Will Brexit Create A US Real Estate Dividend?

The June 23rd decision by the Brits to leave the European Union has driven US mortgage rates into the ground, but can such results continue?

So far, just a few weeks after the vote, mortgage rates have sunk about 15 basis points. Interest levels for 30-year, fixed-rate, prime mortgages went from 3.56 percent for the week of June 23rd to 3.41 percent for the week of July 7th.

“At 3.41 percent,” said Freddie Mac, “the 30-year fixed-rate mortgage is just 10 basis points from its November 2012 all-time record low of 3.31 percent.”

The big question is what will happen from this point forward. Has the Brexit vote created a temporary shock or does something more substantial loom ahead? For example, can we expect low mortgage rates for the next several years?

No one, of course, has a crystal ball, but there’s a very good case to be made for continuing low mortgage rates, a case which closely involves the Brexit vote.

The European Union

The idea of the European Union was to create a huge inter-connected market, one that could compete with the efficiencies and economies of the US. And, to a great degree, the project has been successful: the EU today includes 28 member nations as well as 510 million people. Not only that, the European Union has a gross national product of $18.5 trillion – more than the US.

The catch is that the EU has always had divisions. There are huge differences among the member nations in terms of languages, history and traditions, including big distinctions between the UK and it’s cousins on the Continent. For example, Britain, an island nation, is part of the EU for purposes of trade and travel and yet it continues to use the pound rather than the Euro.

The EU is an economic experiment, one which is in great trouble. The EU unemployment rate is generally 8.6 percent but that rate is not distributed equally. Greece is at 24.1 percent, Spain is at 19.8 percent, Germany is at 4.2 percent and Britain is at 5 percent.

The European Central Bank – the equivalent of our Federal Reserve – set its benchmark interest rate at -.40 percent in March, continuing a string of negative rates which began in 2014. Worldwide, more than $10 trillion is invested with negative rates.

US Mortgage Rates

Many observers predicted that US mortgage costs would rise this year, especially after the Fed increased the federal funds target rate to .50 percent in December. In fact, mortgage rates have fallen steadily, going from 3.97 percent before the Fed announcement to 3.41 percent in early July.

While the Fed has repeatedly indicated that it would like to see higher bank rates, mortgages are increasingly originated by nonbanks which have the ability to acquire funds from overseas – places where negative interest is entirely common. In effect, we now have a two-track lending system, traditional lenders controlled by the Fed and a parallel system of new players who can get money worldwide with electronic speed and who are rapidly gaining market share in the mortgage arena.

The Brexit Impact

The British decision to leave the EU has created instant turmoil and uncertainty in world markets, an upheaval which has settled down for the time being, but is likely far from over. The reason is that the terms of a British exit are so unclear it’s entirely possible that Britain will never leave the EU.

The international law firm of Seyfarth Shaw has an excellent explanation of the exit process, a process which is gloriously complex and uncertain, an arrangement which means entanglements and arguments for years to come.

In basic terms, the British must give the EU an “Article 50” notice. After the notice is given the Brits will have to work out the exit details with the EU, a process which might take as long as a decade.

Next comes the fun part.

“Once negotiations are concluded,” says the Seyfarth Shaw report, “the withdrawal agreement will need to be ratified by the UK and the EU and, in the latter case, this means ratification by all 27 remaining member states which is unlikely to happen quickly.”

Meanwhile, as all of this back and forth is going on, the European Union, an immense market and a major US trading partner, will be in turmoil. Investors with capital will be looking for safe havens, places where their money can do better than earn negative interest. We can expect that funds will continue to flow into the US and more money (supply) suggests lower mortgage rates within our borders for a very long time. In fact, you can already see the first evidence of a Brexit mortgage dividend.

“Volatility in international financial markets often triggers a ‘flight to safety,’ with investors targeting U.S. real estate, and especially U.S. Treasuries,” explained Rick Sharga, executive vice president at Ten-X.com, an online real estate marketplace. “This influx of capital drives yields on these bonds down, and since mortgage rates tend to directly follow Treasury bond yields, it’s very possible we’ll set an all-time low on the 30-year mortgage before all is said and done.”

