Property Secrets is no more

Discussion in 'Overseas property investment' started by ringledman, Aug 12, 2009.

  1. ringledman

    ringledman Frequent Poster

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    620
    So another agent goes under.

    Actually a shame as I feel they were one of the few decent and honest brokers out there.

    This overseas forum is itself looking like it is going under! first it was consined to a sub thread of property investment and now there is virtually no one posting any more.

    Have we all deserted at the bust?

    Is there anyone still out there?

    Budapest, MichaelDes where are you guys and the other regular posters!

    Tell me whats going on in your markets and regions!
     
  2. budapest

    budapest Frequent Poster

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    936
    There is certainly a lot less discussion here than before, but a lot of what appears here depends on investors asking questions, which hasn't been happening much of late.
     
  3. gtyler

    gtyler Registered User

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    14
    ' I feel they were one of the few decent and honest brokers out there' - agree with you. I read their newsletters regularly, attended one of their investor's meeting in London last year etc. They new a lot about the different markets. A shame that they went under. GT
     
  4. kilty

    kilty Registered User

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    28
    How many of the bigger players that featured so large throughout the boom are still in the game, does anyone know?
     
  5. ringledman

    ringledman Frequent Poster

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    620
    I would guess 20% or so. Good riddance. The majority were pure crooks.

    When I look back at the greed, bull**** and lies that came from the majority of these agents that I spoke to over the years it is no wonder the market eventually tanked in most overhyped countries.

    They made a fortune in the boom. I reckon most had priced in 15-20% margin on the sale price to the Irish & Brits.

    PS were one of the few decent ones out there. Their fee was transparent and told to you in advance with no fee taken from the developer.

    Budapest - How are things over there in Buda? What would you say the market is down from the peak? How are the politics at the moment. Not been over since the riots in 2007. Must revist...
     
  6. budapest

    budapest Frequent Poster

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    936
    The political situation is a lot calmer. Things are going well under Bajnai's government. The tough decisions were made at the right time and the economic situation is more or less back on track. There was a major concern a few months ago in relation to HUF depreciation, but the situation has now stabilised and simultaneously, interest rates are falling rapidly, down 3.5% in the last few months and more to come.

    Despite the hype around 2004-2005, in reality there has been no real capital appreciation in Hungary since 2002-2003. It totally missed out on the general positive wave which benefitted Poland and Slovakia in particular. Prices of good properties have remained the same or risen slightly since then. There are still buyers for desirable apartments. However, because of the extremely low quality of the housing in Bp, things are complicated. Lower quality stock has definitely fallen in price and is almost impossible to sell. The market continues to be oversupplied with the wrong type of property and the number of transactions taking place is low.

    Budapest prices were more or less unaffected during the global property upturn of 2004-2006, but by the same token, it is probably one of the markets, which is least affected now by the global downturn. So, all in all, things are stagnant at the moment.
     
  7. DonKing

    DonKing Frequent Poster

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    555

    I don't log on much anymore and don't post too often. 5 or 6 years ago I used to spend alot time on AAM particuarly the property forums. Great source of info from guys who had alot of experience. Not many of them contribute anymore. Its kinda sad

    Maybe this forum will pickup again when/if the property market picks up again


    I notice OverseasCafe was banned.....a pity. I presume he's the well known (and one of the very few decent) property journalist.
     
  8. ringledman

    ringledman Frequent Poster

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    620
    Yes sad really. There used to be some great debates on here. I think it will be many years before the site gets busy again (i.e. property globally won't do anything for a decade or so imho!).

    Budapest thanks for the info on things over there.
     
  9. Martin77

    Martin77 Frequent Poster

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    173
    Not sure how you come up with this opinion? Care to elaborate?

    Sure things are bad, there's no credit, but entry prices are also very low. I've made excellent money this year on commercial property funds (asset value currently up 29% since Jan even after the recent pull back): better than my other share investments in fact. They are also yielding 6-8% dividend [I've posted here often enough on my view of the importance of cash generation and dividends]. Capital gain was all about timing, dividends are ongoing and "locked in" at a higher rate as I bought at such low prices. Everyone else was heading for the exits whilst I was buying. My bank has also recently uprated commercial property to be 10% of their model portfolio from 0% or 5% earlier this year, so I'm not alone in thinking this.

    I guess the "buy to let of residential property on a small 10% deposit and then lever up 9:1" model may indeed be dead as there's no cheap credit available, but that doesn't mean that all property investment is off limits for a decade IMVHO.
     
  10. ringledman

    ringledman Frequent Poster

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    620

    I refer to residential where globally yields are still too low to signify a market bottom. There are very few places where you can get 8%+ in residential to justify the fees, maintenance, legal and basic hassle.

