Category Archives: Finance

Brits Buying in New South Wales

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People from the UK are among the most prolific buyers of property in Australia, new figures have revealed.

According to the Real Estate Institute of Australia, Britons are third-largest group of foreign property buyers in the country, reports Homes Overseas.

Statistics from the group showed that British investors bought more than £1.27 billion worth of property in Australia last year.

This accounts for more than a tenth of the overall amount of foreign investment in Australia attracted last year.

Britons were only outnumbered by people from Singapore, along with investors from the US.

Figures showed that New South Wales was one of the main hotspots for foreign buyers during 2007, along with Queensland.

Collectively, these two regions were said to account for nearly half of the overseas investment in Australia last year.

This comes after the country was described as a “safe bet” for investors by the Foreign Property Buyer website.

Inflation-Inflicted Foreign Governments Buy the Farm…..

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Farmland, that is. To wit.:

“The Financial Times reports that Chinese companies will be encouraged to buy farmland abroad, particularly in Africa and South America, to help guarantee food security under a plan being considered by Beijing.

A proposal drafted by the Ministry of Agriculture would make supporting offshore land acquisition by domestic agricultural companies a central government policy. Beijing already has similar policies to boost offshore investment by state-owned banks, manufacturers and oil companies, but offshore agricultural investment has so far been limited to a few small projects.

If approved, the plan could face intense opposition abroad given surging global food prices and deforestation fears. However an official close to the deliberations said it was likely to be adopted.

“There should be no problem for this policy to be approved. The problem might come from foreign governments who are unwilling to give up large areas of land,” the official said.

The move comes as oil-rich but food-poor countries in the Middle East and north Africa explore similar options. Libya is talking with Ukraine about growing wheat in the former Soviet republic, while Saudi Arabia has said it would invest in agricultural and livestock projects abroad to ensure food security and control commodity prices….”

 

Read more in a fascinating article on the prospects for Asian Pacific business at FinFacts.com

(etymological note from Snopes.com)

Buying In a Buyer’s Market

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Your First Offer is Your Best Offer

This is the most counter-intuitive part of buying in a buyers market. Ordinarily sellers, or more accurately the seller’s realtor, try to create a sense of urgency to buy the house. They want you to think other people are looking, there is going to be a bidding war, you need to get your offer in today, etc. Remember, in a buyer’s market these ploys are all lies. You are the only buyer, and you can take as long as you want to buy the house. Your task in negotiating is to create a sense of urgency and panic in the seller. This is why you make your first offer your best offer.

Start with a bid at least 10% below asking price; however, it can be less if the most you are willing to pay is less. Lower your bid as follows:

***If you are actively bidding on the property, make your offers expire in 5 days. If you are still interested in the property resubmit a fractionally-lower offer after 7 days (make them sweat for 2 days.) Don’t make is so much lower as to lose consideration, but make it enough lower that the seller gets the message that they need to come to your price before it gets any lower.

***If the seller makes a counter offer, retract your offer and resubmit a lower one. Works the same as the time decay offer above. After you have lowered your offer a few times, the seller may panic and take your offer before it goes any lower. This is what you are after.

***Lower your offer $500 each time you speak with the seller’s realtor. Every time they communicate with you, they will pressure you to buy. Lower your bid each time they speak with you to send a message that their pressure is not working, and it is, in fact, hurting their client.

***Lower your offer $2,000 if the realtor uses one of the standard lies I mentioned above.

***If the realtor tells you there is another bidder on the property, immediately withdraw your offer and tell them to call you if it falls out of escrow with the other buyer. Since this statement from the realtor is almost certainly a lie, it will cause them to have to explain to their client why the only buyer around has pulled their offer.”

More at Redfin’s Real Estate forums

The Boom Follows the Boomers…DC Housing Insiders Say Downtown Prices Will Hold Up

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MB: Predictions for a year from now? Are we going to be sitting here talking about another 20 percent appreciation?
JB: I think there’s going to be a healthy seven to ten percent growth. There is a strong, healthy market here, and you have a lot of well qualified buyers who have a lot of cash.