“In light of this recent activity,” said Freddie Mac in its July Outlook forecast, “we have lowered our 10-year Treasury rate forecast by 40 basis points to 1.8 percent and 2.3 percent in 2016 and 2017 respectively. Accordingly, we have also lowered our 30-year fixed-rate mortgage forecast for both 2016 (by 30 basis points) and 2017 (by 50 basis points) to 3.6 percent and 4.0 percent, respectively.”

If you’re a borrower you have to love it. 

Article source: http://www.nuwireinvestor.com/articles/will-brexit-create-a-us-real-estate-dividend-63913.aspx

Investors Scooping Up Last Apartments in Panama’s Trump Ocean Club

There has been a flood of sales in Panama’s Trump Ocean Club in recent months, as the iconic waterfront tower enters the final closeout phase. Only 8 developer-controlled apartments are left in the sail-shaped tower, which has become the center of cultural and social life in Panama City.

Investors have been pouncing on the deals in the Trump since last October, when there were 50 apartments available. The last 8 should go quickly, with prices rising throughout Punta Pacifica, the neighborhood of skyscrapers on the waterfront.

The remaining apartments are priced anywhere from $75,000 to $100,000 under list price, as the developer looks for quick sales during the limited closeout phase. With prices starting in the $300,000s, the price levels are at 2006 pre-construction levels.

The apartments range from a 102-square-meter one bedroom to four 183-square-meter three-bedroom apartments. The three bedroom apartments are located on the waterfront side of the building with unobstructed ocean views; the five two-bedroom units available are all on upper floors.

Every apartment in the Trump has wide terraces and expansive views, as well as access to the Trump’s many restaurants and amenities. While there are resales available, the developer units are brand new and come with a 1-year warranty and new appliances.

The discounted apartments hit the market at a time when sales and investor interest are increasing throughout the city. Since 2014, we’ve seen a marked uptick in sales in Panama City, with prices increasing 7 to 10 percent a year in the top buildings. PPR’s sales were up 50 percent in the first quarter compared to a year earlier.

The top countries for foreign buyers include the U.S., Canada, Venezuela and Colombia. However, in the last year there has been an uptick in European buyers, specifically from Spain and Italy.

The majority are investors looking to take advantage of Panama’s many tax incentives and the high return-on-investment offered by high quality rental properties. Most of the buyers are paying with cash.

With its high-end towers on the waterfront, top-of-the-line amenities and close proximity to the best of the city, Punta Pacifica is attracting the highest demand and price appreciation in the city. This is the result of having the newest and most luxurious waterfront buildings, as well as the dwindling supply of apartments in the best buildings.

There is also very little land available in Punta Pacifica to build new towers, ensuring that apartments in the existing towers will grow more valuable as the last apartments are sold. With Panama’s economy growing at the fastest rate in the region, valuations on Trump resale apartments are likely to rise quickly once the final developer units are sold.

Jeff Barton is managing director of Punta Pacifica Realty, the leading sales, rental and property management agency in Punta Pacifica, the exclusive Panama City neighborhood of 18 towers perched on the edge of the Pacific Ocean.

Article source: http://www.nuwireinvestor.com/articles/investors-buying-last-apartments-in-panamas-trump-ocean-club-63912.aspx

Investors Buying Last Apartments in Panama’s Trump Ocean Club

There has been a flood of sales in Panama’s Trump Ocean Club in recent months, as the iconic waterfront tower enters the final closeout phase. Only 10 developer-controlled apartments are left in the sail-shaped tower, which has become the center of cultural and social life in Panama City.

Investors have been pouncing on the deals in the Trump since last October, when there were 50 apartments available. The last 10 should go quickly, with prices rising throughout Punta Pacifica, the neighborhood of skyscrapers on the waterfront.

The remaining apartments are priced anywhere from $75,000 to $100,000 under list price, as the developer looks for quick sales during the limited closeout phase. With prices starting in the $300,000s, the price levels are at 2006 pre-construction levels.

The apartments range from a 102-square-meter one bedroom to four 183-square-meter three-bedroom apartments. The three bedroom apartments are located on the waterfront side of the building with unobstructed ocean views; the five two-bedroom units available are all on upper floors.

Every apartment in the Trump has wide terraces and expansive views, as well as access to the Trump’s many restaurants and amenities. While there are resales available, the developer units are brand new and come with a 1-year warranty and new appliances.

