Investors are enjoying the bigger yields on sovereign bonds, but these bigger yields reflect increasing risk. The longer these countries struggle the higher risk their debt becomes, the higher risk their debt becomes the less affordable it becomes. If something isn’t done soon this vicious cycle could easily lead to much more drastic consequences. As Scotland votes on its independence from a devolved UK (Ireland, Scotland and Wales are now in devolved governance) and Englishness and Britishness once again take on separate meaning, how long before one nation decides they would fair better outside the EU?

The latest news is that the Spanish economy contracted 0.3% in the final quarter of 2011, making for a slide into a predicted recession in 2012, with the IMF forecasting a 1.7% decline this year and the Bank of Spain predicting a 2012 contraction of 1.5%, they then predict a 0.3% decline and a 0.2% growth respectively for 2013.

If the Euro does collapse or economies do start to bailout of the Euro instead of being bailed out by it, then it will likely be because either Spain, Italy or both can no longer afford to refinance their deficit, and because the EU can’t (or won’t) raise sufficient funds to bailout these European behemoths. Once that happens all bets are off.

With the Spanish economy set to fall back into recession and such a massive unemployment rate (23% and 50% of the under 20), we once again face the danger that the crisis itself will breed its own worst outcome. That, because economies like Spain are caught up in such a mess that their debt will just become so high risk that they will no longer be able to stay afloat and will have to push the bailout button — and then what if no one answers?

Spain now has the highest unemployment rate in the OECD, with 295,000 more people out of work by the end of 2011 taking the total to 5.27 million, some 22.85% of the population, 48.6% if you could only the 18-24 year olds.

Spain was one of five European countries to be downgraded by Fitch after being put on "Ratings Watch Negative" in December last year. Fitch cited in particular Spain’s failure to meet its target deficit-cut for 2011.

Prime Minister Mariano Rajoy has said the 2011 deficit will be about eight percent of GDP — far beyond the 6.0-percent target — but has promised to abide by Spain target of lowering the deficit to 4.4 percent of GDP in 2012 and 3.0 percent of GDP in 2013. Rajoy plans 8.9 billion euros ($11.7 billion) in new budget cuts, tax increases to rake in 6.3 billion euros, and an anti-tax fraud campaign to recoup about 8.2 billion euros. But with unemployment so high, meaning less taxes to pay more benefits, there are real worries that cost-cutting alone just isn’t going to cut-it so to speak.

"[Spain's] material fiscal slippage primarily reflects an over-shoot at the regional government level and underscores a structural weakness in Spain’s fiscal framework and has undermined the credibility of the fiscal consolidation programme," Fitch said in a report. "In Fitch’s view, the official 2012 deficit target of 4.4 percent is now likely to prove unrealistic. The agency therefore assumes that this year’s deficit will come in at 6 percent, and that the stated 3-percent target will now not be reached until 2014." The agency said economic re-balancing in Spain was hindered by a rigid labour market.

Spain is taking the fore because of its huge labour-market problems, but the same questions are being faced by all those caught up in the crisis; how to get back to growth without spending, how to reinvent the wheel and accumulate without speculation. The EU could not afford to bailout Spain without some major assistance, let alone if both Spain and Italy need help at the same time.

Right now, the Euro is akin to a sinking ship and no one knows how or even if it can be saved. As we all know even from recent history it isn’t long in that situation before the calls to abandon ship start ringing out.

Article written by Liam Bailey on behalf of Turkey property developer Wise Move Homes, famous for the Altinkum property gem the Apollon Holiday Village.

In a volatile world investors are looking more than ever for financial havens, and the Cayman islands, along with several other destinations in the Caribbean are coming up trumps. Here are some of the main reasons why foreigners are snapping up property in the Cayman Islands as investments and holiday homes:

Cheap Caribbean Property:

It’s the Caribbean for goodness sakes. The Cayman Islands represent true paradise. Compared to the likes of the Dominican Republic there is hardly any development at all in the Cayman Islands. The government has always been careful to ensure the beauty and paradise of the islands was kept intact when considering planning applications.

