THE OP­POR­TU­NITY IN OFF­SHORE PROP­ERTY

Finweek English Edition - - INSIDE -

Have you ever won­dered about the his­tory be­hind the say­ing, “Thar’s gold in them thar hills?” Fin­week was fas­ci­nated to learn that the say­ing em­anates from the time of the 1849 Cal­i­for­nia Gold Rush where cit­i­zens of Dahlonega (pop­u­la­tion 5 242 ac­cord­ing to the US Cen­sus of 2010) be­gan to talk about the trek from Ge­or­gia to Cal­i­for­nia to find their riches. As a cu­ri­ous aside, in 1828 Dahlonega was the site of the first ma­jor gold rush in the US.

With gold once again in the head­lines for its surge above $1 400, in­vestors are again scour­ing the globe look­ing for in­vest­ment op­por­tu­ni­ties… but in Fin­week ’s view, while gold is top­i­cal, PROP­ERTY IS PRICE­LESS.

South African in­vestors have long held an affin­ity for lo­cal prop­erty, where a many of t hem have en­joyed phe­nom­e­nal in­vest­ment re­turns. While some of the more fi­nan­cially savvy have en­joyed men­tion­ing the ‘Lon­don f lat’, very few South Africans have made the ef­fort to di­ver­sify their as­sets into the off­shore prop­erty mar­ket through ei­ther di­rect ex­po­sure or other in­vest­ment ve­hi­cles.

With the rand sit­ting at R10.40 to the US dol­lar, at time of writ­ing, it may be worth re­con­sid­er­ing this strat­egy.

Ac­cord­ing to a re­search re­port re­leased by Credit Suisse, real-es­tate in­vest­ment in Ger­many and the US ap­pears to be of­fer­ing ex­cel­lent op­por­tu­ni­ties for in­vestors and is one of the bank’s core themes for 2013. Ac­cord­ing to the re­port, US re­tail, off ice and apart­ment prop­erty is not ex­pen­sive at the mo­ment com­pared to his­tor­i­cal lev­els and, as our Con­text sec­tion on pages 18 and 19 shows, there are good yields to be found in global mar­kets.

One of the ma­jor is­sues fac­ing the global prop­erty sec­tor is the spec­tre of ris­ing in­ter­est rates. With the US Fed­eral Re­serve in­di­cat­ing that it may look to ta­per off its Quan­ti­ta­tive Eas­ing (QE) as the global econ­omy re­cov­ers, this has wor­ried some that prop­erty own­ers may start to see ris­ing in­ter­est rates, which may im­pact those with highly- geared bal­ance sheets.

How­ever, as­set man­ager Mar­riott is less con­cerned about t his a nd told its clients: “While we re­main wary of bond mar­kets, we be­lieve that eq­uity

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