    Commercial is a different issue. REITS and other commercial funds fell 40%+ and well ahead of the residential markets globally. So yes I agree in part if you are going to invest in property commercial is the way forward and only place where value can be found (you still need to look as its not all cheap globally!).

    I still would want 8%+ yield to signify a real market bottom. 6% is still overvalued I feel.

    Asia is the place to buy commercial now I think. Singapore or HK take my fancy. In Europe then Germany is dirt cheap on a valuation basis. Know much about Speymill Deutsche? been on my radar for a while. Wish I had bought 6 months ago at 10c a share!

    It is worth having 5-10% of net worth in commercial if only as an inflation hedge. Likewise 5-10% in other 'Real' assets such as commodities and infrastructure too. El-Erin in 'When Markets Collide' sets out this interesting portfolio allocation for the 'new normal' we are living in.

    I stick by my view that residential globally hasn't bottomed in 90% of countries (including the USA which fell first), yields are still too low, and price to earnings still too high.

    Residential property investment will be seen as yesterday's investment fairly soon.

    The future money is to be made in other assets namely Asian equities and commodities.

    Why housing is not coming back-
    http://www.oftwominds.com/blogapr09/housing-not-coming-back04-09.html

    I agree with your view on dividends. Peter Schiff (an economic legend) writes a lot about the importance of dividends over capital. He states that property or shares capital value can be wiped out. I.e the tech stock bust or current property bust.

    He states that you should buy an asset on the basis of its return every year. So for property it needs a good retal return and for shares a good dividend payment.

    His point is that capital can fall or rise massively and is often not based upon fundamental economic drivers but market sentiment and exuberance.

    Dividend/rents are more stable than capital moves (up or down) and are the basis of what your invested capital should buy. the return per year is what your investment into the asset should earn. Any capital appreciation should be seen as an added bonus and not be the main reason for the initial purchase.
     
  11. Martin77

    Martin77 Frequent Poster

    Posts:
    173
    Understood. I wouldn't argue with your conclusions. In fact I'd wholeheartedly agree. I also have a good chunk of Asian shares.

    Just for clarification, the 6-8% yield quoted in my post is after subtracting all costs, but before income tax. Which where I live means a post income tax yield of around 4.8-6.8%. Since inflation is more like 0%-2%, I find this a perfectly acceptable real rate of return for my investment, as part of a larger portfolio. There are those who say commercial is the next bubble to burst, but I'm not in that camp. These funds invest mainly in prime retail, not office space. I've checked the underlying funding requirements for the next few years, and I'm very comfortable with them.
     
  12. MichaelDes

    MichaelDes Frequent Poster

    Posts:
    431


    Although there is a lot of fantastic opportunities out there presently for overseas property investment, it seems the cut and thrust of this forum has died, primarily because many people are disillusioned with their investments not materialising as expected and accepted the reality of a bad decision.

    Property investment only makes sense if (i) development can be undertaken to add value - i.e. roof conversion, extension, refurbishment etc (ii) the fundamentals stake i.e. rent covers payment and also price is affordable to the locals (within the 3x to 4.5x times average income). Local average income is what pays rent and rent cannot be borrowed etc so it is always the true indicator of market value.

    Rent x 10 = True Value (@ 10% yield).

    Unfortunately like many in stock markets and other investment fields, with easy credit washing over markets, property was no different and people over exuberantly flocked to purchase and believed what was being told without undertaking proper due diligence. Buying the wrong product for the marketplace – i.e. hypothetical illustrating - apartments on the north sides of buildings with bad views and overpriced compared to the rest of the locality.


    Many organizations both good and bad made a lot of money out of this exuberance (but the bad will be highlighted more so through forums). OPI became a massive Ponzi scheme for many, but for those canny enough there are always opportunities.

    For a forum to work there needs to be bulls and bears but this has all changed and the market has capitulated. Ironically however whenever there is no activity in a market with capitulation this should be a prime time to purchase - for those still lucky enough to have a shirt on their backs.

    Probably OPI will become an important forum again but it is hard to know if it will be in AAM on some newer site with less restrictions.
     
  13. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    32,376
    Hi Michael

    I have just noticed this post now.

    As I explained clearly to Overseas Cafe, if anyone wants to set up a website to deal with the "deficiencies" seen on Askaboutmoney, they will get our full support. I would love to see someone else who is interested in and informed on the topic dealing with all the spamming from developers and all the defamatory posts and all the threats from the people who have been defamed.

    It's very easy to do and we will happily provide a link to the forum - assuming it is not too commercial.



    Brendan