Cape Town - The new year could be the year of opportunity and the best time to invest - as long you choose the right asset class, in the right location and a reputable company to work with, says Ray Withers, CEO of investment agency, Property Frontiers.
"There is a general worldwide feeling of gradual and hesitant recovery after three years of nail-biting recession and it is this cautious optimism we see set to fuel growth and create rewards for those who invest in the right areas," says Withers.
So where to invest in 2013?
Thanks to a wealth of natural resources, industry and agriculture are thriving in pockets across Africa. This economic growth is creating stable and prosperous societies with a rapidly growing, youthful population and a wealthy middle class with the desire and ability to buy property. Housing supply cannot keep up however and put local demand together with the requirements of international executives and the shortage becomes almost a drought in countries such as Angola, Uganda and Ghana.
A good example can be found in Uganda's capital Kampala where it is estimated that in this city alone an additional 34 000 homes need to be built every year to keep up with the demand of the local population.
It has taken almost four years but at last it seems the US housing market is on the road to recovery with house prices beginning to rise again, sales increasing, foreclosures falling and construction activity moving positively. The Federal Housing Finance Agency has shown the largest growth in house prices since September 2006 and the US Census Bureau shows that in August 2012 the median sales price of new homes in the US increased by 17% year on year.
In real terms, property prices in the US today are back to where they were around the turn of the millennium, with prices in some states up to 70% below their 2006 peak and around 50% of current rebuild cost. Many US States are in recovery but ones to watch are Buffalo, Rochester, Baltimore, Cleveland, the Eastern states of Florida, Georgia and South Carolina. It is in these locations that large quantities of repossession stock can be bought, refurbished and rented out or resold, all within a short time-frame.
2012 has been a mixed bag for the UK property market with London yet again bucking the trend thanks to the influx of wealth from abroad making the north south divide appear more of a ravine.
Although price rises have slowed in central London over the last two quarters of 2012, and may stay flat for 2013, we predict they will rise again in 2014 and more dramatically in 2015.
As for the rest of the country, prices in many areas have either stayed static during 2012 or dropped a little. This has led to slow market movement although in many areas houses are starting to sell due to prices being realigned to reality with many properties now selling for anything from 10-20% below the asking price.
Going forward into 2013/14 it looks like location as ever will be the key. As prices in many areas of London have risen by up to 70% in the last two years, the difference between London and the countryside is the greatest it has ever been meaning that good commutable areas and beauty spots outside central London are going to fare well as families take advantage of this window of opportunity.
As the wealth of Brazil expands so does the growth of the middle classes and with demand outstripping supply in all the major cities and urban hubs, housing at all levels and price points is proving an exciting asset class offering both excellent rental potential and capital appreciation.
House prices in Rio de Janeiro rose by almost 20% between July 2011 and July 2012 (just under 14% when adjusted for inflation) and in São Paulo rose by over 18% during the same period (up almost 13% when adjusted for inflation).
With two huge international sporting events coming to Brazil in the near future - the 2014 FIFA World Cup and the 2016 Olympics and Para-Olympics - the world's eyes will be on the cities of this exceptional success story.
A second Cuban revolution is about to play out some 54 years after Fidel Castro famously took control of this picturesque Caribbean country. Now under the rule of his brother Raul, Cuba is slowly moving towards capitalism and with it the chance for locals to own Cuban real estate for the first time in decades.
Until 2011 it was illegal in Cuba to sell property on the open market (the only way to move was to swap your home for another) but now that has all changed and Cubans can buy and sell on the open market. As a result this young booming economy is considered by some to be one of the top five emerging global markets in the world.
2013 should also see a further relaxation on the ownership of property by foreigners. Although at this stage ownership will be limited to upmarket holiday complexes and existing homes currently owned by foreigners we are hoping there will be a wealth of new opportunities in the pipeline.
Although the eurozone economy as a whole is expected to remain stagnant throughout 2013 that is not to say property-based investments do not exist.
After the runaway success of the student accommodation investments that Property Frontiers first launched onto the UK market back in 2009, Ray and his team feel there are now similar interesting opportunities in other European countries. Key areas to look at will be major university cities in northern European countries such as The Netherlands and Germany.
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