Even now that the Cayman Islands is becoming popular as an overseas property destination, the availability of properties is almost all resort developments. Thus, the properties are serving twin purposes, they are the supply for overseas buyers’ demand, but are also supplying the tourism industry with its availability.

The Cayman Islands represent an untouched beauty that barely exists anymore, and those who visit normally come again and again, so of course having a holiday home on the Caymand Islands is a fantastic investment or holiday home, which makes you very popular at parties.

Investment Potential:

Cayman Islands property prices are among the lowest in the Caribbean, which gives incredible scope for strong rental yields and capital growth.

As was mentioned most of the availability is in resort developments. The majority of them come with guaranteed rental yields and even attractive buy back deals.

Packages Geared Towards Pensions

The credit crunch wiped trillions of dollars off stock markets, and left many pensioners pensionless. With everyone growing older and living longer more and more people are choosing to supplement whatever state pension they may be entitled to with their own investments and strategies.

The British Self Invested Personal Pension is a prime example. The plan allows Brits to make their own investments for their pension pot, including commercial property. Many Brits are buying into holiday resort properties as part of SIPPs because the fact that they are managed as part of the resorts makes them SIPPable.

Many resort developments on the Cayman Islands fit into this category, including the Dolphin Estates development. SIPP investors are looking for safe returns. Dolphin Estates guarantees them 20% over 4 years. They can take this as a guaranteed 5% rental yield each year, or a 120% buy back on year 4. It also leaves the option open to try a profitable sale on the open market in year 4 before pocketing the additional 20% from the developer. Though you should double check this in the terms.

Article written by Liam Bailey on behalf of Select Resorts, a leading UK based overseas property agent marketing Cayman Islands land for sale from £40k.

The rapid devaluation of cash first triggered by instability in the foreign exchange markets, and then by that and roaring inflation caused by money printing in the US and UK, has led to the world’s wealthy individuals and investors seeking to put their cash into something safer than, well, cash. This first kicked off a rush on buying gold, but then, as the price of gold soared higher and higher people began looking to property.

As a rule of thumb, property will almost always appreciate in value over the long term, at least, we have always held this to be true, but all bets are off since the financial crisis. So, the wealthy buyers are looking to destinations that are now proven to have seen property prices holding firm against the downturn.

The Caribbean is home to a predominantly large number of such locations. Because Caribbean property has always been predominantly bought by wealthy lifestyle buyers, there was very little rush selling when the crisis struck, nor are developers and agents relying on rapid sales (one property sold for £300,000 is equivalent to selling 10 properties at £30,000). So, because prices are set by sales in the vicinity, this meant Caribbean property held its value in most places.

St Kitts is certainly one of those locations. This can be seen in the price of the Ocean’s Edge resort development, currently being marketed by Savills affiliate overseas property agent Select Resorts. Even now, 4 years into the financial crisis (longer in the US) you can’t buy a property in this development for under $372,000.

St Kitts property sales have been recovering since the second half of 2009. Some people believe this is because the world realised that the world wasn’t going to end, and that the wealthy would indeed survive with their money bags intact, at which point they became keen on getting their money into something that wasn’t haemorrhaging value.

St Lucia, Barbados, Grenada and Trinidad and Tobago all made the grade as safe havens, but St Kitts and Nevis had an ace up their sleeve. Anyone who buys a property in St Kitts and Nevis costing $350k or more is immediately granted citizenship and a slew of tax benefits to go with. Tax benefits including no world income taxation, no personal tax, no restriction on the repatriation of profits and imported capital, no inheritance tax, no withholding tax for nationals living abroad and no tax credits.

Understandably, the tax benefits combined with the safety of property in St Kitts as an asset has led to a great recovery in sales over the last 18 months.

Amidst all this volatility, real estate is seen as a safe haven, however, even real estate is volatile in many countries, especially established markets. Within all this instability, volatility and uncertainty stands a rock, Germany.

In Germany only 43% of the population own their own homes. This renters culture builds into a promising investment prospect.

