Real Estate Bargains In Developed Countries
According to Barclays Capital, the world economy has transitioned from a credit crunch to that of an ‘inflation crunch’. While 2007 had been an exceptional year for emerging markets and their respective real estate sectors, the drying up of global liquidity and inflationary pressures have driven up asset prices in emerging markets.
With such negative sentiments only beginning to cloud the Asian emerging markets scene, some investors are turning their attentions to other areas for possible distressed or undervalued property investment opportunities.
Being the epicenter of the entire sub prime mortgage crisis, few would consider the United States of America for property investments. Prices across the nation have either dropped sharply or, in the best case scenario, gone stagnant.
Tim Murphy Managing Director of IP Global, a Hong Kong–Zhebased property investment company, says that there are some amazing bargains in the US market provided that you are not buying on the way down and he feels that there is a bit more downside to go. “You need to make sure that you’re not buying in an area where the market is going to take five years to ten years to bounce back,” cautions Murphy. “I think there’re parts of the US that are going to be underwater for a long time, but there’s probably parts of the US that are probably going to bounce back quicker.”
He expects that the next 6–9 months should see some property markets in the US make a turnaround with distressed deals taking the lead. “There’s a lot of money still around the world. I think you’ll see a lot of funds and smart individuals take advantage of the bargain prices. It’s (now) a buyers market, which is quite rare. There hasn’t been a buyers market in the US for over 6 years,” said Mr Murphy. He thinks that the US and the UK are ‘special situations’ markets so investors have to find the right locations to buy into and not just buy because of the problems affecting the markets.