The discounted apartments hit the market at a time when sales and investor interest are increasing throughout the city. Since 2014, we’ve seen a marked uptick in sales in Panama City, with prices increasing 7 to 10 percent a year in the top buildings. PPR’s sales were up 50 percent in the first quarter compared to a year earlier.

The top countries for foreign buyers include the U.S., Canada, Venezuela and Colombia. However, in the last year there has been an uptick in European buyers, specifically from Spain and Italy.

The majority are investors looking to take advantage of Panama’s many tax incentives and the high return-on-investment offered by high quality rental properties. Most of the buyers are paying with cash.

With its high-end towers on the waterfront, top-of-the-line amenities and close proximity to the best of the city, Punta Pacifica is attracting the highest demand and price appreciation in the city. This is the result of having the newest and most luxurious waterfront buildings, as well as the dwindling supply of apartments in the best buildings.

There is also very little land available in Punta Pacifica to build new towers, ensuring that apartments in the existing towers will grow more valuable as the last apartments are sold. With Panama’s economy growing at the fastest rate in the region, valuations on Trump resale apartments are likely to rise quickly once the final developer units are sold.

Jeff Barton is managing director of Punta Pacifica Realty, the leading sales, rental and property management agency in Punta Pacifica, the exclusive Panama City neighborhood of 18 towers perched on the edge of the Pacific Ocean.

Article source: http://www.nuwireinvestor.com/articles/investors-buying-last-apartments-in-panamas-trump-ocean-club-63912.aspx

Why Does A Guy Worth $800 Million Own A Mobile Home Park?

Tony Hsieh, the founder of Zappos.com, owns a mobile home park in Las Vegas, Nevada, called Airstream Village. He also has a net worth estimated to be around $800 million. So why would someone with so much money want to own a mobile home park? For that matter, why would they want to live in the same park they own? Because that’s exactly what Tony does – he lives in the park with his pet llama.

He enjoys the social experiment of high-quality living on very little money

Tony told a Las Vegas newspaper “for me, experiences are more meaningful than stuff. I have way more experiences here at Airstream.” Prior to living in his mobile home park, he lived in an expensive high-rise condo in an exclusive building. Clearly, since he can afford to live anywhere he wants, he is enjoying the mobile home park lifestyle or he would not continue to make that his address.

He enjoys the sense of community

Tony could choose to insulate himself from his fellow man. But he finds the mobile home park a refreshing change, as far as having experiences with other humans. “I see my neighbors a lot more now than I did when living in a house in the suburbs or living in an apartment building,” he told the Las Vegas Review Journal in January. Mobile home parks are well known for social camaraderie, and Airstream Village delivers on this tradition.

Mobile home parks are good investments

Tony charges $1,200 per month per lot, which includes an Airstream trailer or a “tiny house”. The park has 30 lots, so it generates around $432,000 in revenue, and nets an estimated $250,000 per year. And that’s on a single acre of land. You would be hard pressed to yield that much cash flow from such a small space and low capital investment. While Tony is very frugal, he is also extremely interested in making money, and the mobile home park allows him to make a huge profit from something that interests him.

He believes that mobile home parks could change many urban areas

Tony believes that “urban camping” could be a great idea to revitalize many blighted downtown areas, such as the one in Las Vegas where Airstream Village is located. He intends on expanding Airstream Village enormously in the years ahead, and to promote similar programs in other cities. Unlike many Americans who view trailer parks as a negative, Tony sees them as cool, hip and completely in-tune with the concept of a “green” America.

Conclusion

Many people find it crazy for a guy who is nearly a billionaire to own and live in a mobile home park. But if you look at it factually, it’s not a bad idea at all. His contributions to “urban camping” may one day be revolutionary – but until then, he’s having a lot of fun. And making a lot of money with his hobby.

Article source: http://www.nuwireinvestor.com/articles/why-does-a-guy-worth-800-million-own-a-mobile-63892.aspx

How Will Brexit Impact Panama?

England’s shocking decision to withdraw from the European Union is sending shockwaves through markets around the world. After a steep drop in the first few days, stocks have stabilized, but analysts around the world are scrambling to discern the short and long term impact of the vote.

