June 13, 2020
Now a new government policy provides sure stimulus to the real estate market, guaranteed to take low end prices higher...
Government banks introduce a new lending policy offering the lowest mortgage interest rates ever in Turkey, set 4% below the rate of inflation and below the average annual currency depreciation rate for the last three years. With 90% loan-to-value, requiring just 10% cash down payment equity, the banks are effectively paying buyers to purchase, and subsidizing that purchase...
This policy will and is definitely taking property prices higher. at the low end of the market, the leading indicator is signalling price increases of 40% pus over the next 9-19 months.
An Investment in Turkish Real Estate has not performed too well...
An Investment in a Turkish TV & Film Production Company has more than doubled in Turkish Lira value...
An Investment in a Managed Fund utilizing more than 30 years of expertise in Turkey has increased 132% in US Dollar terms...
Comparison of Turkey, Bulgaria, Greece, Cyprus, Portugal, Malta, and Albania also available on request... click here...
ALL Enquiries: Email firstname.lastname@example.org and include your WhatsApp or Viber numbers for a complimentary call back.....
The Difference: Professional Investment Management with 30+ years experience & knowledge managing Turkish Lira assets... April 28 2020
As can be seen from the above graphic, investors in residential real estate in Turkey have endured a 9% loss over the preceding 9 months ending April 27th 2020 in US Dollar terms... And those that invested without following professional advice, guidance and techniques will have lost an additional 5% to 15% more, as a result of buying through an agent, usually as a result of becoming impressed by 'pretty pictures' (usually misleading) on the internet...
Email to email@example.com to find out how to avoid such an outcome and include your WhatsApp or Viber number for a free call back.
Professional Investors make money and eventually do the job to earn their living. They have received training, knowledge, and experience to make them successful. This is what separates them from investors without training, knowledge, and experience: new or novice investors.
Novice investors usually do not know the first thing about investing. And the first thing about investing, is knowing what an investment is. An investment is not something that will (or might) increase in value in the future. That is merely a speculation.
An investment is something that pays you to own it. For example, an investment in a government bond pays an interest coupon. An investment in a share of a company on the stock exchange pays a dividend from earnings. An investment in a bank deposit pays interest. An investment in an annuity pays a deferred income stream.
This is where novice investors in real estate experience an investment vehicle road crash. They are duped into believing the investing myths of real estate sales people, such as ‘Buy Land because they are not making any more of it’, or ‘Safe as Houses’. The most common myth is that real estate always goes up in value, when in reality, that type of increase in value is not accounted for as an investment gain, but inflation.
The fact is that real estate is NOT a good investment. This is because real estate does not pay you to own it. The opposite is true. Real estate requires payments of costs to own it: taxes, maintenance, etc. And in order for real estate to generate income, an investor must pay additional cost to find a renter, and to manage the rental. None of these costs exist materially for stocks, bonds, annuities, or bank deposits.
Investing in real estate requires techniques that are applied by professional investors in order to generate viable investment returns. Novice investors that do not apply such techniques will not have a viable investment, it is simple as that. And in those situations, a novice investor should only invest in real estate where the benefit of usage of the property can be enjoyed, in some form and duration, even if only periodically. If a novice investor does not intend to use the property at all, then in such cases, a better investment will be in stocks, bonds, deposits, or annuities.
Email to firstname.lastname@example.org to find out more about different strategies for residential real estate investment and include your WhatsApp or Viber number for a free call back.
April 19 2020
New Highs in Stock Prices As foretold previously, the flood of new money stimulus is directly inflating asset values. The US Central Bank and Treasury have flooded the markets with more stimulus funding in the past five weeks than during the entire five years after the financial crisis of 2008. Investors basing their decisions on a ‘top down’ investment strategy focused on macro-economics have been left behind.
These are also the largest stocks by combined market capitalization size, accounting for more than 22% of the 500 company S&P 500 index in the US.
