While many an eagle-eyed property investor can spot a potential bargain, time must be spent exploring the reasons why.
Istanbul, Turkey’s largest city and commercial capital, is a great example of this maxim. By all accounts, the city’s real estate market had a difficult 2018. This is a reversal of strong price appreciation since 2012, global investors helped city centre apartments jumped from as little as GBP 50,000 to near double that a few years later, according to Turkey Homes research.
But the political and financial backdrop of emerging markets is often far more volatile than in those developed, so an inflow of hot money from a lowering of regulation can have an equally dramatic reversal when the country hits the international headlines.
Turkey had an unstable last year, with political and diplomatic uncertainty adding to regional tensions and trade tariffs from 2016 and 2017. The lire has dropped in value sharply: where a US dollar bought around 3.9 lire in April, by the second week of August this shot up to US$1-6.86 lire.
The lira US$1-5.2 lire rate at the end of January 2019 may indicate the are property deals to be done. The cuts to certain real estate taxes and lower mortgage costs might also be interesting. Holiday home resorts on the Black Sea also should be of interest - tourism was up 31 per cent in the 12 months up to May 2018, according to the Culture & Tourism Ministry.
But how much the president can skew fiscal policy towards supporting the industry before market fundamentals take hold is a big question. With instability ongoing, strategists are already talking about overvaluation in Istanbul’s luxury sector.
Austin started 2019 with strong economic headwinds from the last two years in its sails.
In fact, It’s been a decent story for Central Texas overall, as the return of oil & gas prices has added to solid employment figures overall from other sectors in the region and its main cities, including the tech sector.
Speakers at last year’s Home Builders Association of Austin annual event were adamant that those in home construction will be busy this year, despite softer consumer confidence in other areas.
This is because the city has a demand glut. Last year set another record for home sales, amid evidence of bidding wars. Prices have rose steadily and may have found an average ‘floor’ of US$ 300,000 - the median price for single-family houses in the Austin-Round Rock metropolitan statistical area has stayed above that level for 10 consecutive months. The median price for the Austin area overall is $319,000.
This therefore presents an issue of affordability, particularly helping first time buyers - especially in a city full of post-graduates - make that first purchase.
Such a challenge is the supply issue in relation to helping new buyers, as well as keeping a lid on rental increases, that builders specialising in shared living for millennials (think New York) such as Medici Living Group are taking an interest in the city. Medici’s Quarters brand of space-economic living is being rolled out coast to coast.
The head of Local Market Monitor, a data provider, even suggested in a forbes.com poll that purchasing large Austin houses to subdivide into apartments could be the savvy choice for investor landlords, so strong is the rental demand.
The city may peak around mid-way through 2020, commentators have said.
Paris is an interesting example of the variety in demand that a single city can have, depending on the demographic of the buyer.
Perhaps given the backdrop of architectural beauty, top rate luxury fashion and convenient, Europe-wide access, the city has remained highly popular with the super rich. Knight Frank International’s research into the most desirous locations put the French capital in top position, with an obvious sweet spot among those spending in the millions.
The first, 6th and 7th arrondissements in particular have been marketed to a tee to US, European and Middle Eastern buyers, the research found, and prices have risen in this top sector.
This has pushed some of the next tier of financial investment into the 10th arrondissement, where gentrification is at an earlier stage.
So far, so good. Developers have been bearish as to the demand for new properties would continue to the same pace, lower down the investment scale, however.
Enquiries from the UK have increased - Home Hunts, a high end property firm, received more than double the enquiries from across the Channel in 2018 compared to the previous year, according to feedback it gave Financial Times. This has been partly been attributed to the uncertainty generated around Brexit. Around 2,000 finance jobs may switch from London to Paris in the next few years, one PwC estimate has shown, with a prime motive being investment to potentially lead to a personal abode.
Prices in the city centre have risen 17.5 per cent since the Brexit vote, in fact. Knight Frank expects another 6 per cent in price to the city in 2019, in addition to nearby rivals such as Berlin.