In the age of globalization, the world's markets are becoming ever more available to foreign investors, and while real estate has traditionally been one of the tougher markets to enter and navigate in foreign countries, it is getting ever easier. Nearly 50 percent of all countries improved their real estate transparency, according to the Jones Lang LaSalle Index from 2006 to 2008, with eight of those countries moving up a full tier. The only country to fall in the index was Venezuela. The Jones Lang LaSalle index ranks the transparency of countries based on five items: performance measurement, market fundamentals, listed vehicles, legal and regulatory environment and the transaction process.

While many countries still have a ways to go before investors can truly feel confident about investing there, this is a great sign that the world is recognizing the need for foreign investment. For investors, it is also great to see the number of investment opportunities continue to rise. Many people are fearful about investing in foreign markets, so out of fear they neglect them. Investors who take this stance are missing out on literally a world of opportunity. Know that while there are additional risks involved with foreign investment, there is also a significant reward variable to consider in addition to the main factor which should compel investors: diversification. Those investors who have 100 percent of their investments in U.S. funds, companies and other U.S. vehicles should seriously re-evaluate their portfolio.

Buying physical property in a foreign country can be rewarding, but it is not for everyone. That being said, if foreign real estate isn’t your cup of tea, then consider at minimum investing into some foreign funds, which could even include a foreign REIT (real estate investment trust). For the more adventurous, though, buying property in an emerging market, or even a developed foreign market, can be exciting and profitable.

If you are considering buying property abroad, the best piece of advice I can give you is to do your homework. Fully evaluate all the potential risk factors and then weigh them against the potential rewards; if an investment makes sense, then do it. Depending on the market you are entering you may also need to take additional precautions. If you are investing in an emerging market, I would recommend that you don’t invest more money than you can lose. Emerging markets and their governments and markets are not always stable, so things can go south quickly--but they also can get better quickly as well. To be safe, though, take extra precaution, especially if you are a new investor. Also, I always recommend seeking trusted local legal counsel (make sure to get referrals from other investors who have been successful), regardless of whether or not your agent tells you that you need one. Things don’t work in other countries like they do in the U.S., so be open-minded and patient (especially in Latin American countries), but that doesn’t mean let people walk all over you. Just realize that things are going to work differently and take a little longer in most places compared to the U.S.

Lastly, I want to point out that, especially in emerging markets, it is easy to get excited by promises of incredible returns and other such things, but there is a reason the developers are offering these returns: There is a lot of risk. Many developments that start never see completion for various reasons. Until you fully understand the market and how things work there, it is wise to only buy what you can see and touch.

Labels: international, investments, real estate

Argentina became infamous earlier this decade for defaulting on their debt during a major financial crisis, and now it appears they have defaulted once again. This time around, things aren’t quite as bad in the country, and the default is a little different, but their actions still qualify as default, according to an article written by a couple economics professors for the Wall Street Journal. Carmen Reinhart from the University of Maryland and Kenneth Rogoff from Harvard claim in their article that Argentina has manipulated their inflation data in order to pay out less on their inflation indexed debt, thus putting them in default.

The professors say that the government’s scheme began with the firing of their top statisticians. Now the inflation measurements that are being “officially” reported are drastically understated. According to the article, Argentina is reporting an inflation rate of less than 10 percent when by most external measurements, the real rate should be closer to 30 percent. The Argentine government owes around $30 billion in inflation indexed debt, according to the article.

Investors should know that circumstances such as this are always a risk when investing, especially in developing countries. Argentina isn’t alone in these types of actions, either. Across the world, countries manipulate their statistics to be in their favor. Sometimes they are minor “adjustments” and sometimes that are major and pretty blatant, like in this case.

I want to also point out that, while these types of things are more pronounced in developing countries, they happen here at home, too. The U.S. has adjusted things in their favor before (such as the gold price in the '30s) and still do it today (such as the CPI and GDP). So don’t be naïve and think this will never impact you because you don’t invest abroad; government manipulations of economic data happen here, too. Inflation indexed bonds just happen to be one of the easiest debts to influence, so invest in them with your eyes wide open.

Labels: economy, inflation, international, investments

In response to high fuel costs truckers in Spain have decided to go on strike. The truckers want the government of Spain to pass a law establishing a minimum price for their services, and to make sure that their contracts better reflect the fluctuating cost of fuel, which has risen by more than 20 percent since the beginning of the year, according to BBC News.

This fuel strike, which involves around 90,000 drivers--most of whom are self-employed--has the potential to cause some serious problems for Spain and its inhabitants. Already people are lining up at grocery stores and gas stations around the country, trying to get as many supplies as they can before stores start running out of goods. The striking truckers have warned the public that stores will only be able to last a couple days, according to the BBC article.

