Prospects For Property Markets Abroad Ernst And Young
Every year professionals from Ernst & Young’s real estate group meet to discuss property based trends around the world. From these meetings Ernst & Young annually produce a report detailing the current trends in real estate markets around the world and in investment approaches too, and they add their own observations making for informative and informed reading.
This year’s ‘Real Estate Market Outlook’ report really makes for essential reading if anyone is thinking of buying a home overseas for any purpose – whether they are simply seeking a vacation bolt hole or an investment property. Basically, everything is looking tough in real estate terms for at least the short term.
According to Section 5 of the Ernst & Young ‘2008 Real Estate Market Outlook’ report, we haven’t even begun to scratch the surface in terms of appreciating the level of default rates in the US. The report estimates that we won’t come close to understanding the breadth of the mortgage crisis in America until at least 2009, and that until true figures are revealed and the financial markets manage to absorb the fallout, there can be no turn around in global real estate fortunes.
The findings of the report’s contributors focus on the international housing market fast morphing into a very different model from the one we have seen in the past decade. Where until very recently property firms were speculating on a continued level of demand, nowadays the larger builders are struggling with an oversupply of end product and the smaller constructors and property related firms are either going out of business, getting out of business or being absorbed. The Ernst & Young outlook is that when the global real estate market does rebound, the landscape will be very different.
To us this actually sounds all to the good. Until the market rebounds there will be bargains to be bagged from developers keen to offload their stock and realise some form of capital return on their physical outlay. And when property is once again an affordable commodity for more of us, there will be fewer bottom feeders leeching off the consumer as the worst developers will hopefully have given up the game. Mind you, perhaps that is wishful thinking!
As for there being bargains galore any day soon – this will hold true in many markets such as Turkey, the Republic of Cyprus, Spain and Florida where building is or has continued apace but where numbers of buyers have been dwindling. Look around for developments sitting empty – you can guarantee the developers of these will bite your arm off if you make them a fair offer.
So, the Ernst & Young report paints a fairly bleak short term picture for property abroad as we all sit back, wait and see quite how bad the global credit crunch is going to be and see how badly indebted some banks have become. But for those of us who are underexposed to property related debt and who are perhaps in a position to negotiate for a home overseas bargain property, all this could be very positive and encouraging news indeed! It all depends on your perspective.