Precious Metals Coins As forecast, precious metals coins continue to increase in value. Buying demand for precious metals coins has reached the highest levels of the past decade. At the same time, in the US, the mint has stopped producing, and like many national mints, have run out of inventory supplies. The market is rumoured to be suffering a systemic shortage of gold bullion. As a result, the premium of coins over spot bullion prices is also surging, due to the high demand and low supply. Most countries have a national precious metal coin, which investors can buy for physical possession. In Turkey investors are also blessed with widely available gold bullion in wafer sizes from 1 gramme upwards, and there is little prospect of central government sequestration, as in some countries.
Investment Returns internally last week fluctuated between 27% and 34% since the third week of March. This rate of return is not possible on a residential property investment. In addition, the returns are liquid, meaning they can be turned into cash within 2-4 days, and thus risk is flexibly manageable.
IMF Support Previously we mentioned turkey was in consultations with the IMF for support. The President has since come out with strong statements suggesting the terms proposed are unacceptable, which is understandable, because IMF support usually implies economic austerity.
Currency Weakness The Turkish Lira is under pressure on all fronts: tourism revenues in decline; export revenues in decline; investment outflows; contracting services (logistics, construction, etc) in decline; budget deficit spending surging.
Exchange Controls Unfortunately the banking regulator in Turkey has introduced reserve requirement ratios that reduce the amount of foreign exchange banks can hold. In effect, this is a form of exchange control. Under present circumstances, it may be expected that this process continues slowly in small steps towards wider exchange controls. This is almost inevitable under the present circumstances.
Sales Preparation Preparing well in advance is the only way to be in a position to achieve a sale of property: photographs, registrations with on-line market places, documentation, etc. No travel is required, everything can be done from your home country.
Buying at Discounted Prices Preparing in advance, with ample time, is necessary to capture a low price: documentation, registrations, etc. No travel is required, everything can be done from your home country.
Finance the Investment With low interest rates world wide, borrowing the USD funds needed to complete a Citizenship Investment, in order to capture discounted prices, is a tactic that is worth consideration. Our advisers are happy to explain more.
The Safest Investments in Turkey presently are the companies that earn US dollars because their products are priced in US dollars and purchased on international markets. These are the companies that are our core investment holdings and have achieved 27% to 34% returns over the past three weeks.
For additional information on the above and more, please email are email@example.com .
April 07, 2020 Turkey is now actively engaged in consultations with the IMF for support. The immediate result is that the downward momentum of the Turkish Lira has slowed down for the present time. The Lira is today bouncing up 1-2% off recent lows. (afterwards the discussions have not continued publicly, but the situation is subject to change.)
The world is changing, and investment strategy needs to adapt accordingly. The recent stimulus measures to support the economies of the US and Europe are having an immediate impact on listed asset valuations, as forseen in our previous memo. Investment discipline is essential to adapt to the new reality of a changed world with new strategy.
Our investment returns are today 23% in US dollar terms, since our previous private memo two weeks ago (below). Investors may participate by using the introductions of our investment advisers to our investment banking service providers in Turkey.
In this new world, holding cash is no longer a viable investment. A 23% return in listed corporate assets is the same as a 23% decline in the asset purchasing power of cash. The corporate assets we have invested in earn US dollars, and provide US dollar correlated dividend yields, and performance returns. As previously mentioned, the pivot position is in precious metals coins. Coins have gone to an additional 10% premium above their long-term premium to bullion spot prices. Real estate income earning rents in Turkish Lira are not attractive in the near term, and will be many months before prices can recover, on the back of this inflationary surge in asset values, provided Turkey receives some of that newly created monetised funding from the IMF. Our real estate price leading indicator for Turkey has today crept up to last summer’s low, after crashing 10% below it in recent weeks.
In this environment the investment priority is to preserve wealth, by investing in US dollar earning corporate assets, balanced against precious metals coins, with physical access. Please enquire to firstname.lastname@example.org for more details abut implementing this strategy.