The truckers know that the country can’t run without them and they are making their voices heard, but are they going to be successful in their campaign? Part of the problem is that the Spanish government has a limited number of options available to it thanks to its arrangement with the EU. For example, it is required by the EU that member countries place at minimum a 15 percent value add tax (VAT) on fuel. In addition, the EU restricts the use of certain fuel subsidies, according to the BBC.

What the truckers want is more money to account for the business cost increase of more than 20 percent, and one way or another, they are going to have to get it. "We have no more solutions. We can't afford diesel any more. It's as simple as that," Jean-Claude Ferrand told Spanish national radio, according to the BBC.

If the government can’t offer subsidies what they might have to do is help negotiations between the truckers and the suppliers. Ultimately, either the government offers a subsidy or the suppliers are going to have to pay more to have their goods delivered. Looking at the options available it appears that likely the suppliers will be the ones fronting the costs, which of course will be represented in price increases and in the end borne by the consumer. Either way, though, it was going to come down to the consumer; they were going to pay for it either through their tax dollars or through increased goods prices.

Spain is making the headlines now, but with the way fuel costs keep rising, they are unlikely to be the last ones with this problem. Look for more and more truckers to substantially raise their prices or go on strike--or else out of business. Either way, supply and demand pressures are going to push prices higher to account for the increase in transportation costs.

Labels: business, European Union, international

After the military coup in 2006, which stopped Thailand’s surging markets in their tracks and created fear in the eyes of investors, the last thing Thailand needs now--after rebuilding that confidence somewhat--is another coup.

After Samak Sundaravej was elected prime minister, many people feared that another coup may be imminent. After all, Samak is a close ally of the former prime minister Thaksin Shinawatra, who was the one ousted by the coup, so the precedent for such action has been established. Already protests have begun in opposition of Samak, just as they were going on in protest of Thaksin. Many Thais believe that Samak is just a proxy for Thaksin according to the BBC.

The bottom line here for Thailand is that if they want to restore investor confidence they need to quell this problem, and fast. The bigger these protests grow, the more speculation of a coup there will be and the lower investor confidence will shrink. Already Thailand’s stock market has fallen for five straight days, and the rumors of a coup are mounting, according to the BBC. If Thailand can put an end to the uprisings (in an acceptable manner) and cool down the rumors, it would go a long way towards proving that this administration is here to last.

Investors don’t like uncertainty, and when you are investing in a foreign country in particular, the last thing you want to see is problems with the country’s leadership. Thailand is a beautiful country with loads of potential, but in order to maximize this potential the country is going to have to establish some level of stability within their government.

Labels: international, politics

In the first quarter this year, Canada’s economy shrank by 0.3 percent, according to Bloomberg. So while all the talk is about a U.S. recession, surprisingly, Canada may just beat us to the punch.

This news came as a shock to me because of how strong Canada’s economy has been, including their oil industry. The biggest problem area apparently was the auto industry. If the auto- and auto-related industries were removed from the, calculations then Canada’s economy would have actually still grown, according to Bloomberg. The biggest importer of Canadian automobiles, of course, is the U.S. and we just aren’t buying too many cars right now. Not only is Canada suffering from the drop in consumer confidence in the U.S., which is the number one importer of Canadian goods, but more importantly, Canada is suffering from their strong currency.

Ever since the Canadian dollar surged against the U.S. dollar, the trade balance between the countries has changed. Canadians are buying more U.S. goods and the U.S. is buying fewer Canadian goods because the U.S. goods are comparatively cheaper thanks to the weak U.S. dollar. Now the Bank of Canada is likely to cut interest rates in response. This should lead to the Canadian dollar dropping against the dollar, as it already has begun to do.

Labels: business, dollar, economy, international

Thanks to the commodities boom, Brazil has emerged on the world scene as a new economic powerhouse. This has not gone unnoticed by foreign investors who have been pouring billions of dollars into Brazil in an effort to capture some of the vast potential for profit. While it has only been a few years since Brazil was on the verge on economic disaster, it appears they have been able to turn things around in the country--and this time change may be for good.

I read a great article from The Wall street Journal this morning about Brazil that is definitely worth your time to read. The article talks about Brazil’s past problems, how they are overcoming them, some current investments happening in the country and even a little about the future prospects for Brazil.

In my opinion Brazil is here to stay. They are one of the few energy-independent countries in the world, they have the largest supply of fresh water in the world (Some think that water resources will soon be in higher demand than oil), they are packed full of just about every other natural resource you can think of, their currency has strengthened and stabilized and their government--while not perfect--has shown remarkable growth. As the government continues to grow and strengthen, and as they continue to combat the corruption and bureaucracy that is still holding them down, the sky is truly the limit for this country.

