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Panama

You will see Panama every time I talk or write about the best emerging markets in the world for property investment. Regular readers of mine will know that this is because of the expansion of the Panama Canal.

The Panama Canal, or rather revenues earned from its operation makes up for a large portion of Panama’s services sector revenue, which in turn contributes a third of the country’s GDP.

Panama’s GDP growth averaged 10% in the last few years on the back of massive growth in tourism, including medical tourism and call-centre services. Even now during a global recession the International Monetary Fund is forecasting 3% growth for Panama this year. The expansion of the Canal is due to be completed in 2014, at which point analysts expect that it will boost Panama’s GDP massively.

All these things are making Panama a magnet for investment. This, in turn is playing a part in Panama’s continued GDP growth in a self-perpetuating cycle of growing foreign direct investment (FDI).

The Panama real estate market is also strong, again on the back of the massive tourism growth but also because Panama has the largest market-share of American retirees purchasing their retirement homes. The country is also very popular with American lifestyle buyers. Add to these the growing number of buyers from around the world and you can see why both Donald Trump and Hilton are currently constructing sky-scraping multi-use developments in Panama City.

The final bonus is the low prices of property currently on offer in Panama. Panama City — the capital — has seen values grow massively but you can still get a luxury 1 bedroom apartment for £120-140k, and a studio for about £70k.

However, if you look to the new emerging areas you can pick up some real bargains. There is one development that always springs to mind: the Bala Beach resort development, which offers 1 bedroom apartments, beach-front to Maria Chiquita Beach for £55,000. I know one company (I trust) that is selling the Bala Beach development; Azure Overseas.

As always, and as regular readers will know, I recommend that buyers do their own research, including at least one, and preferably multiple trips to the country. Things to check are the developers track record, financial situation, and to make sure that the land-ownership is secure, and that building permissions are in place and being adhered to.

Albania

Again, I always put Albania in these lists because I just love it. There are internationally marketed off plan developments available, allowing you to buy luxury property very cheaply. The fact that the properties are built to target overseas buyers and Albanians means that today’s investors will be able to sell to Albanian’s when they decide to cash-in their investment.

Albania’s government has an excellent fiscal track record over the last decade. Between 2002 and 2006 they successfully brought a quarter of the nation’s poorest out of poverty. Albania then became a middle-income country according to the World Bank’s classification. This allowed Albania to borrow money from international banks instead of relying on handouts.

Between 2002 and 2006 the economy was growing strongly. When this continued into 2007 and 2008, the government took advantage of its new status and took out a series of massive loans from international financial institutions. These included a massive loan from the European Bank for Reconstruction and Development to build a new terminal at Albania’s largest port in Duress, as well as renovating the existing terminals.

Even when the international downturn set in, Albania continued to invest in future economic growth, taking out another major loan to complete a super-highway linking the port of Durres to inland Kosovo.

This will boost the economy massively for years to come, by making it the quickest route for Kosovo exports, and also increasing tourism from land-locked Kosovo to the Albanian beaches. The latter also could be a holiday rentals market for foreign investors in coastal areas like Saranda.

Again, the future is bright for economic growth in Albania over the next 10 years at least. Not least because Albania is in the process of trying to secure entry into the European Union by 2014/15, which will increase economic growth by boosting exports, tourism and other parts of the services sector.

Again, economic growth in Albania will push up property prices: economic growth means increasing employment, increasing wages and increased affluence. This leads to increasing living costs, including the cost of building materials and labour.

This automatically increases property prices at the rate of inflation. But because property in Albania is so cheap, the increasing numbers of foreigners buying for investment and/or accommodation as businesses move into Albania could push prices up much faster. This will also boost the residential rental market and push rental yields up from the current 4% to 6% in the next 5 years.

India

In India it is simple: the population, and more importantly, the middle class population is growing far faster than property development can keep up with — as the thousands of students pour out of universities and into gainful employment in one of the world’s fastest growing economies. The IMF forecasts 5.4% GDP growth in India this year.

This translates to massively growing demand for affordable housing for the foreseeable future, which will put upward pressure on property prices == especially when developers inevitably run out of land to develop in the cities.

There is also the dynamic mentioned above, where rising living costs makes development more expensive and adds to the upward pressure on prices.

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I thought it was only right that I should write one for my own blog, and so I am undertaking the arduous task of charting my ultimate top 5 property investments for 2009 and 2010.