MB: You do not think it is going to stop?
JB: It has stopped in other markets already. People forget what happened after September 11? You couldn’t give away an $800,000 house in Washington D.C. for a year. Take Columbia Heights for example. You have a lot of people who bought $350,000 condos and wanted to sell them for $450,000, but you can buy a house for $355,000. It makes no sense. That is a clear example of a housing imbalance. Where you have good housing stock at a fair market price, you will have willing buyers. That is what makes this market very healthy.

MB: What is the price per-square-foot in your various markets?
JB: The price per square foot in Georgetown is $753 but a luxury condominium in Georgetown is about $1,000. In Kalorama, it is around the $650 to $700 market, and depending on renovation it can go as high as $750. Georgetown is about 20 to 25 percent more expensive than Kalorama. Logan Circle is comparable to Georgetown and Kalorama. The condo price per square foot could be as high as $700 to $900, and Capitol Hill is getting up there, too.
CM: I have a different market them what is going on downtown. I don’t see that much appreciation next year, maybe four to six percent. There is a possibility that we might get a bump because of the construction costs, because of Katrina. I also believe that the big builders are going to divert resources. Right now they artificially keep up their supply and demand by only allowing so many houses to be sold per month because they don’t want to get too far out and they don’t have the production capacity to build any more. Because the developers are national, houses are built in factories, and are shipped and assembled on site. I think they are going to take some of that capacity away from those projects and use that to deal with Katrina rebuilding. The effect may be a bigger housing shortage, but I also see that there is an affordability problem. When our average price of a home is over $550,000 and the mean is over $600,000 in Fairfax County, some people find it very difficult to afford housing. Even though I work on the luxury end of the market place, it still all trickles up. Long term, we’re going to go up. Short term, I don’t know if we’re going to have as great as an appreciation as we have had over the past few years.

MB: And what about square footage?
CM: We’re at $250 to $300 a square foot for houses and $500 per square foot for luxury homes. That is construction price, not including land. The lots are going anywhere from $500,000 on the low end to over $1 million.
JF: My market is different because we operate in scarcity of single family homes. Chevy Chase has a building moratorium that is going to further tighten the supply. Builders are not going to want to go in there and take the risk of knocking a house down and putting up a big house. The few houses that do come on in the market are going to continue to appreciate because there is no place to go. In the last three years, the price per square foot for land has gone from $315 to $750 to $800 in prime locations. If you want to buy something in Edgemoore you are at $2 million, and that’s a tear down. In terms of the condo market, unlike Northern Virginia, we are under built to an extreme. The Adagio, in downtown Bethesda, came on the market with 90 units and sold out in two weeks with a waiting list of 3,000 people. According to the last Census report baby boomers represent 52 percent of our market in the Washington metropolitan area. The last baby boomer will turn 55 in 2020. What do boomers want to buy? They want to buy downtown locations, water properties, golf communities—any kind of a second home market. Follow the boomer and you will make money….”

More at  Washington Life.

Crude Oil Decoupling from the US Dollar

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“Crude oil has detached itself from movement in the US dollar. Movement in crude oil prices suggest that the options markets has a big role to play and a part of the rise in crude oil is attributed to covering by option sellers. Frankly, very few traders and investors expected crude oil prices to rise near $125 at this time of the year. Long term investors will exit their investments once crude oil breaks $150 as incremental returns will fall over $150. Investors have made over 100% returns when crude oil prices rose from $50 in early 2007 to now. Crude oil over $150, investors will not get 100% returns in twelve months once crude oil breaks $150. If crude oil prices float over $200 for a long time whether in 2009 or 2010, there will be real evidence of a global slowdown. Even emerging markets like India where petrol and diesel prices are subsidized, the government will start reducing subsidies. The rise in crude oil prices may last another year and a half and thereafter the pace of the rise will fall….”

Chintan Karnani, Asian Metal Markets

Fighting for Food: Mobs riot as food prices soar in Somalia….

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“Down with those printing the fake money!” the young men yelled, denouncing the growing number of counterfeiters who have contributed to escalating prices. “Down with opportunists!”