If you are interested in finding out more about physically investing in Brazil make sure to read NuWire’s article on Brazil Property Investment.

Labels: international, investments, real estate

Cuba’s economy was long held down by dictator Fidel Castro but his younger brother, Raul Castro, the new acting President of Cuba, has enacted some small reforms that are stepping stones toward economic improvement. He has legalized the sale of computers, DVD players and cell phones, allowed Cubans to stay at hotels previously reserved for tourists and, most recently, lifted the wage ceiling for employees in Cuba.

The wage restriction was a major damper on production in Cuba and one of the strongest sources of complaints from Cuban workers because they were paid the same regardless of how hard they worked. Naturally if employees can’t make more money the harder they work, there is little motivation for them to exceed the absolute minimum for productivity. The fact the Raul Castro has heard these complaints and is taking action is a great sign.

Cuba has been off limits for a long time for American investors, and there is much untapped potential in the country. For more insight about Cuba’s future investment potential, read my post: Fidel Castro Resigns: What’s Next For Cuba?

I look forward to more changes in Cuba’s economy and hope that it won’t be much longer until Cuba and the U.S. can reconcile their past differences.

Labels: Cuba, international

Thailand’s medical tourism industry is one of the strongest in the world, so why didn’t it make the cut for NuWire’s recently published list of the Top 5 Medical Tourism Destinations? We received an e-mail from a reader asking why Thailand was not included on our Top 5, which was a valid question. Here is some background on Thailand’s medical tourism industry:.

The main medical tourism hospital in Thailand is Bumrungrad International Hospital in Bangkok. The hospital is state-of-the-art, equipped with top-of-the-line technology and a well-trained staff. According to Bumrungrad’s website, more than 200 of their doctors are U.S. board certified. The only difference between the care patients receive there and the care they receive in the U.S. is that it is much cheaper in Thailand. Bumrungrad serves more than 400,000 international patients annually. It is one of the biggest medical tourism hospitals in the world.

As a medical tourism destination, Thailand indisputably ranks as one of the top countries in the world, but it did not make our list because we were also considering each country’s investment potential. Thailand has been a great place for investors for years, but recent political turmoil there has been cause for worry. The military ousted the former prime minister and the new prime minister is friendly with him, so another military coup seems possible. If Thailand can prove its long-term stability, it could once again be a great place for investment as well as medical tourism.

Labels: international, investments, tourism

International tourism is ready to explode with investment opportunities, according to an article published in the Harvard Business Review titled “The Tourism Time Bomb.” The writers--Paul F. Nunes, a research fellow at the Accenture Institute, and Mark Spelman, global managing director of Accenture’s strategy practice--state that international tourism is growing exponentially, and that this growth will soon lead to dramatic changes in major tourism destinations as well other locations which are likely to benefit from the resulting overflow

The following are important excerpts from the article:

“According to the United Nations World Tourism Organization, international tourist visits are expected to double soon, from roughly 800 million in 2008 to 1.6 billion by 2020.”

“First, most tourism-related prices, such as hotel room rates in popular cities, will continue to escalate as demand outstrips supply.”

“Second, rationing, and the resulting waiting lists, will become commonplace. Some groups, for example, are already calling for limits on traffic to ecologically sensitive destinations, such as the Incan ruins at Peru's Machu Picchu.”

“Finally, jaw-dropping prices and decades-long waiting lists will prompt the creation and the expansion of destinations in both developed and developing economies. The Chinese, for example, are developing Hawaii-like Hainan island and Macao, a gaming paradise on China's southern coast.”

“Companies and governments are also creating facsimiles of popular destinations.” (for an example read The Brink Tank’s post: How Do You Say Rocco In Arabic?)

“Just as sites and structures can be successfully replicated in new locations, so can institutions. If the swelling ranks of global travelers can't all come to you, you can go to them.”

“As the scarcity of places grows, many companies will find opportunities to profit by meeting new levels of demand for authentic, and inauthentic, experiences.”

“A billion or two additional international travelers represent both a massive potential headache and an opportunity for business.”

Real estate in both urban and suburban areas is one of many investments that may benefit from this explosion. As demand increases, tourism and hospitality businesses should also perform well, and there are many new businesses that could be created to cater to international tourists. An entrepreneur’s imagination is the only limit.