Central America seems far away from the soap opera of Europe, but it is directly linked through a wide array of businesses. But England is a relatively small trade partner for the region. If Britain’s economy struggles and it stops buying goods, the most likely country affected would be Colombia, the largest regional exporter to Britain. But England only accounts for 2.5 percent of Colombia’s exports, Estrella de Panama reports. The U.K. accounts for only 1.7 percent of Brazil’s exports and 1 percent for Mexico.

Forecasting the impact on Panama is more complex. U.K. companies are large investors in this country, including London and Regional Properties, which is developing Panama Pacifico, the 3,450-acre mixed use project on the west side of the Panama Canal. With the British pound sliding, U.K. investors are losing a large chunk of their buying power.

But the U.K. and Panama have a special relationship. In 2013, a treaty was signed eliminating the potential of double taxation on profits, making Panama an ideal trading partner for U.K. companies. That’s not going to change due to Brexit.

In terms of property, British buyers play only a small role in the Panama City market. There are certainly many U.K. citizens living and working here, but they are usually here as representatives of their companies, which see Panama as the regional hub for business. And that’s also unlikely to change.

There may be an upside, as well. The Brexit exit might push investors to seek out financial safe havens not tied to the EU, which makes Panama appealing. With a stable real estate market and continued economic growth, Panama’s strong ties to North America will make it a likely alternative for outflow from Europe. At the same time, investors who were targeting Europe may now look elsewhere.

A recent article in the Miami Herald notes that the countries facing the most exposure to Brexit are those that depend on revenue from raw commodities. In Chile, for example, commodities make up 88 percent of the country’s export income; in Argentina it is 69 percent and in Brazil commodities are 67 percent of the export revenue.

Copper and other commodities are playing a larger role in Panama’s economy, but it is a small fraction of the country’s business, compared to other countries. While turmoil in Europe may impact growth, Panama is relatively insulated by its role in overall trade, across many sectors. In the short term, any drop in exports-imports from Europe or the U.K. would dent Panama’s economy, but hardly slow the country organic growth, which is expected to reach 6 percent in 2016.

The effect of Brexit on commercial and business activities won’t be very deep, Jeffrey Mountevans, Lord Mayor of London, recently told Costa Rica’s La Republica, when asked about the impact of Brexit on the region.  “It’s not like we are taking a nosedive, financial markets are already recovering, we are beginning to have more confidence from that perspective,” he said. “Change is always something that raises doubts, awakens fear, but we will continue working to strengthen our relationships.”

Gauging the long term impact is more complicated, and more in the territory of looking into a crystal ball. The British vote was only advisory. Government leaders have indicated they will honor the vote, and there has been no traction for a call for a new referendum. But it could take years for the EU and England to negotiate their separation, and the results of those negotiations will play a large role in how the changes roll out to the rest of world.

Europe and the U.K. are clearly due for a period of turmoil and uncertainty. And it’s probably not a good idea to invest in European banks. But, at the very least, it is clear that much of the initial fears about Brexit were overblown. In many ways, the impact will be confined to Europe, many experts now say. While it is difficult to predict with certainty, Panama has already shown its ability to serve as a secure place to ride out the economic storms in the rest of the world.

Article source: http://www.nuwireinvestor.com/articles/how-will-brexit-impact-panama-63862.aspx

Could Brexit Actually Boost Foreign Investment in UK Property?

Most of the forecasts for a post-Brexit UK economy, including the property market, are not exactly positive. In particular, it is expected that the UK will become a less attractive place for foreign companies and individuals to invest or do business now the UK has chosen to leave the European Union behind. However, some experts are expecting that one specific area – foreign property investment – may actually get a significant boost from the vote to leave.

The experts predicting this are not, for the most part, disagreeing with the overall, mainstream forecasts for a post-Brexit economy, and on the face of it a surge in foreign property investment against this backdrop seems surprising. However, the prediction hinges on one specific side-effect of the shock that leaving the EU is expected to create for the UK’s economy; a rapid and marked drop in the value of the pound against other major currencies.