Firstly, because there was no rush on mortgages Germany has not fallen prey to the great sub-prime crash, and German banks are as stable and strong as ever. Secondly, in Germany house prices are controlled by rents, and rents are controlled by laws (tied to wages), because they can’t have the population priced into homelessness by greedy landlords. When wages grow rents are allowed to grow and when rents grow prices grow, but only slightly.

Anyone who has known the German property market for a few years knows that a boom is always just around the corner but never actually arrives. If you want an investment that will appreciate rapidly or even at all, then Germany is not for you. However, if you are happy to invest into a property with practically guaranteed 100% occupancy, allowing you to calculate yields beyond a shadow, and then look towards Germany.

Berlin is particularly interesting, because up to 90% of the population there live in rented accommodation. What’s more there is an abundance of refurbished and modernised apartments in the city offering top quality apartments are undervalued prices. Even in Berlin rental yields average 5%, but again, we are talking about a reliable, long-term buy to let investment.

Experts are predicting that property market in the Silicon Valley area or in West Los Angeles will be one of the earliest areas to experience price rises simply because of the number of high income people who live there. The city of San Francisco, Malibu, La Jolla and Palo Alto are also places where prices are anticipated to return to their peak within the next five years.

The lower end of the market has already experienced more interest, and now that is spreading to the middle market which should increase stability. Much of this is due to increased affordability, although the market is still being held back by high unemployment levels.

The threat of rising interest rates may force more buyers into the market as they will be worried about losing the opportunity to fix rates. As the economy recovers with more jobs being created and better job stability, and as financing for mortgages returns, the current affordability of housing will seem even more attractive.

During the last couple of years many investors have made substantial capital gains by buying foreclosed homes, and although the recovery is still relatively slow-moving the opportunity to find a bargain may be diminishing.

In Paris demand accelerated greatly in 2010 and it became staunchly a seller’s market. According to reports if buyers didn’t make an offer almost immediately on the best properties they lost out, and most paid the full asking price or above.

Limited supply of properties for sale in Paris led to prices rising in 2010, with estimates putting the growth at between 7.5% and 10% for the year.

There are twenty different arrondissements in Paris, and thirteen of them have seen house values increase, with the average cost of a 50 square metre apartment being 334,000 Euros.

The most expensive area is St Germain des Pres, where prices have increased by nearly 20% in the past year. Paris is beginning to feel like the preserve of the very wealthy. However, healthy rental rates and strong potential for capital growth mean it is still popular with investors, who favour 1 bedroom apartments.

The price rises are not limited to Paris. It is estimated that house prices across the country have risen by nearly 6% this year, which compares very favourably against falls of just over 7% in 2009. It is thought that prices will continue to rise as there is likely to continue being a shortage of properties for sale, which with low interest rates will drive up demand.

New building throughout France may satisfy growing demand over time, especially with the gradual lifting of building restrictions, but this is less true of the glamorous capital, where building is closely monitored. It is likely that Paris will continue to become France’s premier destination for property prices, but eventually, with populations growing and living longer, and as more and more buyers are priced out of the Parisian market, other cities will begin to catch up.

After much talk of bottoms and beginning recoveries reality is once again dawning on the Spanish property market, as it comes to terms with its massive oversupply and the dire state of the wider economy.

According to the Spanish housing ministry sales of Spanish properties across the board (domestic and foreign buyers) fell 47% between July and September. Widespread reports tell of prices now down 50% and of sellers finding it difficult to sell even at that.

Barbara Wood, a buying agent acting for Britons, bought a seven-bedroom home in the tourist hotspot of Ronda; it was advertised at €1.5m (£1.25m) but the seller accepted €850,000. An Estepona villa had a €750,000 price tag but went for €485,000.

She says: "Discounts of 20% are way too little. Few sellers have the guts to advertise an asking price close to what they actually take, so buyers have to wade through masses of property with daft asking prices."

This is a million miles from talk of massive sales increases as developers cut 20% off their prices, as we heard in the middle of the year, including a report of one Marbella developer seeing sales rise 200% compared to 2009.

And it is not going to get any better for a while yet. Experts are predicting that prices will fall between 15 and 30% further before stopping, and even then we will be looking at stagnation before growth.