Labels: business, international, investments, real estate, tourism

According to an article in the New York Times, Zimbabwe’s leader Robert Mugabe could be on his way out of office. Several advisors on Mugabe’s staff are in negotiations with opposition leader Morgan Tsvangirai. The election appears to be much closer than the Mugabe camp anticipated and now some Mugabe officials are calling for the leader to resign.

The following is an excerpt from the New York Times article:

“‘The chiefs of staff are talking to Morgan and are trying to put into place transitional structures,’ said John Makumbe, a political analyst and insider in local politics who has spoken in the past in favor of the opposition.

“‘The chiefs of staff are not split; they are loyally at Mugabe’s side,’ said Mr. Makumbe. ‘But they are not negotiating for Mr. Mugabe. They are negotiating for themselves. They are negotiating about reprisals and recriminations and blah blah blah. They are doing it for their own security.’”

I sincerely hope that Tsvangirai will knock Mugabe out of power in a peaceful, democratic manner, and that he doesn’t fall victim to the power of his new position. It would be great news for Zimbabwe, Africa and the world. Zimbabwe was once an attractive emerging nation for investors and I want to see it regain that status.

A word of warning to investors eager for the potential of a Mugabe-free Zimbabwe: Even if Tsvangirai does take power, there will be a risk that things will not improve any time soon. It is best to wait for the new leadership to show some stability, in how they plan to run things before investing.

Labels: international, Zimbabwe

Corruption in the Los Cabos area of Mexico’s Baja California Sur is a bigger problem than some investors might think. According to a recent press release from the Association for the Protection of the Environment and the Marine Turtle in Southern Baja (ASUPMATOMA), government officials in Baja California Sur have seized hundreds of acres of beach front land from a group of investors and conservationists even though the claims being presented have been proven to be falsified.

The press release states that ASUPMATOMA has provided evidence that the land titles submitted by a Sinoloa company on July 27, 2007 were forged by a man who was recorded legally dead several months prior. State officials still proceeded to clear the land last week, actually reversing the charges against René Pinal, who is the main owner.

This land was being used as a sanctuary for sea turtles, and was open to the public to visit them in their natural habitat. However, it seems the government has other ideas for this valuable land: probably something more along the lines of hotels and resorts, which provide taxes to the government.

Corruption can be common in developing countries, adding extra risk to foreign investments, but this situation in Baja California Sur is more the exception than the rule. If these unsubstantiated seizures become more commonplace, then investors will have reason to think twice before investing in Mexico, but for now it seems to be a rare event.

ASUPMATOMA is still campaigning to fight the seizure. If you want more information about them or their cause, visit www.savetheseaturtles.org.

Labels: international, Mexico, real estate

The Zimbabwe Situation, as it is being dubbed by some, is a combination of mass inflation and human rights and property rights violations. I think most people would agree that long-time leader Robert Mugabe is responsible for the present state of the country, and it's economy.

For those unfamiliar with the Zimbabwe Situation or Robert Mugabe, there is a website dedicated solely to providing information on the subjects: zimbabwesituation.com. I also wrote a blog post last month that talked about the inflation problems in Zimbabwe.

According to recent press covering the Zimbabwe Situation, there appears to be some hope for the upcoming elections. For years, the opposition party has been suppressed and elections have been rigged. Mugabe would punish any supporters of the opposition by cutting off their food supplies, among other things. Many people are not even registered to vote out of sheer hopelessness, and the last few elections in Zimbabwe have been—more or less—a waste of time.

This election seems to be different; there is a growing sense of hope among Zimbabweans. Both the opposition leader, Morgan Tsvangirai, and a rival leader from Mugabe’s own Zanu-PF party are running. Though Mugabe has employed some of his traditional election tricks, this election has been relatively peaceful, according to an article from BBC News.

Zimbabwe was one of the brightest stars in Africa prior to Mugabe’s destruction of the economy. The country is rich with natural resources, and it has much to offer both tourists and businesses, but investors will shy away until Mugabe is out of power. If Zimbabwe can elect a good leader who welcomes a free market, things could turn around for Zimbabwe. I’m not holding my breath, but hopefully someday soon we will see an end to the infamous Zimbabwe Situation.

Labels: inflation, international, Zimbabwe

For years the rift between Taiwan and mainland China has grown as the Chinese government asserted ownership of Taiwan and Taiwan called for independence. The Taiwanese government took a hard-line stance and heavily restricted travel and immigration from the mainland out of fear of sabotage or attack, but this has affected trade. Taiwan is now unable to compete with mainland China and other lower cost countries on several exports, and the economy in Taiwan, which was very healthy only a few years ago, is starting to suffer. For this reason, many residents of Taiwan were calling for change from their leadership.