For foreign property buyers, this effectively provides a discount on UK assets over and above any slippage in true property values. Investors who primarily use other currencies will find that favourable conversion rates allow them to get more pounds for the same amount of money, and buy more expensive sterling-valued properties for the same outlay. Experts from major firms such as JLL are predicting that this attraction will outweigh the problems and uncertainties of an immediately post-Brexit UK for many foreign buyers, and encourage them to pick up properties while exchange rates remain favourable. As such, there could be a rush on both residential and commercial properties in the immediate aftermath of the leave vote, as investors “pile into” UK markets before the value of the pound has time to climb again.

Such a rush in buying activity would be in stark contrast to the current situation. The run-up to the UK EU referendum and the high degree of uncertainty that surrounds it has led to a general sentiment of cautiousness among investors whether domestic or international, and as such buying activity has been restrained. The first quarter of the year saw a 31% decrease in transaction volumes compared to the same period of 2015, despite many residential investors rushing to push transactions through in the first quarter before the 3% stamp duty surcharge came into effect into the UK in April. In London, this drop in activity was more modest than the UK-wide figure, but the capital still experienced a year-on-year drop of 11% in Q1 property transactions.

A number of experts, including 80% of members of the Royal Institute of Chartered Surveyors according to a recent report, believe that uncertainty about the referendum has been a key factor holding back activity. However, some also point out that the current cautiousness of investors is in turn leading to a situation where there is a lot of restrained buying that stands to be released when investors see a better opportunity, as may be the case if a Brexit leads to favourable exchange rates for foreign buyers.

Article source: http://www.nuwireinvestor.com/articles/could-brexit-actually-boost-foreign-investment-in-uk-property-63859.aspx

What Online Real Estate Listings Can Learn From Ecommerce

For homebuyers today — whether you’re looking to move within your neighborhood or across the country — most searches begin online. Before they stand in the front yard or inspect the basement, most buyers check the online listings, and a bad digital listing may be the end of their interest in a particular property.

Although ecommerce has been around for over two decades now, real estate is still just getting a handle on the changed marketing landscape. That’s why realtors who want to boost sales ought to take some cues from the arena of ecommerce.

Other industries mastered great product description years ago. Here are four ways realtors can bring ecommerce strategies to bear on the world of property sales.

Get The Highlights

In the writing of property descriptions, traditional listings have a structure modeled on the old newspaper approach, in which you were charged for each character. That’s why we still see “3BR 2BA” shorthand on the Web when there are more elegant ways to describe a home and the price-per-character charge no longer applies.

Today realtors need to start designing every property description by drawing up a full list of features — then trimming that down to the most meaningful and interesting details, the way other ecommerce merchants do. A few home dimension specs might be helpful, for example, but most people browsing the listings won’t get out a tape measure to compare dimensions.

What they mainly want to know is whether the house has two master bedrooms with bathrooms en suite. That’s much more informative and compelling copy.

Invest In Appropriate Platforms

Another reason that realtors post inadequate property listings online is because they aren’t using a great sales platform. Maybe you’re compelled to create a new page for every single property, or you have to call up your webmaster to edit the code whenever a new house comes to market.

Those are unnecessary barriers to good online listings. Instead, real estate firms ought to take a cue from their ecommerce peers and invest in platforms that are easy to populate with product information.

Homes are your product; the more easily you can fill out a comprehensive product profile or edit a profile to highlight a current trend, the more effective your listings will be.

Describe Sincerely

Part of what potential buyers want to see in real estate writing is evocative description … but they don’t want to feel they’ve been misled when they arrive at the actual site. That’s why it’s essential to be clear but realistic when you describe a property.

Superlatives are a hard sell in realty, for example. It’s easy to say a light bulb is the brightest on the market when you know what your competitors manufacture, but who’s to say that a home combines “the best” of two different architectural styles?

A better approach would be to describe the specific architectural features in the home than to offer unqualified (and likely unjustified) praise. “Masterpiece” is too vague as a description for a home or anything in it, but “inlayed onyx” is specific and meaningful.

Stay Current

The most exciting details in any listing — whether for a house, a blender, or a pair of trousers — are whatever details are popular in the marketplace right now. Big data has made it easier than ever to research breaking trends, which can empower realtors to reference in their listings the features everyone will be clamoring for a year or two down the road.

Future highlights, any major upgrades to the structure, brand-name kitchen appliances, or other trendy amenities should have pride of place in your listings. Yes, the countertops are new, but it’s more worth noting that they’re marble, because that’s a feature in high demand. Use such keywords tactically to boost the power of your listings.