Citizenship investors in Turkey can invest without Turkish Lira currency risk via the appropriate investment funds. The minimum requirement for citizenship is a $500,000 investment. An investment of $500,000 now, can later be scaled down to $250,000 and the investment transferred to real estate, with the balance released, and still qualify for citizenship, and in the interim have achieved the near term investment gains. With near zero interest rates, consideration is due to borrowing funds to complete the $500,000 requirement. The stimulus programs are essentially paying an investor to do so, with near zero or very low interest rates. Please enquire by email to email@example.com for details of the techniques applied to achieve the above results.
Investing a lesser amount to achieve the investment returns is still recommended, in order to protect capital and accrue gains as the world adjusts to the new reality. Do not be surprised when stock exchanges hit new all-time highs in the coming weeks. In this respect the cheaper valuations of listed corporate assets in Turkey are a distinct advantage over the valuations of corporate assets in the US or Europe. Turkish assets are at a 50% - 70% discount to their US and European peers, and at valuations that are compelling in the most fundamental sense of financial analysis.
Investors that wish to receive these investment updates on a more timely basis are invited to email firstname.lastname@example.org and request ‘Please Send Investment Updates’.
March 19, 2020 How are you doing during this time of crisis? Here, we are in self-isolated lock down, as firm policy since early February, but officially in South East Europe, everywhere is entering the second week. I hope You and Yours are well, and staying safe. This update form the Investment Advisers at mytapu.com provides perspectives below in response to requests, to provide some investment perspective in the current crisis context.
The world is changing. Data from the global pandemic confirms the changes are irreversible. This brief note provides short insights into the near term investment implications. Preserving the purchasing power of capital is the priority for achieving wealth accumulation.
The capital markets are dis-functional; investment grade debt, US Treasuries, are no longer a meaningful benchmark of any capital markets pricing function. Yields are negative while the risk of default is soaring. And now having moved a quantum leap beyond single risk systematic failure; the banks are bankrupt, rolling forward future quarters accounting; repaying global digitally-created dollar borrowing liabilities, by absorbing cash from local business activities, is creating a short squeeze on the dollar, sending it higher, and the higher it goes, the higher global (and US) credit-default swap pricing rises, and so the central banks are in an existential struggle to sell dollars, and create dollar liquidity, to reduce the speed and propensity of global defaluts.
Real Estate – In a crisis environment, every seller will confirm, real estate is never liquid. And an investor in residential real estate, can usually not purchase at a discount justified by market conditions, unless buying from an institutional or corporate investor. The reasons are simple; selling owners have unrealistic expectations of the future value of their property which are firmly fixed with bias in the rear view mirror of yesterday; selling owners work together in an ‘echo chamber’ of self –reinforcing delusions’ with the sales agents commissioned to find a buyer at the highest possible price, etc. These are two reasons why investors seeking to optimize their investment returns never will do so with real estate alone. Instead, the use of investment funds and listed investments is a more effective tool.
The emergence of data related to the pandemic has long ranging negative consequences for real estate everywhere, including Turkey. First, buyers are not motivated, and have no incentive. Second, the long-term structural impact on real estate requires ample time to resolve: this impact occurs due to missed rent payments by tennants, resulting in missed mortgage payments by landlords, resulting in reduced dividend payments by banks to investor's, resulting in less new investment buying. The pandemic data within Turkey, and indeed most countries, is suspected as unreliable, to varying degrees. Obviously, there is no justification to be travelling at this time, to execute an investment, or citizenship application.
As forecast last summer, our real estate price indicator for Istanbul and Turkey had increased 34% to first week of March. As the pandemic accelerated, property prices plunged immediately with asset valuations everywhere, to a level 10% below last summer’s lows. This change will be reflected in prices during the coming weeks and months as the property market struggles to resume business. Expect on-line transactions to surge to 95%+ of all activity. Expectations of the recovery proceeding as forecast for Autumn 2020 are now delayed a minimum of 6-12 months, at earliest, and possibly much longer. The broader macro-economic impact warrants another ‘step-down’ in valuations, for the duration. Rental income assets reliant on short term tourism revenue have their future cash flow streams decimated. Single family suburban homes are likely to be the comparative beneficiary, being in short supply already, and only in formats for wealthier segments of society. This is life cycle investment strategy.