The Spanish economy is still is one of the few in Europe still in recession, and its incredible 19.7% unemployment rate is far worse than anyone would have dared predict for an established market like Spain.

If you want a holiday home in Spain, have the cash to buy, and don’t mind the fact that it may fall in value after you buy, then you should definitely be out there now looking for bargains. But if you are outside that criteria in anyway then wait, because prices are almost certainly going to fall further in the weeks and months ahead.

1 Brazil:

We all know that I was right about this one. The only thing I was wrong about was that the Brazilian economy wouldn’t see any contraction during the downturn, because, — I believed — continued growth in Asia’s emerging markets would continue to fuel growth in Brazil. The Brazilian economy contracted by 5% in a very short space of time, starting from the end of 2008, but it has also enjoyed one of the fastest recoveries.

The contraction was like a very small blip compared to Brazil’s massive growth in the last few years. Recently reports have highlighted the fact that rising affluence has led to Brazil’s middle class being some 91million strong — a large proportion of the population. There are already signs of foreign investors flocking to capitalise on this massive growth in demand for affordable housing in Brazil. Then you have Brazil as a the World Cup host in 2014, and the Olympic host in 2016, both of which will increase tourism, affluence and bring increased sales and prices in the luxury sector. A resounding pat on the back there then.

2: Cambodia

Cambodia has suffered massively during the credit crunch. It was always a high-risk investment, and so the minute risk-appetite started to wean, sales of Cambodian property to foreigners dried up almost completely. At the same time the banking industry was hit hard, and so was the wider economy with the massive drop in demand for Cambodia’s key exports such as textiles and a massive drop in tourism. While I still think Cambodian property has bags of investment potential, my assertions of growth in the short term were badly mistaken.

3: Philippines

During the global financial meltdown the Philippines’ economy has continued to grow strongly, fuelled mainly by continued growth in outsourcing and worker remittances. Internal demand for property has remained strong, and it has benefited from resurgence in foreign demand from the second half of last year. That’s another back-slap I think.

4: Canada

Canada’s housing market has enjoyed a massive rebound throughout 2009, and in fact the government, which just months early acted to stimulate the market, was forced to look at measures to cool it.

This happened in several places around the world, because of a liquidity surge brought on by government stimulus into an economy that never crashed as bad as was expected and was seen in the worst hit parts of the world. Therefore anyone who invested in Canada property when I recommended it in 2008, is probably either sitting even and hoping the growth continues, or a little up and hoping the growth continues.

The National Association of Estate Agents have reported negatively on markets throughout the height of the downturn. But now, when the tide of international confidence has turned and things are looking brighter, their members would not be happy/would revolt if they were not to do everything they could to assist in the turning of public opinion, the increase in confidence and ultimately to increase demand for property in the markets they serve.

And, further, now knowing this I must ask: has all the information they have disseminated in the last 18 months been solely to be informative about international property, or to build credibility and add weight to the message when it became positive.

The article that made me ask this was on Spain, the NAEA’s Des Rowson, the organisation’s spokesperson for Spain saying that investors should buy quickly to capitalise on rising house prices in the country.

Apparently Rowson conceded that the Spanish market endured a "difficult 2009", before highlighting the bargains that are currently to be had. He said that while the organisation doesn’t expect any significant changes before the pound strengthens, but still sees a 3% growth over the year, for that reason Rowson said:

"So if you are thinking of purchasing a property, do so in the early part of 2010," he noted.

To say that the Spanish market had endured a difficult 2009 is like the understatement of the decade. Yes, there are bargains to be had but prices won’t grow by 3% unless they can shift the 1 million unsold properties — left from the construction boom that saw Spain build more properties than Germany, France and Italy put together. And this will need to be done quickly to leave enough time for a growth of 3%.

This is clearly an attempt by NAEA to spur on the sales increases that have already been seen, as I said, I don’t blame them for this, it is just an observation. In reality though, the recent sales increases have been from bargain hunters, but there is no rush to secure a bargain; banks are holding thousands of properties back to avoid flooding the market, there’s a good few months left before the end of discounts and distressed sales in the Spanish property market.

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