The housing market has heated up again after years of foreclosures and stagnation. Now’s the time to improve your real-estate listing skills. You’re not having to pay by the character anymore, so use those five-star words to trumpet the properties you’re working with and they’ll start selling faster than you can list them.

Article source: http://www.nuwireinvestor.com/articles/what-online-real-estate-listings-can-learn-from-ecommerce-63781.aspx

$6 Billion of Sales in 90 Days

There have been three transactions in the mobile home park industry over the past 90 days. And each one was around $2 billion. That’s right billion with a “b.” The three mobile home park portfolios were Carefree, Northstar and YES (which is so fresh that it’s still just a rumor). That’s six times more than the largest transaction in history to date, and all in just a few months. So what’s going on?

The boom in the affordable housing business

Mobile home parks are all about housing people at low cost, when compared to single-family homes and apartments. In many markets we serve, the median home price is $150,000, the average apartment rent is $1,200 per month, and yet they can live in a 3/2 and have a yard for only $600 per month. As the U.S. economy has declined over the past eight years (following the 2007 start of the Great Recession), it has made inexpensive housing a huge boom industry, just as it has propelled the “dollar store”. Essentially, the mobile home park business is “hot” right now, and has no signs of dissipating.

The rise of consolidation

Mobile home parks are the least consolidated of all commercial real estate sectors. Self-storage, which is the youngest asset class in real estate, is still three times more consolidated. The fact is that the industry is heading for significant consolidation, and these three large sales are evidence of this. There will, no doubt, be more to come.

The end of the stigma wall

Most people don’t think about investing in mobile home parks because they have been trained by the media to think that they are gross, or dangerous, or filled with street people. So basically, American investors are letting the likes of COPs, Jeff Foxworthy, Trailer Park Boys and Myrtle Manor hold them back from making 10% to 20% returns – pretty sad. Fortunately, large institutional investors are not swayed by television and urban legend, and starting to invest in that “other” form of multi-family.

The entrance of foreign investment in this sector

It’s worth noting that two of the three buyers in these transactions are foreign. One is from Canada and the other is rumored to be from Singapore. There have been no large transactions to date in which the buyers were not from the U.S. When you include the world stage, the potential buyers for mobile home park assets is unlimited.

The strong return levels of the mobile home park industry

Of course, what really is fueling these three gigantic transactions is cash flow. Mobile home parks have the highest yields of any form of real estate. That’s the same reason that we’ve been buying them for the last twenty years, and why we’ve grown to 5th largest in the U.S. Cash is king in real estate, and that’s what has put mobile home parks squarely on the radar screen.

How you can share in it

Mobile home parks are an equal opportunity investment. There are parks that range from 10 lots to 1,000, and price points that run from about $30,000 to $30 million. You should learn the facts about this industry, and how you can get involved in it. There are around 44,000 mobile home parks in the U.S., and only about 4,000 of those are institutionally owned – so it’s a wide open playing field.

Conclusion

Mobile home parks have recorded $6 billion in sales so far in 2016. That’s an incredible number, and should serve as plenty of notice that the “trailer park” industry is far from what most Americans imagine. Learn the facts and decide for yourself.

Article source: http://www.nuwireinvestor.com/articles/6-billion-of-sales-in-90-days---whats-going-63770.aspx

Weak Pound a Draw for US Property Investors

Domestically, property investment activity in the UK is slow at present. Thanks to uncertainty about the up-coming EU referendum and the after-effects of the 3% stamp duty increase on non-main residence property purchases last month, many investors feel that this is simply not the right time to buy.

For some international investors, though, things are very different. Investors from the US, in particular, are finding the situation in the UK property market encouraging right now.

This is, at least indirectly, the result of some of the same factors which are putting domestic investors off. The most important factor behind this is definitely the relative weakness of the pound. The UK’s currency has been shedding much of its value lately, due in no small part to uncertainties about the country’s economic future as the referendum on EU membership approaches. Sterling is trading at a particularly low point at the moment against many other major currencies, not least the US dollar.