Investment Assets Turkey
In Turkey the valuations in the last 5 years have been depressed and never reached international or US levels. So with the present decline, valuations are at rock bottom, from a fundamental investment perspective; earnings & cash flow yields. PE's in the 3-7 range, means earnings yields (trailing) in the 20-30% range, and double digit dividend yields (trailing) of fast growing companies. Turkey is good for simple business growth companies because of the high demographic growth rate. Buying a 25% earnings yield that is growing 10-30% is a good deal, especially when you calculate the compounding effect. Turkish companies automatically have a dividend payout policy in the form of an accounting system that forces them to increase their capitalisation every year by the amount of their retained earnings (after allocations for reserves), and that capital increase takes the form of a tax free stock distribution which can be sold for cash if required. There are also few with cash dividend yields of 9-14% and cash divided payment policies. With this perspective I started buying lightly in the last few days, as ever, with a scale down pyramid positioning tactic. The stocks I have targeted are those that earn foreign currency or have product prices determined by international markets, so the corporate value retains hard currency value, not Lira value, which means they rise as the Lira falls. And none are importers of intermediate goods, so risk limitation on that front. All are primarily in house producers of all or most of the value added they are selling. I can buy comfortably at these levels within a budget that provides for buying larger at lower prices. This long position compliments an overall alpha tilt strategy... which is a combined long & short strategy that distills alpha and protects against wild market beta, which is managed on a daily, controlled basis. This is the strategy that banked monthly returns of 7%, 8% and 9% in the final three months of the hedge find management a few years ago. In the current situation my short position hasn’t been especially aggressive in specific stocks such as shorting airlines, but is instead broad, with short index warrants (puts). I will roll the long purchases in under that short umbrella, gradually, where currently I have a limited long exposure of warrants on one of the priority portfolio alpha targets, that is pure cyclical, value, leveraged. So in this way risks are continuously managed to produce the alpha tilt I am comfortable and happy with.
Investment Assets US & Europe
This market is likely to be more like the mid 1970's or early 1980's or 1991-3 bear markets rather than like 87, 01-03 or 08... It is going to shape like a trough with spikes down and recovering from time to time as the new economy emerges. Being cash overweight as a holding position is going to result in debasement of value, due to the emergency funding programs that are being initiated. Corporate earnings are still the best hedge against that, selectively. Holding physical precious metals coins going forward, or even bullion may be a second pivot position, the one versus the other. Central banks buying stocks has succeeded in slowing the rate of decline, but nothing more. There is flight capital from around the world buying into US stocks at these levels, but I suspect the better entry point will be when prices have fallen the same distance again from the present levels... that at least will be closer to a viable financial investment on an earnings basis, because the valuation levels are still too high... Those declines may well be on sudden spikes downward, so it makes sense to have your targets identified; which stocks and investment funds, and which prices. Bottom-up stock picking strategy beats top-down macro every time in this type of situation... the passive investing herd is being culled.
The World is changing...
What are you doing...?
Above charts courtesy of Unıon Bank of Switzerland (UBS) ... please contact your local UBS office for more information and research.
Oct 30 2018 Worldwide, luxury properties rose by just 2.7% on average across the 43 cities that make up the index - this is the weakest performance in annual terms in almost 6 years.
The Cities Singapore, Edinburgh and Madrid led with gains of 10% + over he 12 months to the end of September, in the top five, while Paris and Berlin posted steady gains in he last six months of 3% and 7%, respectively.
London wound down, moving into negative territory, watching prices fall 2.9% as a result of the continuing uncertainty around Brexit.
Vancouver declined the most, at 13%. Also among the decliners was Dubai, where prices fell 3.8% resulting in fifth worst on the list.
Istanbul, Stockholm and Taipei all registered 6.3% year-over-year declines, tying them all for second worst place.
