Words: Ashley Rigg
Published: 23rd February 2012
*Leading agent warns buyers not to buy now
Turkey’s vote for Christmas is a more likely headline. It’s not often you hear an overseas property agent publicly discourage potential purchasers from buying abroad.
However, that is exactly the advice being handed out by Assetz chief executive Stuart Law.
Law is quoted in numerous media outlets this week advising clients’ considering purchasing in the Eurozone to “sit tight” until the political situation becomes clearer.
Law is disparaging about the short-term prospects of Greece, Spain and Portugal and says buyers who can afford to wait should do so.
“Cash rich holiday home buyers who can afford to take a longer term view and are motivated to buy for the location and climate, may feel the time is right to seek out a bargain. However, the majority of investors would do well to sit tight until the situation becomes clearer, or concentrate on safer countries with less exposure to a partial Eurozone breakup such as the UK, USA or France.”
50% potential losses
Law argues that buyers who purchase now could be looking at capital losses of up to 50%.
“The property markets in these countries [Greece, Portugal and Spain] are not going to recover quickly, as their recessions drag on. Sensible investors will wait until there is some indication of a resolution to the sovereign debt crisis in Greece and the impact on the banking sector and the economies of other weaker EU members can be assessed. Property may look appealingly cheap in some cases, but it could be worth half of today’s values to a foreign owner if it was suddenly being valued in Drachma, which we believe could face a 50% devaluation if Greece leaves the Euro.
Comment
Agents in Greece, Portugal and Spain will no doubt believe Law should keep his opinions to himself. It’s a negative PR tactic but it is an effective one. Controversy sells newspapers and this is no doubt part of the plan. Assetz are focusing their business outside the Eurozone this year so it fits their commercial interests.
The sooner Greece can prove it can live without the Euro and the Euro area can show it can live without Greece, the better.
Uncertainty is the killer. There is no historical precedent and the worry of “fallout” affecting Portugal and Spain is bad for business. The financial markets seem to believe that Italy and Spain are safe from any Greek fallout. Sooner rather than later, this assumption will be tested.
The re-scheduled Greek elections are due to take place in April. This could be the catalyst. What is certain though is that the news will have to get worse for Greece before it can get better for others. That's the harsh truth.
Source: Global edge
User Comments
20 yrs ago investors were waiting that property prices went down in Portugal. Altough we have had some fluctuations in the last 20 yrs on long terms prices always went up A lot of those "investors" are still waiting. The local economy might effect some areas in the world if you are looking for capital gains. Most people that I know in Portugal, let's say 95 %, have choosen this country and especially the Algarve for the quality of life, regular flights, safety and the weather. Last year qualityhotel and golf bookings went up. The main reason of their stay is that they feel happy in the first place. A lot of them made a strong capital gain on long term, a nice reward for having confidence in Portugal
tom olthof,
algarfinders2011
Mr. Law is right even though no one can give definite numbers for loses maybe less maybe more.
The house prices in the mentioned countries are still over valued and these countries are economicaly in trouble.Every one knows that in these conditions iproperty investments in eurozone countries will result with loses.This seems obvious.
The properties are undervalued in Turkey especialy in Antalya since the demand from foreigners dropped dramaticaly and there is no demand from locals. Stressed developers are ready to negotiate for your investments.Turkish economy is raising very fast(second after China) This secures your investment and profits in short and long term.
Buy in Turkey before it is too late.
mehmet kavruk,
mesan const. ltd
There is a counter property argument in areas where expatriates are the principal buyers. The inevitable enforced reduction in local product and labour prices due to the collapsed economies will make these countries attractive again as cheap places to go on holiday for those with other currencies. That will increase demand and could increase rather than decrease the values of properties, as long as these properties are being bought by foreign money and not dependent upon the local economy. For more details http://www.surveyspain.com/articles/what-if-spain-exit-euro.htm
Campbell D Ferguson,
Survey Spain Network
When did Stuart Law last avail himself of the Greek property market ?? Or in fact vist Greece.
Becuase whilst Greece is undoutably having a tough time and today it is really tough having persoanly just returned from our own Greece offices I have seen the effect that all of this is having on the marketplace.. The greek property sector has never been fuelled by big loans most greek property owners do not fund their property through mortgages unlike Spain, so the pressure on the Greek property market is of course less, the impact today is about a 15% reduction in prices in general, of course in all down markets there are some opportunites bigger than this where someone has finacial pressure, but are the greeks going to lining up to give their properties away ?? I do not think so ...
Spain is a diverse marketplace, the Canaries for example is seeing a resurgence in property sales so to make sweeping statements on a country as large and diverse as Spain is again hardly the most intelligent of comments.
I was party to hearing some of the comments that his salesteam was putting out at the recent Isreal Expo and I am afraid you have to say pick a market place and knock it in favour of one you are pushing..
One comment was we do not recommend anywhere in Europe not even Cape verde, the only place is America, but the stand was dressed with France , Cape Verde and USA..
Talk about using the media to push a marketplace rather than actual facts and market knowledge..
Congratulations
John Goldacre,
GoldAcre Estates
Stuart Law should be asked on which date exactly, France left the eurozone. The fact that he belives that France is not in the Eurozone, does tend to destroy his credibility - some would say totally. The exposure of French banks is frightening.
Warren Buffet made his huge fortune on the principle that the time to buy is when the streets are running with blood. Streets in the centre of Athens did and may well do so again tonight. If ever there was a time to buy real estate in Greece, it is now, when the country is in a desperate plight.
From now on things can only get better and that includes Greece reverting to Drachmae, which will knock the Euro sideways.
IAN POLLARD,
HiddenGreece.
If Mr Law had actually backed up his statements with some facts it would make sense - however, phrases like "could be looking at capital losses of up to 50%" and "Property may look appealingly cheap in some cases, but it could be worth half of today’s values to a foreign owner if it was suddenly being valued in Drachma, which we believe could face a 50% devaluation if Greece leaves the Euro." leave a lot to be desired.
An awful lot of "coulds" and "ifs", and no solid suggestion of what one should do instead to protect against the devaluation of the pound due to QE.
Peter Mindenhall,
IPIN - International Property Investment Network
Stuart Law's advice is ok. Don't buy in EU zone countries, buy properties in Croatia. Safer than USA, FORBES put it in 12 top retirement heavens, Croatia is top European destination, and not yet in EU zone!
So, Croatia is one of most wonderful countries in Europe, and not in EU zone.
Marija Bojcic,
Luxury Croatia