Saturday, April 17, 2010
Dear Reader,
We don't talk much about property investment in Asia. It's not that we don't come across good deals (we've seen some very attractive condo-hotel opportunities that made us sit up and take notice) but because most countries in the region restrict foreign ownership.
Cambodia's National Assembly passed the Foreign Ownership Property Law last week. It's now awaiting approval by the Senate and the King, although these should only be formalities. The new law allows foreigners to buy the leaseholds of properties at least one floor up (condos, or offices), and hold the property in their own name. Foreigners still can't own land, or property close to national borders.
The new law makes Cambodia more attractive for property investors than many other Asian countries. Cambodia's minister of land management believes the new law will boost real estate sales and create a market for luxury high-rises. We're waiting to see the first wave of developments taking advantage of the new law--and, as usual, we'll investigate any opportunities we think are worthwhile.
One area that is worthwhile, and already on our radar, is Brazil's north-east. The local middle class drives property prices here: only 1-2% of all property sales in the northeast are to foreign buyers. Brazil's strong economy is growing the numbers and wealth of the middle class, who are in turn buying more property, and more luxury goods. Last week, they were spending on new cars, with record sales levels in the first quarter.
A merger between two major home-appliance chains wasn't so widely-reported. The two groups, Insinuante and Ricardo Eletra, will merge, creating the country's second-biggest retailer. The new company's aim is doubling the number of stores over the next four years. Their target is low to middle-income earners: and their focus is Brazil's north-east, which is fast-developing. This is yet another positive economic indicator for the region, and one of the many reasons we're still upbeat on the property market here.
Brazil's real estate developers usually offer attractive financing terms. That makes it easier for many lower-income and middle-class Brazilians buy a home. Financing payments are normally interest-free over the construction period, and often you don't need to make a down payment. That's not the case in China, another of the BRIC countries. This week, China raised minimum property down payments. First time buyers purchasing a home bigger than 90 square meters (968 sq ft) must pay 30% of the purchase price as a down payment. For second home buyers, the down payment rises to 50% of the purchase price. That makes Brazil' financing terms look better than ever...
Hollywood stars were out in force in Ecuador, supporting an environmentally friendly project. Their aim is to leave 850 million barrels of oil unexploited in a UNESCO biosphere reserve in the heart of the Ecuadorian Amazon. Leonardo Di Caprio, Edward Norton and Chevy Chase joined businessmen (including Steve Case), government officials and environmental activists on board a National Geographic vessel, visiting the Galapagos Islands. Leonardo Di Caprio offered to travel to the Yasuni reserve in the east of the country with a group of friends, to launch the campaign.
Perhaps Leo will take some time out to visit our favorite stretch of Ecuador's Pacific coast on his trip. If he did, we think he'd like it...deep-blue Pacific ocean, miles of wide, sandy beach, and a relaxed pace of life that's very tempting. The property prices might be a little too low for the tastes of a star, though--$105,000 for a home on the beach is not very Hollywood.
Mexico got the star treatment on Wednesday, when Michelle Obama arrived in Mexico City on her first solo official visit overseas. We focused however on a news story reported by International Living's Suzan Haskins. The article described the author's escape from the wintry weather back home to one of my top 5 beaches, Tulum. She loved the beautiful beach (who wouldn't love powder-fine white sand, contrasting sharply with neon-blue water?) and the mellow vibe (yoga on the beach, instead of drunken partying). She wanted a location that was easily accessible from New York, and Tulum fitted the bill, less than two hours from the international airport in Cancun.
Tulum will be much more accessible once Tulum international airport opens up. The Mexican president launched the new airport project last month. Once open, the airport will bring more tourists directly to this area, and Tulum's popularity will explode. It should keep its boutique destination status, though, thanks to development restrictions.
The new airport is good news for our favorite resort deal, only 15 minutes from the site for the new airport. More tourists means more demand for resort rentals. Not that you'll have to worry about occupancy--the units in this resort come with a fixed rent for the next five to seven years. If you'd like to see why this resort deal is so popular with our readers (nine out of ten who visit, buy a unit), click here.
Margaret Summerfield
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