And now the Federal Reserve Central Bank in the United States signals that a more hawkish approach lies ahead during the coming two years, for an upward move in interest rates, towards the rate of inflation, triggering headlines:
House prices from Atlanta to Sydney and everywhere in between are beginning to roll over and head down.
Research and Graphics Courtesy of Knight Frank Research
October 3 2018
Surprising to many of our readers with properties in the UK and South Eastern Mediterranean, accustomed to weak market conditions in recent years, is the booming state of property markets elsewhere around the world. As the graphics above illustrate, this may share similarities of a balloon type bubble.
Now the first signs of that bubble bursting are beginning to appear. Prices are easing back in leading markets.
Weak conditions in New York’s luxury segment are now spreading to the broader market. Manhattan sales are down 11% in an ongoing trend, while listings are at the highest levels since 2011. The number of sellers cutting prices is the highest for 9 years, with prices of 3 bedroom apartments declining 17%. Supply of studios and one bedroom apartments are up 15% and 21% in the third quarter, as reported by Bloomberg.
In Hong Kong prices decline for the first time in 29 months as bank lending interest rates increase for the first time in more than 10 years.
Meanwhile in Vancouver, the beneficiary of aggressive Chinese buying for so long, Home sales crash 44%, while seller’s listings surged 38% year on year, and the Chinese buyers have disappeared.
The obvious reason is the monetary tightening gradually being escalated by central bank policy makers, as interest rate increases are rising closer to inflation rates. And such policies show no signs of abating at the moment- rather the opposite is true, the policy may well become more earnestly enforced in 2019 and 2020.
The conclusion? If these 'leading' markets suffer a slow down or crash, don't imagine that prices in your market will benefit and go up- it simply won't happen. Instead, prices everywhere will suffer lower. If you have reason to be thinking of selling a property, do not wait, go to the market, maximise your value proposition, and find a bid…don’t list with an offering price and wait for a buyer at that price, unless you are prepared to wait a very long time, perhaps until after the recession, and the next upward cycle begins, several years from now.
Dec 2017 Is rising inflation good for property prices? Inflation in the US and China has reached the highest levels for 5 years. Inflation in the core EU economy of Germany recently exceeded expectations, and has more than doubled for the year.
Many readers will remember past times, when property values increased with inflation, making property an ideal ‘user-friendly’ inflation protected investment. And most likely, property values will continue to increase with inflation, especially while interest rates remain artificially low. In past decades, an increase in inflation was met with an increase in interest rates, as central banks battled to keep inflation low. Now times are different. For more than fifteen years, central banks have been striving to increase inflation. In the current environment, any increase in interest rates to dampen down inflation, is likely to be slower in coming, and of a lesser magnitude, than in the past, as recent events clearly illustrate.
In such an environment, inflation is likely to be very positive for property prices and valuations... more so than most investors are currently expecting. Why? The reason is because when inflation exceeds interest rates, the real rate of interest is negative. For real estate investors, this means a borrower is paying less annual interest, than the annual inflated capital appreciation of the property- effectively the investor is being paid to borrow, and invest, and those are the circumstances unfolding, at present, and that is good for property prices....
Spring 2018 The Pain of negative capital growth, occurs when house price inflation is less than the mortgage rate…
New buying from local buyers unlikely to fuel upward prices. New buyers registering with real-estate agents fell for an 11th month in February (RICS).
Increased taxes on landlords and loan limits in Singapore have also helped to damp demand from overseas, leading to a record number of homes under construction in the U.K. capital that have yet to find a buyer.
Further, price declines likely, trending lower as house price inflation now dipping below mortgage interest rates.
Westmister – down 16.8% from Last Year.... London Falling at fastest pace for 8 years
London house prices are falling at the fastest pace since the depths of the recession almost a decade ago, with the capital’s most expensive areas seeing the biggest declines. Average prices fell to 593,396 pounds ($820,000) in January, an annual decline of 2.6 percent, according to a report published by Acadata. That’s the most since August 2009. The fall in London house prices is likely a warning shot before prices begin to fall elsewhere.