Egypt:

I have recently fallen in love with Egypt, and it is my hot tip of the day (the one I tell my friends and relatives to go for if they ask me). For the price of a mid-range saloon I could buy a luxury apartment in Hurghada, one of Egypt’s fastest rising tourism destinations.

Hurghada is doing a roaring tourism trade at the moment, especially with Brits, who, keen to holiday outside the Eurozone are finding the low living costs in Hurghada an additional draw.

Property is so cheap in Hurghada because it is still in a very early stage of its development, with more developments in progress than useable holiday accommodation. There is a risk factor in that, as well as the risk factor for buying property off plan. But if you do your research carefully including several trips to the development then all those risks become benefits.

You are buying in cheap because you are buying into a building site, the value of the investment when it is a luxurious apartment on a world-class resort in a popular tourism destination is impossible to say accurately, but it will certainly be a lot more than the 12,000 – 20,000 GBP that you can buy in for now.

Egypt property is a versatile investment choice, because you can buy in with the hope of making short-term profit when more of the resorts are completed than not, but if that doesn’t pan out the profit will still come over the long-term.

The Philippines

I really am favouring countries that have shown their ability to grow economically this year; kind of like: if your (emerging market) economy can keep its head (of steam) while all those about you are losing theirs…

The Philippines is expected to grow by over 4% this year according to the International Monetary Fund, and unlike some of the economies expected to grow this year based on bumper crops that could be regarded as unreliable, the Philippines growth is based on the comparably solid worker remittances from overseas Filipinos, and on the outsourcing fuelled services sector.

Another benefit the Philippines has from an overseas investor’s perspective is its being worst affected by the Asian economic crisis at the turn of this century. This led to reforms in the banking sector which are neither here nor there in honesty, but it also led to Philippines property and commodity prices being lower compared even to its neighbouring competitors.

On top of that you have the fact that the capital Manila is a city emerging into a modern metropolitan wonder faster than most, and this means bargains in the form of off plan apartment complexes. I know for a fact that £30 grand will buy you a luxury apartment in a Manila high-rise, and in the growing financial district of Makati. As Manila’s middle class grows these properties will be in high demand, first for residential letting, and then for purchase.

Albania

I can help it, I just love Albania. Don’t get me wrong, its economy is likely to avoid the recession this year by only the skin of its teeth with a 1% growth forecast by the International Monetary Fund, and you won’t find 12% guaranteed rental yields in Albania. That said, Albania’s government is one of the most economically astute in the developing Eastern Bloc, having brought a quarter of its population out of poverty in the last decade and become a middle-income country in 2007.

Even now as most of the world is pulling in its purse-strings, the Albanian government is investing in future growth; using its new status to secure loans from the Japanese government, the European Bank for Reconstruction and Development for projects like a new terminal at the country’s largest port Duress, and a new super-highway linking the hills of Kosovo to the improved port.

Again the low price of property is not a downside in Albania; you can get a 2 bedroom luxury apartment in Tirana for just the wrong side of £50k if you know where to look. The good thing is that in Albania’s case the developments are not all resorts; many of them are suitable for the local population. This means that you can resell to Albanian’s who will be looking to buy property in increasing numbers as the economy continues to grow.

However, Albania property is very much a long-term investment; I have no doubt that in time the property being bought off plan now for £50k, will be resold for 3 times that amount, but this will only be when the local population can afford to pay that for quality housing, which may be 10, 15 or maybe even 20 years down the line

Panama

I just wrote a long article detailing why Panama property is one of my investment tips for 2009, rather than repeat or rewrite it you can read it by clicking the link above.

Repossessed Property in Developed Markets

The international economic crisis has led to hundreds of thousands of homes being repossessed around the world. For me the three main investment hot-spots where repossessed property is in abundance are: the UK, Florida (and the US) and Spain.

Many people are seeing this as an opportunity to buy cheap property, but that is not the way I recommend capitalising on it. I think people should spend the amount of money they would have spent, and use it to buy the ultimate repossessed property that they could buy.

For instance: if you are looking at Florida or Spain, then go for coastal property or property near Disneyworld in the former. But most of all buy a big property with plenty of land, especially in Spain, because this will prevent developments from springing up all around you. And in the UK it’s all about location, location, location; look for swanky up-market properties near the best schools.