Well, change is on the way. The people of Taiwan have elected Ma Ying-jeou as their new president. Ma is of the opposition party and favors closer relations with mainland China. According to an article in the International Tribune, Ma said in an interview yesterday that, in his first 100 days in office, he hoped to have an immediate effect on the economy by opening up Taiwan to mainland Chinese tourism. After that, Ma has other plans on how to better incorporate mainland China into Taiwan’s economy.

The former leading party of Taiwan, the Democratic Progressive Party, thinks closer relations with China will only result in disaster. If Taiwan can successfully reintegrate China into their economy without major disruption, then Taiwan’s economy should experience a nice surge. If the Democratic Progressive Party is correct in their conspiracy claims against China, and the situation turns ugly, then Taiwan may decline further.

Investors who think that Taiwan and China will live harmoniously should buy into Taiwan now. Taiwan’s tourism sector especially is in for a boost. As an indication of how investors are thinking, Taiwan’s stock market saw a 4 percent jump today in response to the election results. One should remember that certain Chinese leaders deeply despise Taiwan, and not discount the risks in this relationship. The Chinese seem to support Ma, so hopefully the two sides will be able to resolve the issues between them in a peaceful manner.

Labels: China, international

Many investors are now looking overseas for real estate investment opportunities as the era of globalization grows and the problems in the U.S. continue. Choosing the country in which to invest is one of the first steps, and one of the most difficult.

Investors must first decide what their motivation for the investment is. Is it to make money, or is it a combination of money and personal enjoyment of the property.

Global Property Guide is a great online resource that helps investors evaluate international real estate investment opportunities. The site calculates average rental yields for various countries and provides information on tax policies and long-term growth prospects. Based on the different investment factors, the site rates each country on a scale of 1 to 5 stars. The following is a list of the locations which have a 5 star rating, and are listed as the best places for long term real estate investment by Global Property Guide:

1) Buenos Aires, Argentina
2) Bahamas
3) Sofia, Bulgaria
4) Cairo, Egypt
5) Hagatna, Guam
6) Bratislava, Slovakia
7) Montevideo, Uruguay

Personally, I think that it is a good list, though I don’t know that I agree with the Bahamas’ and Bulgaria’s rankings. The yields in those countries aren’t all that great, and I think that Bulgaria has a serious bubble on their hands. The website offers a great resource for aspiring international real estate investors to start their search, but it should not substitute for real due diligence.

Labels: international, investments, real estate

In the latest drama in Latin America, Nicaragua has officially broken diplomatic ties with Colombia, and Venezuela’s Chavez is threatening to seize Colombian assets in the country. Naturally this has had a dramatic effect on the Colombian corporations operating in Venezuela, which was evident in the sell-off of those corporations’ stock yesterday.

In my previous post, I said that the chance of a full on war was minimal, which was echoed by U.S. defense secretary Robert Gates according to a CNN article. However, there could be serious economic consequences. It appears that Venezuela, Ecuador, and now Nicaragua might be preparing to engage in economic warfare.

I’m not sure if Chavez will actually follow through on his threats—as he tends to make a lot of them—but threats alone have already caused damage to Colombian investors. It doesn’t appear that this thing is going to end as quietly as many thought.

Labels: Colombia, international, nicaragua

The Federal Reserve and European Central Bank have a very different opinion when it comes to managing economic policy. This is especially apparent when one looks at how their respective currencies, the dollar and the euro, have performed against one another. It seems that every day, the euro is setting a new high against the dollar. There is a great article in The New York Times that talks about this very issue, but I will attempt to summarize it here. Let’s take a look now at how the two central banks ideologies compare.

The Federal Reserve’s number one priority is economic growth. Their thought is that if growth stalls, then so will demand and inflation. To the Fed inflation is simply a byproduct of growth, so they aren’t too concerned with controlling it directly. They would rather control growth, and thus indirectly control inflation.

The European Central Bank focuses on growth as well, but they are also very concerned with inflation. They do not necessarily agree with the idea that inflation can be controlled (at least to their satisfaction) solely by focusing on growth.

Growth has been slowing both in the U.S. and in the European Union, but the central banks have had very different responses. The Fed has responded with a series of rate cuts, and will likely make even more of them, while the European Central Bank has left their key interest rates in place. In the U.S., the drastic rate cuts haven’t had much effect in ramping up the economy, and growth has come to a halt. In addition, inflation has been increasing dramatically, inspiring some to proclaim that the U.S. is entering into a period of stagflation. Growth in the European Union has continued to slow and inflation is above target at around 3 percent, but on both counts they are doing a little better than the U.S.