The Pain of negative capital growth, occurs when house price inflation is less than the mortgage rate…
Must Read- Debunking the Myth - https://news.goldcore.com/ie/gold-blog/london-house-prices-recession/ Note- Beware the inaccuracies in this report- sited prices falling were not actually falling, then, only the rate of increase is falling... but they are falling now...
Nov 15, 2018 Around the world, rising interest rates and tumbling property prices leave little scope for trend investors seeking sensible capital value growth prospects. There is one place that is still investable on financial merit; a virgin market with long term structural changes pushing prices upward, but still with unbeatable valuations. This opportunity shines all the more brightly for defensive investment merits and desirable lifestyle delights… this is the one place to buy now ...
The Investors' Toll Kit for Buying Residential Property:
A Safer, Smarter, Better Way to Buy Property in Turkey
التلفزيون التركي يتصدر التصنيفات في الولايات المتحدة الأمريكية والعالم
Feb 15, 2020 The perception & popularity of real estate in specific locations is always enhanced by positive media coverage. Portraying glitz and glamour is valuable promotion that real estate developers pay top dollar for: ask Donald Trump. More than one luxury villa purchase by foreign investors has been spurred on by Turkish TV series. The Istanbul property market is on the threshold of enjoying another surge in popularity among international investors, together with Turkey’s Citizenship Investment Program, as the success of Netflix’s ‘Rise of Empires: Ottoman’ achieves tops viewer ratings in the USA and the World.
The production is unifying the audiences of Turkish TV to include North America, Europe, India and Asia, to the existing viewer following in the Middle East, Spain, and South America. During the first full week of streaming, the six episode drama-documentary ranked 4th among top trending TV shows in the United States overall, briefly 2nd among Netflix shows, and 6th in binge viewing.
This is a notable ‘first’ for Istanbul productions. Previous Turkish TV series were local Istanbul productions made for the local Turkish market with foreign language sub-titles added for international distribution. This project is an international production in all respects, targeting the international market, with bi-lingual dialogue, a multi-national cast, and multi-national production collaboration: all ‘made in Istanbul.’
If this international success can be repeated, Istanbul may be destined as a top international hub for film production, on par with Los Angeles and London. Istanbul as a property investment location could well be on its way to assuming the status of a top global investment location, on par with the likes of Miami, London, Hong Kong, etc.
And leading the cast are Turkey’s two shining idols, burning brightly for their growing international audiences… one look shows why …
أصنام تركيا المشرقة تقود الطريق
نظرة واحدة تخبرنا لماذا
Nov 30, 2018 How’s the property market doing? Investors' intuition and instincts are telling them one thing, but the news and statistics are saying something else... For real estate investors experiencing this dilemma, these charts tell why….
This market boom is not like the last one, in the most important way; sales volumes are averaging lower prices, and less profit margin. It has been a good time to be invested in real estate, but not as good as previous cycles. A comparison of two distinctly different real estate markets, Miami and Istanbul, reveals both share this common ailment. The similarities are relevant- the better market conditions of the last five years have not been at price levels or profit margins of the previous up-turn.
When it comes to comparing investment viability across different residential real estate markets, no where does the sun shine brighter than Miami. The present cycle is now stretching out so long that one might be forgiven for mistakenly believing this uptrend is structural. Alas, the signs of an imminent cyclical downturn are becoming more frequent, as the crest of the wave…
Miami, having done so well for the last ten years, hasn’t experienced a notable pull back to buy into. Considering all key ingredients of a stellar residential real estate investment, Miami has them in spades, beating all the rest, Hong Kong and Singapore not withstanding. This leading global market performance during the present economic cycle, benefiting from having long been a key attractor as the cultural capital of Latin American diaspora, the present small down tick in foreign buying, is notable.
