European Property Prices

[qtman]

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I think this is interesting. From an investment point of view, property is yesterday's news.

[rockyracoon]

Interesting chart. Seems the underlying values are dipping although as a security there will be some independent movement from the underlying property prices.

No doubt Europe is becoming played out for the big bang buck fest on quick property turnovers. However there must still be plenty of money to be made. I know of an Irish property investor who has divested himself of nearly all Irish property over the last 18 months. He has invested heavily in certain parts of England. Even though this is a mature market that isn't particularly bouyant at the moment, he feels that his property portfolio is undervalued and the next upswing in the market will net him tidy profits.

[Thac0man]

I think this is interesting. From an investment point of view, property is yesterday's news.

Overseas property was always was a scam. (with thew exception of markets we know well like the UK etc)

Even RTEs overseas investment programs with the twat Sean Moncrief were wildly inflating the prices being asked for properties. The one area I am absolutly sure of this was their program on Croatian property. One property, a sprawling badly built ramshackle, was on the market for 3 million Euro. It was claimed to be 'good value'. To put that in perspective the average yearly salery in Croatia is about 8400 Euro a year. Lack of housing or its affordability is not an issue in Croatia for Croatians, on 8400 Euro a year.....

To support my claim that this is a scam let me contribute another example: A popoular English program on BBC that takes couples around and shows them property. Again an episode in Croatia. They were showed two abandoned and run down farm houses, ex-peasent dwellings. The price tag: STG£250,000. In Croatia, to a Croatian, that property might only fetch a maximum of about 25,000 Euro..... do the math. The English couple who were shown the properties bought two. I was amazed the Croatian estate agent could keep a streight face when the told him.

People have been paying through the nose for properties which never have and never will be worth the price they have paid for them. The only people who have made money off this are Estate agents and the first wave of investors (which are usually one and the same).

[rockyracoon]

. . It was claimed to be 'good value'. To put that in perspective the average yearly salery in Croatia is about 8400 Euro a year. Lack of housing or its affordability is not an issue in Croatia for Croatians, on 8400 Euro a year.....

To support my claim that this is a scam let me contribute another example: A popoular English program on BBC that takes couples around and shows them property. Again an episode in Croatia. They were showed two abandoned and run down farm houses, ex-peasent dwellings. The price tag: STG£250,000. In Croatia, to a Croatian, that property might only fetch a maximum of about 25,000 Euro..... do the math. The English couple who were shown the properties bought two. . .

Some interesting points on the impact of "natives" when the speculator enters the market. This, of course, happened on the west coast of Ireland in a big way. Holiday homes made it virtually impossible for locals without existing land assets to afford new homes unless they were willing to mortgage their lives away. In fact, I believe there was a government tax break for developers.

Yet what I never understood was how the over inflacted price that an outside investor was willing to pay for a property became the floor price for all subsequent home transactions. I remember someone buying a renovated cottage near Kiltyclogher, Leitrim for nearly €150,000 some years back. This price then set the floor price for every other property in the vicinity no matter the condition, square meterage or location to amenities. Makes one wonder.

[locke]

The graph relates to the shares of property companies rather than the actual value of property.

While the value of the property holdings will have an impact, such factors as the prospect of rental growth for shopping centre owners will be taken into account along with those of builders.

Also note that you could have drawn the same conclusions from the graph at the start of July 2007.

[qtman]

Also note that you could have drawn the same conclusions from the graph at the start of July 2006.

No. There was a general correction in equity markets in July 2006. The dip in the value of the property fund is not reflected in other equity funds e.g.

Pan European Equity

[Twin Towers]

A friend of mine has sunk 350k cash (euro) into something that looks like a glasshouse, with no fittings, perched atop a Ballymun tower block on the wrong side of the river in Bratislava, Slovakia. He has already left for it, knows nobody there, doesn't speak the language, has no hope of finding work.

I told him he was mad. Was I right?

[johnfás]

A friend of mine has sunk 350k cash (euro) into something that looks like a glasshouse, with no fittings, perched atop a Ballymun tower block on the wrong side of the river in Bratislava, Slovakia. He has already left for it, knows nobody there, doesn't speak the language, has no hope of finding work.

I told him he was mad. Was I right?

yes

[Thac0man]

Some interesting points on the impact of "natives" when the speculator enters the market. This, of course, happened on the west coast of Ireland in a big way. Holiday homes made it virtually impossible for locals without existing land assets to afford new homes unless they were willing to mortgage their lives away. In fact, I believe there was a government tax break for developers.

The situtaion here plus other settled markets versus developeing/new markets is what I am referring to. There is a huge differance.

The settled markets do include places like Morocco (ie. Casablanca), where French private investment has always been present and has driven up prices for locals. Also more typical examples like Portugal etc.

However much, if not most money being invested abroad is being sank into places like Bulgaria or Croatia, the new markets. The property market for foreign investors remains a far differant market than that available for local people. The main reason for this is that the property market as we know it, does not exist. Many people build on family plots of land or buy incomplete structures started by others. Typically this means the eventual investment is somewhere in the region of 40,000 to 60,000 Euro for a house near a state capitol, typically in the outter suburbs. This prices could triple for a house nearer the centre. However, when foreigners are presented with simular properties the price is immediatly treble what local citizans might expect to pay.

I do not expect to see anyone who has invested in speculative areas get a return for their money. Areas like Dubrovnik will always be popular with Itailian and German investors, but other "new" areas are never going to give the pay off people have been led to expect.

While new "exciting" properties are still being tauted as great investment opportunities, the papers remain filled with properties in the same areas that previous investors are finding impossbile to offload. As the market continues, the banks, estate agents and developers behind new sales can continue to provide accomodation at prices which the market is prepared to pay. This mean if confidance wanes, profits may become smaller, but are still way above the actual face value of the property on offer. Those who have already invested there own money have paid top doller and cannot offload their property with accepting a serious loss.