Singapore Real Estate

From Dublin to Tokyo, house prices have slumped in the past year as the credit crunch has restricted lending and stunted growth in the biggest economies, new figures have shown.

The world’s three biggest financial powerhouses, the US, Japan and Germany, have all experienced negative or zero growth in property prices in the 12 months to 31 March, according to the latest Global House Price Index from the estate agent Knight Frank.

The once booming Baltic states of Latvia and Estonia – where many Britons have bought holiday homes – suffered the most, crashing 20 and 10 per cent respectively to the bottom of the table of 33 nations.

In western Europe, Irish homeowners experienced the sharpest downturn, losing 8.8 per cent of the value of their homes, while in Germany prices fell by 5.2 per cent. In Japan, prices fell by 0.7 per cent, while the US, where the Treasury has pumped in billions of dollars to revive the economy, experienced zero house price growth.

Britain’s runaway housing boom slowed to an annual rise of 1.1 per cent, though new figures from the Nationwide Building Society this week revealed they had slumped 2.5 per cent in May, the fastest fall in prices since the housing recession of the 1990s.

Few major economies escaped the global housing slowdown, with France, Hungary, Austria, Lithuania, Switzerland, Poland, New Zealand, Israel and Denmark all recording annual rises of 3 per cent or less. Some burgeoning economies have bucked the trend, though, mostly in Asia; Singapore was up 29.9 per cent, Hong Kong 28 per cent and China 11 per cent. Iceland and Australia also did well.

The figures indicate the deep impact felt by the slowdown triggered last year by the defaults of sub-prime home loans by Americans, but they miss its severest effect because the trend has intensified in the first half of 2008.

Knight Frank’s figures for the first three months show that prices plunged by 8.4 per cent in Ireland and by 3.9 per cent in the UK. In the US, they fell by 0.2 per cent and in France by 0.1 per cent, but they rose in Germany by 1.8 per cent and by 6 per cent in Russia.

In a statement, Knight Frank said: “The number of markets where prices have fallen has increased, and, although there are still locations where price growth is in double figures, at the moment they are the exception rather than the rule. A year ago, 35 per cent of the markets covered by the Global House Price Index saw house price inflation in double figures. In the first quarter of 2008, this proportion had just fallen to 20 per cent.”

The British estate agent added: “The geography of the best-performing markets is not as clearly delineated as in previous years, when we might have been able to say that growth was strongest in the Far East, or central and eastern Europe. Today the top performing markets are dispersed around the world, with Bulgaria, Singapore, Hong Kong and Jersey being the locations with the highest growth rates.”

The global index is based on national statistics, where available, or figures from a respected national organisation.

When considering investment opportunities, many individuals turn to their financial consultant and purchase mutual funds, stocks and bonds. With the economy and stock markets in an ever changing pattern, most financial consultants would agree that investing in a Real Estate Investment Trust, in lieu of pooling into a real estate partnership, is a viable financial investment option without the complication of actual home ownership and avoids the red tape associated with real estate partnership agreements.  Understanding the dynamics of an REIT and the advantages and the disadvantages of this investment vehicle will ensure you have diversified your portfolio and obtained the appropriate real estate purchases based on your specific needs.

Real Estate Investment Trusts, REIT, are listed on the stock exchange and make for a very liquid investment. With most brokerage firms requesting no minimum investment the advantage over real estate properties is in the guarantee of losses never being passed to the investor. Additionally, income and property taxes only apply in states where the investor resides unlike actual real estate ownership or real estate partnerships which require property taxes to be paid in the state in which the property is located. This, alone, provides an incentive to move into REIT plans with properties in states where taxes are more significant than in the state you may actually reside.

With an REIT, monies are deposited into a mutual fund account with shares purchased in the REIT program of your choosing. As an REIT is required to distribute 90% of its taxable income to shareholders, most REIT plans are publicly held and traded on the stock market. In contrast to an REIT, a real estate partnership is not publicly traded on the stock market and will routinely pass investment losses to the investors.  By doing so, most investors find they may see red in their investment portfolio and may also be required to meet future contribution requirements through their real estate partnership agreement.

Source: Associated Content

Owning a home overseas can be a good investment, but it can also be a gamble. Talk to a lawyer first, one expert says.

James and Nancy Wood know all about the economic pitfalls of recession and the dollar’s declining value overseas.

Still, the Carbondale couple made a choice some would say defies logic: They bought a condominium on the tiny Caribbean island of Bonaire earlier this year.

“We thought it would be a good investment because of what’s happening in the U.S., frankly,” James Wood said.

And they’re not alone. Americans own 500,000 to 600,000 foreign properties, according to a November report produced for the National Association of Realtors.

But are those investments safe?

Boulder real estate investor Jack Walker said the age-old mantra of “buyer beware” is particularly important when purchasing properties overseas.

“I would think 99 percent of transactions when you buy overseas are fine,” Walker said. “You just don’t want to be the person who is the 1 percent.”

The English expatriate has bought homes in Australia, England, Monaco, Scotland, Singapore and the United States — and he has some horror stories of purchases gone wrong.

To avoid joining the ranks of the unhappy 1 percent, Walker said, serious land-shoppers should begin their buying excursions with a trip to a lawyer’s office.

“This is an important legal transaction, and it can have all kinds of ramifications,” Walker said. “Whereas in the United States you go to a Realtor, and the Realtor takes you through the transaction and you’ve got someone to sue if something goes wrong, that isn’t the case in many other jurisdictions in the world.

“A lot of people don’t want to go to a lawyer (because) it’s expensive, but believe me, the investment in the legal fees is absolutely going to be the best investment that they make,” Walker said. “You’re a child in an adult world when you’re buying a home in a foreign country. It’s so easy to be taken for a ride.”

Understanding the difference between land-lease agreements and outright land sales and being clear on lingering U.S. tax responsibilities are two other areas Walker recommends reading up on.

“It’s very difficult to get out of the American system, which taxes you on your worldwide income,” he said. “So if you’re thinking, ‘I’m just going to leave the United States and live in Costa Rica,’ you need to consult a tax attorney. You don’t want to be flying home to visit friends and relatives and be arrested because of failure to file tax returns or tax avoidance. It’s not a fun thing to do.”

Matt Dierksheide and his partner, Eric Schwarz, are no strangers to international travel. They’ve been to Africa, Asia, South America and Europe.

And they’re not wed to oversized American homes: They downsized from an 8,800-square-foot home in Castle Pines North to an 1,800-square-foot townhouse in Lone Tree before setting off to Europe with plans to buy a reasonably sized home there. more…