Istanbul on the other hand, is a comparative new comer on the radar screen of international residential real estate investors. Briefly an out-performer of its peers, suddenly fallen sharply with a weak currency impacted by strong Dollar and upward global interest rates, is now struggling with resurgence. Much mooted citizenship investment stimuli, recently produced a small but sharp up-tick of inward foreign investment, likely to continue for sometime, like Miami, driven by cultural priorities of investors- a favourable factor for sustainability and duration of the trend. The Istanbul market is benefiting from positioning as the cultural capital of Islam, with more than 500 years historical context. New Citizenship Investment regulations have reduced the minimum amount of property purchase required, to $250,000. In October, 36 percent of total sales, just over 2,200 units, were to foreign investors.
In Miami, the statistics show foreign home buyers are disappearing. For the year ending July 2018, foreign buyers purchased about $23 billion of South Florida real estate, down 5% from the previous year, at 19% of existing home sales versus 21%, previously. The share of foreign buying in South Florida nearly doubles the US national average of 10%. Canadians and Brazilians bought the most, 52,000 properties, a decrease of 15%; Latin American and Caribbean buyers together amounted to 36%, Canadians 22%, Europeans 19%, and Asians 11%. A strong dollar, higher global interest rates, and declining local currencies have virtually eliminated buying from Mexicans, Argentineans, and Venezuelans. The decline in sales is particularly notable in the million dollar segment.
In Turkey, official statistics of property purchases by foreigners in October showed that Iraqis topped the list with 1,439 units, followed by Iranians with 557, Kuwaitis with 378, Germans with 341, and Russians with 336; whilst the largest segments of foreign buying in the previous cycles from, British, and Swedes increased from virtually non-existent levels by 131 percent, and 137 percent, respectively, directly correlated to the recovery in tourism this summer. For the record, the
official prognosis in Turkey, is …’ we may sell 40,000 units to foreigners in 2018, this is a historic record for our country." Such optimism is remarkable, considering the influx of foreign residential ownership for the first five years of the previous boom totalled some 50,000. And those 50,000 were primarily to northern Europeans, sales at significantly higher prices and larger profit margins. Perhaps in the context of ebullient enthusiasm, it’s worth remembering, that similarly optimistic forecasts of the return of Russian buying in 2017, amounted in the end, to a mere total of $ 1 million….
The current outlook in both Miami and Istanbul has now pivoted sharply, each in different directions. Developers in Miami are halting new construction, as properties, such as Miami Beach’s Sunset Island II, are lingering on the market for more than six months, instead of selling in one month, on a first visit, the buyers are more cautious, visiting three or four times. In Istanbul, developers are now rejoicing at having buyers return, whilst competing to sell un-moved inventory.
Reflecting the US situation in a global context, with Istanbul as an example, is relevant because the US market directly influences global interest rates, and thus global real estate markets. In September, Bank of America signalled the peak of the US housing market, citing declining affordability, greater price reductions, and deteriorating housing sentiment. The effects are impacting real estate markets globally. Three month Libor interest rates, the benchmark for more than $ 30 trillion of global borrowing, mortgages included, is in a sustained uptrend.
The significant insight is that markets are peaking at the end of the current cycle, without having attained the pricing or profitability of the previous cycle. This is the reason why residential investors intuition is not corresponding with the news, because investment returns are not matching up to those enjoyed near the peak of the previous cycle, nor to the bullish press-releases of the real estate media.
Evidently, as is plain to see in the charts above; each new financial bail-out by Central Banks, has a diminishing impact on economic activity and wealth creation.
Special Thanks for Graphics, to Lance Roberts via RealInvestmentAdvice.com…
Oct 30 2018 Reversal of the downward trend in the Lira seems to have prompted potential buyers that were watching and waiting, to finally take action. With the Lira now up 20% from it's lows, this pent-up demand is resulting in purchases in Istanbul and coastal regions.
