Quality Speaks For Itself

Invest in property when the financial markets are in turmoil

Posted in Markets by Carl on October 27th, 2008 11:23am

I read with interest in the Sunday Times 26.10.08 that there are “spots where property is still hot”.

In times of crisis investors have typically sought refuge in property. However even though the UK property is plunging, as The Times says “the picture is not the same the World over.” Property in some regions is booming and the Times quotes amongst others Bulgaria, Slovakia, Russia and the Czech Republic. What I find difficult with recommendations such as these is they are based upon historic performance. I don’t know about you but I like to invest in places that are going to grow not that have grown already. If you read any commentator on Bulgaria they are saying that the boom is over and prices are already in decline.

The reason for this is that like many markets, the tourist has been targeted as the primary driver of demand. In times of hardship tourism becomes a discretionary spend. Therefore for property to be a solid long term bet it has to have the fundamentals of commerce and tourism (or leisure pursuits) in place. Within the EU (and the protection that this offers the property investor) there are not many places that have these drivers but Larnaca in Cyprus does. If you want to invest directly in property, have solid capital growth and good demand from commerce (Cyprus has the lowest rate of Corporation Tax in the EU so many companies will relocate ther in the next few years) then I urge you to look closely at Larnaca.

Interestingly the article also suggests that Funds are a better bet than investing directly in property. All I would say is that they are suggesting you rely on a Fund Manager then to look after your interest – look at all those poor individuals who have relied on a Fund Managers to manage their pensions for them over the last couple of years! Take control yourself and own a physical asset.