It is extremely hard to compare economic policies in this way because the two subject economies are very different. It will be interesting though to see how the two differing policies turn out in their results. I’m not a big fan of how Bernanke runs things, and I’m leaning towards the European Central Bank working out better, but we will just have to wait and see.

Labels: economy, European Union, inflation, international

Violence brought about by the elections in Kenya has stymied—but not stopped—an inspiring story of entrepreneurial innovation and spirit. Kenya’s Youth Ministry was holding a business plan competition to inspire and support entrepreneurs and create new businesses. From an initial 5,000 participants, the best 100 were chosen for further training and judging. Kenya recognized the need for new businesses and the benefits that they bring to the economy. Some experts estimate that for every one person who receives work in Africa, 10 others will have food, clothing, shelter, school fees and other necessities. Unfortunately, six weeks after the competition began, so did the horrific violence which has claimed over a thousand lives and displaced hundreds of thousands.

But now the entrepreneur competition has brought about a new life, and there is a film already being made about the events which have taken place. The film is called “Kenya Stories”, and it was originally intended to be a simple documentary about the competition, but it has now become something much more important. On their website, they discuss the film and the 100 top entrepreneurs in greater depth. Their goal is to generate interest in what is happening right now in Kenya, tell more about these aspiring entrepreneurs, and hopefully create support for the cause. They are looking for mentors, angel investors, referral business, networking help, donations and so on.

In the midst of such tragedy, it is truly inspiring to see how people can rise up. I wish the very best for each of these entrepreneurs, and hopefully we will witness their business plans come to fruition someday. I also wish the best for the “Kenya Stories” film team, and I can’t wait to see the finished product.

For more background information on the violence in Kenya, read The New York Times’ article.

Labels: business, international, Kenya

Things appear to be getting a little sticky down in Colombia, South America. The nation has shown signs of moving away from its long-standing reputation as the cocaine capital of the world, but it is now facing new turmoil. This time, the trouble is with their neighbors Ecuador and Venezuela.

In short, Colombia crossed the Ecuador border in a raid on the FARC (a Colombian guerilla group) which claimed the life of the FARC’s number two in command, Raul Reyes. The major conflict is that they did so without the permission of the Ecuadorian government, and naturally that did not sit well with them. The FARC is a group of leftist-leaning rebels who have the support of Venezuela and Ecuador, which are both leftist-leaning governments. That fact only adds another log to the fire.

In response to the raid by Colombia, Ecuador and Venezuela have both started moving troops to the Colombian border. There is no knowing where this will lead , but either way it doesn’t appear to be a good thing for people who have invested in Colombia.

Colombia was on the road to a dramatic turn around, and many investors looked to Colombia as a great emerging opportunity for investment. That still might prove to be the case, but until this situation gets resolved, most potential investors are going to wait to see how this thing pans out. Nothing scares away investors like the threat of conflict.

My thought is that Venezuela and Ecuador are just ruffling their feathers in response, and that they won’t take any military action beyond that. The bigger concern would be how this event affects Colombia’s economic relationship with its two neighbors and, potentially, other Ecuadorian and FARC sympathizers.

Labels: Colombia, international

We have written several pieces in the past about investing in Edmonton real estate, but the question remains: how long can the boom last? It seems that the world is waking up to the economic powerhouse that Alberta, Canada—and Edmonton in particular—is becoming. The price of oil just hit another high, and oil drives Alberta’s economy. Is it too negative to think that the gravy train has to end at some point?

As long as the price of oil remains as high as it is now, Edmonton is likely to remain a hot commodity. The oil sands region in Alberta contains an enormous amount of oil, and being that it comes from a friendly, neighboring country, there will continue to be huge demand for their oil. With the amount of money flowing into the Edmonton economy, people there can afford to pay a premium for their living expenses. With that in mind it’s possible that the real estate values could continue their rise for awhile longer.

On the other hand if the price of oil were to drop off significantly, Edmonton, and Alberta as a whole, will be hurt dramatically. Edmonton has done a good job of working to diversify their economy, but the fact remains that oil is the number one industry in the area. It is also possible that environmental regulations could have an impact on the oil sands region. It is no secret that the oil sands produce an enormous amount of pollutants, and it is possible that restrictions could be placed on the production which could prove very costly for the oil producers and the area’s economy. Let’s also not forget that real estate values in the area have skyrocketed over the past few years, and history tells us what goes up, usually comes down. Read our article Resource Driven Real Estate Booms and Busts for some more insight.

Overseaspropertymall.com just did an interesting blog post on the subject. In their post, they looked at both sides of the argument and offered some insight as well. I would recommend that you check it out if you are curious about investing in Edmonton real estate.