Istanbul’s foreign buyers may also be influenced by travel considerations. The opening of Istanbul’s new airport, the world’s largest by capacity area, offers a convenient logistical solution for business travelers. Rather than merely a stop-over hub, Istanbul potentially may become preferred living base station for those with business interests in South East Asia, the Gulf, North Africa, Northern Europe, and North America. Singapore is 18 hours flight time from New York- Istanbul is only 10.- a significant difference, particularly in jet-lag recovery time. European destinations and Moscow, are all within 2-3 hours flight, half the time of a journey from Dubai and the Gulf. North Africa, and the Gulf, are 3-4 hours from Istanbul, half the time of a flight from London. Considered from this perspective, Istanbul is better placed as an international business hub, than Dubai, Geneva, Frankfurt, or London.
And now the Citizenship by Investment threshold for property has been reduced to $ 250,000, making it clearly competitive with other nearby locations, the underlying demand is emerging. Extended families of consecutive generations, seeking the purchase of two and three properties, and re-location services, for schooling, business start-up, and medical facilities, have an ample selection of high quality services to choose from.
In recent years Istanbul has become known widely for its remarkable local culture in many exotic dimensions, and that reputation will continue to attract interest as a place many aspire to live in. A new Turkish passport, and plentiful nearby flight destinations, are an alluring combination, for investors from many regions of the world.
Investors wishing to learn more about the Investors' Tool-kit for residential property purchases in Turkey, and Finding a Property in Turkey, please click here.
Sep 28, 2018 The Central Bank's announcement of a six percent increase in interest rates sparked an immediate 10% increase in the value of the Lira, and liquid Turkish assets bounced off their bottoms in sympathy, for a 28% index gain in dollar terms over the preceeding two week period. This short term upward trend could conceivably extend an additional 15% before encountering resistance, provided political and economic conditions remain favourable. This scenario is supported by an upward trend in tourism revenues combined with a sharp decrease in the monthly trade deficit for August, as imports collapsed. Unfortunately, exports also declined, and any long term upward trend is unsustainable without a meaningful resurgence of exports, or foreign capital-stack restructuring.
Sep 21, 2018 Offering prices of resale properties in central Istanbul are finally beginning to emerge at sensible and near compelling price levels. Recent price analysis of the luxury villa segment in a specific location of the Turquaz Riviera showed a 7% decline in Lira prices and an 18% decline in Euro terms for the three month period of Feb-May 2018. This surprising situation warranted further research. Instead of focusing on general price indecies for real estate, which are often clouded with various statistical anomalies and distortions, asset values in Turkey in general were analysed for the best indication providing an accurate perspective of the current situation.
This graphic for the five year period 2013 to Sep 21 2018 shows the value of Turkish assets priced in US Dollars. This means that despite rampant Turkish Lira Inflation, the assets are reflecting a deep US Dollar Deflation, as the economy, banking system, and de facto the construction sector, struggle to generate sufficient Dollar liquidity to repay debt AND re-invest in growth- in other words, net negative US Dolllar (hard currency) liquidity creation. The conclusion is that during any and all times over the past five years a decision to sell assets was a better decision than to hold or buy for the duration.
Yes, prices were overheating in 2013 and so the subsequent decline was more accentuated. .. a 67% decline, over that specific five year period, from that specific peak valuation in 2013. When adding re-invested income to the equation, such as dividends, interest, or holiday rental income for example, an asset will needed to have generated an estimated gross yield (to cover expenses and the risk adjusted USD opportunity cost of capital) of approximately 17% yearly to compensate for the annual average 13% decline in the assets capital value, and preserve the capital value of the investment at break even. Thus present yields of 18% or more on Turkish assets are above the five year average trendline, with assets pricing at a corresponding discount to the same. The assets are an international benchmark equity index, MSCI, which includes Turkey's largest Real Estate Investment Trusts.
An unprecedented rush for Turkey and the Lira due to the sudden decline in Turkish Lira exchange rates, and ...
Boom !- Last minute holiday bookings explode !
Whoosh…! Turkish Lira sold out in the UK as Brits buy up all …only small amounts remaining at two airports.read more here.