Words: Ashley Rigg
Published: 11th September 2008
Industry Millionaire: Dan Johnson talks to Globaledge
This week we give a large fictional investment pot to a man who knows a thing or two about investment property. Dan Johnson is the founder of
TheMoveChannel.com, an international investment portal and one of the largest remaining independent portal businesses. In 18 months, he will have had a decade at the helm, during which time he has seen the first dotcom bubble burst and a full boom-and-bust cycle in the UK housing market. He also runs E-Quity.com, a sales agency for overseas property and he often invests personally in his company’s projects.
To help our readers come up with ideas for future projects, we gave Dan £25k, £100k and £1 million to invest anywhere in the world with the objective of maximizing return over a five-year period.
Ashley Rigg: Hi Dan, thanks for meeting me today. Here’s £25k of Globaledge money. How would you maximize my return over five years?
Dan Johnson: That’s very generous of you! I’d probably whizz back in time and buy the same serviced hotel unit I bought in Manila,
Philippines 12 months ago for £23k. It’s in Metro Manila, the business district. The completed units are now selling for £40k, a 40% return in year one. It’s been one of my most successful recent investments.
AR: Hang on a minute. How much would the time machine cost me?
DJ: It’s all part of the package. I’ve always believed in going the extra mile for clients! [he says smiling]
AR: OK, we’ll let it slide. So why Manila in particular?
DJ:
The Philippines has one of the largest well-educated, bilingual workforces in Asia and has strong trade links with the Korea and Japan. It also receives a large number of tourists from these countries. Although not as developed, it is also forging economic links with China.
Manila is the capital. It has a large population and city centre living space is relatively scarce but prices are still low compared to the West. The big benefit of buying a serviced hotel unit is that it’s an arms length investment
AR: Let’s add another £75k into the mix. Where would you invest this time?
DJ: I’d buy a large piece of agricultural land in
Sardinia. The land would cost between £20k and £40k and I’d use the rest of the money to fund the development of a luxury property with a big pool with Cypress trees in the drive. You can get a grant from the government where you get percentage rebate on the building and furnishing costs. One of the conditions of the grant is you maintain agricultural output so I’d build a vineyard, melon field or olive grove. Maybe all three depending on budget.
AR: Isn’t Italy the sick man of Europe?
DJ: The Italian economy as a whole has been relatively sluggish of late but Sardinia has exceptional growth prospects. Many seriously rich and influential people are buying on the northeast of the island. Lots of Russians are buying and Silvio Berlusconi owns property there. It’s a trend thing, there are bound to be ripple effects. It’s also spectacularly beautiful, easy to get to and the weather and the food are great. A newly built villa appealing to the right market could easily double your money in a very short time period.
AR: Thanks Dan. Let’s up the stakes to a million pounds. Where would you invest if you had this kind of money at your disposal?
DJ: I’d look at three options. The first would be investing in TheMoveChannel.com to grow it to the size it really should be.
AR: I’m sorry, that’s not allowed under Globaledge rules. I’ve already let you have a time machine!
DJ: OK, my second choice would be to invest in a portfolio of 20 properties at roughly £50k each. I consider myself to be an experienced investor and I’d stick to Markowitz’s portfolio theory that demonstrates that risk is reduced through diversification. I’d look for balance in terms of destinations and types of investment. I’d split the money roughly equally between land plots, units I’d buy with cash and units bought with gearing. Geographically, about 30% of the money would go into
Latin America, 30% into South East Asia.
Brazil, Philippines,
Vietnam and
Malaysia are particular favourites because of their high growth potential. I’d split another 20% equally between Western and Eastern Europe.
Portugal,
France and Sardinia spring to mind here and
Slovakia is one of my favourite destinations in the East. The Tatra mountains offer fantastic year-round rental potential.
AR: What about the other 20%?
DJ: 10% would go into the Middle East, probably
Egypt. I’m not that keen on Dubai as there could be potential issues with over-supply and I don’t really know the other emirates well enough at this stage. The other 10% I’d keep for impulse purchases.
AR: Sound like a lot of work to me.
DJ: It would be, but it would also be fun - if I had the time and the money that is!
AR: What’s the third option?
DJ: I’d love to fund a project from conception to completion. I’d like to provide the finance for the developer, have an influence over the style and format of the project and take a tidy share of the profits.
AR: Any locations in mind?
DJ: I’d probably go for
Brazil. There are lots of attractive opportunities across the globe but it would probably be contacts-led. I’ve some very good relationships with contacts in Brazil and it’s a great investment and holiday home destination.
AR: Thanks Dan.
DJ: You’re welcome. It was a pleasure.
Would you like to be an industry millionaire?
Do you have a good knowledge of a particular country or region? Could you point overseas agents and developers in the right direction when looking for partners and projects? If you’d like to participate, please contact us.
About The Move Channel
Founded in 1999, TheMoveChannel.com is a portal that allows agents, developers and private owners to effectively market properties to the investment and lifestyle buyer. With a range of country-specific and niche sector sites, every type of property in the world can find a home and potentially a new owner.