p.a., then don't listen to any of them. If anyone is happy making those returns when there is significnatly more to be had for a little effort, then stay working at your job and good luck to you.

Clubman I have made my point and provided the source. This thread isn't driven my your agenda set above. I have stated that blanket condemnation has been made. I have given examples. It is up to you, should you wish to refute them and I will be happy to listen. BTW I have invested successfully over several years in Britain, Holland, France, Hungary and the Baltics. I still largely favour equities and believe that we are probably half way through the current business cycle.

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Theo said:

The best way to weed out those with blanket opinions is to ask them how their investments have done.

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Steady on! First things first. Let's see if the issue of people having blanket opinions is valid first off. Then see what needs to be done about it if it is an issue. I am of the opinion that Ric is misinterpreting valid analysis of the possible pitfalls, risks, issues involved (often as a counterbalance to some overenthusiastic recommendations of certain options) as some sort of blanket condemnation/dismissal of certain investment strategies. Just because somebody has not invested in a particular asset class/gengraphic region/etc. does not preclude them from discussin the potential pros and cons. The floor is open to Ric to prove me wrong by posting relevant evidence to support his accusations/insinuations above.

Ric said:

Clubman I have made my point and provided the source. This thread isn't driven my your agenda set above.

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No - but addressing some of the issues that I have raised would help to clarify if your arguments have merit.

I have stated that blanket condemnation has been made. I have given examples.

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You have attributed certain comments to certain people - most notably Brendan - without providing the full context and verbatim comments (or links to same).

The Indo article that you mentioned (assuming that I have identified the correct one) does not contain any blanket condemnation of foreign property investment as you have asserted.

Basically you have not provided sufficient supporting evidence so far for your arguments to be taken as merited.

It is up to you, should you wish to refute them

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No - you need to support your arguments with evidence before people can attempt to rebut/refute them if/where necessary. As it stands your posts seem like generalised rants I'm afraid.

What are you so uppity about the words "gambling and speculating"? If you invest in something that is exactly what you are doing. I don't care how well researched etc it is. Nobody can see into the future.

I imagine the "waterless wasteland" comment is being used just to illustrate the pointt that these overseas investments are being sold as certain goldmines and it is fair to counter such beliefs with that, while desalinisation can be a(n expensive) solution, factually they have to effectively import water to survive. I would certainly want to know that if I were being pitched to.

Chamar said:

I imagine the "waterless wasteland" comment ...

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This is part of the problem. I can imagine Brendan saying all sorts of things about all sorts of issues. However unless somebody can tell us precisely what he actually said then we are in the realm of speculation and possibly drawing conclusions from things that never happened. We already have one myth exposed above - that an article in today's Indo issuing a blanket condemnation of foreign property investment - which must undermine confindence in other stuff that Ric says. Note that the Indo article concludes:

[FONT=Verdana, Arial] Property advisers say the best way to avoid being scammed and get good value is to source your own property, do plenty of homework, and seek independent advice.

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Not a blanket condemnation in sight!
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Theo said:

In fact,, many dotcom companies have done extraordinarily well. (FTD.com, eBAY, yahoo.com, google.com, i could go to valuelines and list about 50 others but my point is made).

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And with an approximate 80% dotcom failure rate in the year 2002 alone, I don't think that your point is well made. "The crowd" as you put it, is only hearing the bumpf from those selling the properties, and those who have shelled out already claiming paper profits.

In the same way as we only actually hear the names of the successful dotcom companies. Give me the names of wellknown (on this side of the atlantic), high profile dotcom failures?

Will we hear from people who took the plunge (BOO.COM anyone) and lost their money because they didn't do the full research on what they were buying into?

Given all the publicity these days, regarding looking before you leap, I don't think we will. What would people have to complain about? The were greedy and rushed in, and lost their money. They know they'll get no sympathy.