Labels: Edmonton, international, real estate

Many of our readers are interested in purchasing foreign investment property for various reasons. Some want to purchase foreign investment property as a vacation retreat, while others look at foreign property strictly as an investment and an alternative to U.S. real estate. If you are looking at vacation spots, then you should be concerned with more than the yield of a property. However, if you are buying foreign property solely as an investment, then yields will be one of the most important factors of the property you decide to buy.

Global Property Guide has published a list of the top 10 highest yielding foreign markets which might help you in your search for that perfect location. They identified the top 10 highest yielding foreign markets as: Egypt, Indonesia, Philippines, Panama, Ukraine, UAE, Jordan, China, South Africa, and Morocco.

Before you get too excited, consider that these figures are only based on highest yield. The rankings do not take into account the risks, taxes and fees associated with buying, selling and owning property in the country. One needs to analyze and account for these things before one buys property in a foreign country. Global Property Guide covers many different countries and offers additional information, including tax rates. They are a great place to start your research for foreign investment property.

Labels: China, Egypt, Indonesia, international, Jordan, Morocco, Panama, Philippines, real estate, South Africa, UAE, Ukraine

As the U.S. battles a serious inflation problem, we can at least be thankful it’s not as bad as the inflation issues Zimbabwe faces. Yesterday, Zimbabwe’s statistical office reported inflation of over 100,000 percent. That’s right, 100,000 percent; no extra zeros have been added for emphasis.

To give you an idea of what that type of inflation looks like, in Zimbabwe a simple loaf of bread costs around Z$3.5 million, according to VOA News. Can you imagine having to carry around 3.5 million dollars in cash just to buy a loaf of bread? As you have probably realized, this is not good for Zimbabwe’s economy; things have become truly disastrous there. Zimbabwe’s per capita GDP has shrunk from $200 in 1996 to around $9 now, according to CNN.

Unfortunately, a country that was on the rise has essentially been ruined by one man: Mr. Robert Mugabe. Since he won’t allow anyone to run against him in the elections, it doesn’t seem like he will be voted out anytime soon. The good news is that he is 84 years old, so he can’t last all that much longer. Castro resigned this week, so maybe Mugabe is the next dictator on his way out. Here’s hoping, anyway.

With the U.S. inflation rate at a little over 4 percent we don’t need to worry about problems of this scale, and I’m very thankful for that. But inflation in the U.S. is still a major problem. If people continue to overlook inflation, it will eventually eat their savings. Plan for inflation now, and invest accordingly. Ignore it, and your retirement could be in peril.

Labels: inflation, international, retirement, Zimbabwe

In another step towards Nicaragua’s world wide recognition as a travel destination, Nicaragua was one of the sites used for this year’s Sports Illustrated Swimsuit Edition. I believe two models had their shoots in San Juan Del Sur Nicaragua, one of main tourism destinations in the country. San Juan Del Sur is known for its great beach, fishing, and surfing. It also happens to be a growing destination for expatriates and real estate investors alike.

I’ve been to Nicaragua a few times and absolutely loved my time there. The people are extremely friendly, and the scenery is absolutely to die for. The people at Sports Illustrated obviously saw the beauty, and the rest of the world is slowly catching on to this as well. Seeing as the Sports Illustrated Swimsuit Edition is by far the largest selling issue for the company every year, millions more people are being introduced to not only beautiful models but a beautiful country.

Just out of curiosity, I looked around on some forums and blogs and it already appears that many people have taken notice and are asking about real estate opportunities in the country. Whether they follow through on that curiosity is another story, but any buzz is good for business in Nicaragua.

Those who are new to Nicaragua should check out the article we wrote about investing in Nicaragua real estate. Nicaragua also came in number 5 on our list of the top Latin American real estate markets. Any potential investors though should be warned that investing in Nicaragua is risky, and should be looked at as a long-term investment.

Those who have visited Nicaragua know that the country is beautiful, but needs a lot of work, especially in terms of infrastructure. There is a lot of development underway, but it is moving slowly. Most investors in Nicaragua are Americans, so investment in the country has slowed recently due to the problems in the U.S. Many investors are either choosing to wait, or were planning to use equity from their homes in the U.S. and have lost that investment capital altogether. The fact Daniel Ortega is now leading the country also isn’t helping things. However, tourism should continue doing well: It is one of the most affordable, beautiful and exotic locations that Americans can reach with relative ease (around 2 hours flying from Houston or Miami). If the U.S. does in fact go into a recession, people will be looking for lower cost places to travel, and that’s great news for Nicaraguan tourism and bad news for European tourism.