The Mogadishu Traders’ Union said it decided Tuesday to again accept the old 1,000-shilling notes and ordered its private security units to enforce that at the city’s main Bakara market.

“We, the big traders, have already decided to accept the old note and today we want to tell other businesses also to accept the decision,” said Abas Mohamed Duale, deputy chairman of the union.

Protests and riots over rising food prices have recently hit other nations, including Haiti, Egypt, Cameroon and Burkina Faso. The price of rice and other staples has risen more than 40 percent since mid-2007.

The Asian Development Bank said Monday that a billion poor people in Asia need food aid to help cope with the skyrocketing prices.

Soaring fuel prices, growing demand from the burgeoning middle classes in India and China and poor weather have contributed to the jump in food prices worldwide, economists say. Africa has been particularly hard-hit.

In Mogadishu, the price of corn meal has more than doubled since January. Rice has risen during the same period from $26 to $47.50 for a 110-pound sack.

The cost of food has also been driven up by the plummeting Somali shilling, which has lost nearly half its value against the U.S. dollar this year because of growing insecurity and a market clogged with millions of counterfeit notes. The shilling has tumbled from about 17,000 to 30,000 per $1…..”

More from AP.

Mumbai Madness: The World’s First Billion Dollar Home…

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“Forbes estimated Ambani’s net worth at $43 billion in March. Reliance Industries was founded by Mukesh’s father, Dhirubhai Ambani, in 1966, and is India’s most valuable firm by market capitalization. The couple, who have three children, currently live in a 22-story Mumbai tower that the family has spent years remodeling to meet its needs.

Like many families with the means to do so, the Ambanis wanted to build a custom home. They consulted with architecture firms Perkins + Will and Hirsch Bedner Associates, the designers behind the Mandarin Oriental, based in Dallas and Los Angeles, respectively. Plans were then drawn up for what will be the world’s largest and most expensive home: a 27-story skyscraper in downtown Mumbai with a cost nearing $2 billion, says Thomas Johnson, director of marketing at Hirsch Bedner Associates. The architects and designers are creating as they go, altering floor plans, design elements and concepts as the build…”

More at Forbes

with a hat tip to Kevin Duffy for the link.

Mobs: A Citation in ‘USA Today’

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Should have posted this last month when it came out…

As Economy Dips, So Does Customers’ Generosity

2008.3.21 22:30

Hair isn’t the only thing being trimmed at Head Bangers The Salon in Pendleton, Ind.

Customers searching for ways to fight high gas and food prices are doing some trimming of their own – in tips.

“Even the regulars are cutting back,” stylist Joanna Anderson said. “Usually they are apologetic and say they wish they could give more. But they just can’t right now.”

Many workers depend on tips for a substantial part of their income, and those hairdressers, bartenders, cab drivers and food servers have been among the first to be hit hard by the slowing economy, experts say.

Those workers are feeling a pinch because talk of a recession has consumers putting the brakes on extra expenses.

“It’s simply panic, and people cut back in anticipation of what may or may not come,” said financial commentator Lila Rajiva, co-author of “Mobs, Messiahs and Markets: Surviving the Public Spectacle in Finance and Politics.”

More at USA Today. 

(c) 2008, USA TODAY International. Distributed by Tribune Media Services Internationa

Boom Without End: What The Web Knows…..

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“India and China combined are commonly acknowledged as the next two economies to be reckoned with, in terms of double digit economic growth. Prices for basic materials such as copper, steel, nickel and virtually every other mineral used in construction are marching steadily upward.Certain economic commentators are calling this a ‘super-cycle”, implying that the trend will eventually reverse itself, and these industries will contract as they have done since the industrialization of mankind.

It is no such thing.

The cyclical nature of mining is dead, a relic of the past.

What do you think is going to happen to the demand curve for basic materials when China, India, Africa, and Latin America’s internet penetration percentages rise to meet North America’s?

How bout Russia?

China is the largest consumer of copper, but the United States is second. Once a standard of living is achieved it must be maintained.

The rest of humanity’s existence will now be spent in bringing the rest of the world population up to a better standard of living. Or we shall perish in the effort.

The secret is out….”

James West in The Midas Letter