While some international investors share the same view as domestic investors – that the lack of certainty about the UK’s post-referendum property market is a reason to delay investing – others are being drawn by the advantages of a depreciated pound. US buyers, especially, are being drawn to the UK for the opportunity to buy properties while exchange rates are tipped in their favour. With the Federal Reserve increasing interest rates late last year, and with further increases expected, the dollar is rising in value as the pound falls so that the effect is even more marked for US buyers than those in most other countries.

With the pound trading significantly weaker against the US dollar, investors from the USA are finding that the same amount of money is going a lot further when buying sterling-priced properties than it would have a while ago. This gives US investors an effective discount, and a significant one, which may not be maintained for much longer depending on the direction things take after UK voters take to the polls to decide on the future of their country’s EU membership.

According to one prominent agent, Douglas Gordon, prices in some of London’s most exclusive and expensive areas have dropped by an average of 1.8% since June. When this drop in values is combined with the pound’s depreciation against the US dollar over the same period, US buyers have seen these prices effectively drop by 18.5%.

The strong position of the dollar against the pound easily cancels out the stamp duty increase, which would otherwise be as off-putting for US buyers as for domestic investors, and delivers a significant discount on top. It is not hard to see, therefore, why some US investors are braving the uncertainty in order to buy while this situation lasts. If the UK were to vote to leave the EU, its economic future would become all the more uncertain, yet it is widely predicted that the pound will become even weaker. Some sources predict up to a 20% drop in value for the UK currency in the event of a “Brexit,” which could lead to the same trends in investment activity becoming all the more marked.

Article source: http://www.nuwireinvestor.com/articles/weak-pound-a-draw-for-us-property-investors-63769.aspx

Hotel Competition Creates Bargains in Panama City

A glut of hotel rooms in Panama City is translating into great deals for visitors. Room rates are at all-time lows, making a trip to Panama’s fast-growing capital a bargain compared to other popular destinations.

Overall, the average daily rate for a hotel room in Panama City dropped 4.3 percent in 2015 and occupancy rates settled at around 50 percent, after several years of declines, according to data from STR Global. Top hotels like the Intercontinental, Hilton and Waldorf Astoria are promoting five-star rooms for close to $100 or less a night.

There is no mystery about the reasons behind the low rates. The number of hotel rooms in Panama City increased by more than 200 percent from 2012 through 2014, according to the Panama Association of Hotels (Apatel). Today there are more than 18,000 rooms in the city, with another 1,000 rooms in the pipeline, STR reports.

Demand is not the issue, as Panama remains the fastest growing economy in the region. In 2015 the economy grew by 5.8 percent and it is expected to expand by another 6.2 percent this year, thanks to Panama’s role as the hub for business and trade in Latin America, according to the International Monetary Fund forecast.

With business strong, tourism has also surged, with arrivals increasing 4 to 6 percent annually in recent years, according to government data.

But that is not enough to keep up with the wave of new construction. Developers aggressively shifted from residential to hotel development in the wake of the downturn in condo sales after the 2008 global collapse and now they are paying the price. There are simply too many hotels competing for the same visitors.

In Panama’s property industry, we’ve seen this before. After a surge in construction from 2002 to 2009, there was a definite oversupply of condominiums in Panama City, resulting in a drop in prices and empty condos. But the market eventually absorbed the supply and prices started to rise again, especially for the best units. Developers have started to build residential projects again, a sign of a balanced and healthy market.

Hotel operators in Panama City are blaming the government for their troubles and asking for more money targeting tourism. The hotel industry has already convinced the government to ban short term rentals in apartments, which helped dampen competition—unfairly, it could be argued, since both homeowners and consumers like apartments as an option.

But it’s been a slow process to create a new advertising effort to promote tourism. In January, the Tourism Authority of Panama issued a tender for an agency to design and produce a new campaign, drawing bids from four companies. But the tender was ultimately revoked after it was learned the two entities bidding were owned by the same conglomerate.

In March the Tourism Authority of Panama issued a new $4.5 million tender, which attracted four bids and should result in the choice of an agency to lead the new advertising effort.

A promotions campaign will certainly help tourism and there are signs the hotel market is stabilizing. The drops in occupancy and rates have slowed in recent months. But with more hotels scheduled to open in the next year, supply and demand will remain out of balance. And that means visitors will continue to find bargains in the months ahead.

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