Over the long haul, Nicaragua should progress nicely. It offers great investment potential, but investors should use caution. Buying property in Nicaragua is not like buying property here in the states. You must understand the risks you are taking and not invest more capital than you can afford to lose. If you are careful, and invest with a long-term focus, then you will probably be happy with your investment when all is said and done. Beyond that, Nicaragua is an incredible place to visit (at least I’ve found it to be), so even if you find your self stuck with an investment property that you can’t sell, you should have a great time (and excuse for) visiting there.

For the sake of full disclosure, I do personally own property in Nicaragua.

Labels: international, nicaragua, real estate

Finally, the news that everyone has been waiting for: Fidel Castro officially resigned this morning (I know many people were, and still are, hoping for his death, but I’m not going to go there). Castro has been in power for the past 49 years in Cuba, and has by most measurements destroyed the country. Cuba is a land full of potential and promise, but it needs access to U.S. investors, tourists, and trade to fully realize it. Unfortunately, that relationship has not been able to materialize due to various political issues.

With Cuba’s proximity to the U.S. and natural appeal, it should have been an investor’s dream location. It might someday become just that, but some big questions remain: How will Fidel Castro’s brother, Raul Castro, run the country? Will Raul refuse to make any major changes while Fidel is still alive? Even after Fidel is dead will Raul (or Raul’s successor) continue on with Fidel’s policies?

Unfortunately for U.S. investors, many prime opportunities have already been taken by foreign investors, especially Europeans, but even the Europeans have had a tough go with all the regulations imposed by Castro. If Cuba decides to open up the country to foreign investment it can be certain that there will be countless opportunities for investors. The U.S. should be Cuba’s number one source for trade and tourism, and once trade and travel are allowed between the two countries, Cuba’s economy and property values will jump by leaps and bounds.

Investing in a newly opened Cuba would not be without risk though. Cuba has been a dictatorship for the last 49 years, and its government has not respected investors’ rights. There is a precedent and a possibility that another dictator along the lines of Fidel Castro could come along and seize property, or impose unfair regulations. Until Cuba’s government shows stability for an extended period of time, that concern will be at the front of every investor’s mind. Whether the potential reward possibilities are worth the risk is a decision every investor will need to make for themselves.

Cuba has always been intriguing to me: Great food, a vibrant culture, great location and climate, but off-limits. I hope that this new administration takes Cuba in a new direction, and that I’ll be visiting sooner rather than later.

Labels: economy, international, real estate

Exxon is in the midst of a fierce battle with Venezuela in response to the expropriation of Exxon assets by the Venezuelan government. The value of the expropriated Exxon assets was approximately $12 billion. According to Business Week, Exxon recently won an international court order that prohibits Petróleos de Venezuela (PDVSA), Venezuela’s national oil company, from selling any of its overseas assets pending a court ruling. Naturally, this infuriated Hugo Chavez who is not known for his calm demeanor and friendliness towards the U.S. to begin with.

Chavez has since threatened that he would cut off the Venezuelan supply of oil into the U.S.,but it is unlikely that he will follow through with his threats. According to Money Week Venezuela exports around 75 percent of its oil to the U.S., while the U.S. gets only about 13 percent of its oil from Venezuela. In addition the U.S. is just about the only country which has refineries capable of working with Venezuelan crude. If Chavez were to act on his threats it would cost his country much more than it would cost the U.S. Considering that he is already losing favor in his country (see prior post “Chavez Defeat A Victory For Democracy”), a move such as this could prove disastrous for him.

The announcement did cause a slight rise in the price of oil, even though most feel that these threats are idle. Predicting the price of oil is never easy and even the slightest rumblings from oil-producing countries can have a dramatic impact. Any price movement caused by these threats should likely be corrected over the coming days as threats prove empty. If out of pure spite Chavez decides to follow through and cut off Venezuelan oil exports to the U.S., investors can expect the price of oil to jump significantly. However, it is questionable whether it would reach the $200 level Chavez says it would. I personally doubt it, but with the volatile nature of the market you never know.

Labels: economy, international, investments

People who are not familiar with Chinese customs may not fully understand the importance of the Chinese New Year, but it's a huge celebration, and one which is not limited to only China and its citizens. The Chinese New Year, also known as the Lunar New Year, is a huge holiday throughout most of eastern Asia and is growing in popularity throughout much of the world.

China has more people than any other country in the world. There is also a growing number of Chinese people throughout the rest of the world. The U.S. and Canada, for example, have large Chinese populations who celebrate Chinese New Year. Many other countries in eastern Asia also celebrate this holiday, even though they are not Chinese. So now comes the question you have been waiting for: how does this impact investors?

With the growing Chinese population, and the significance of the holiday, investors should be able to see that there will certainly be investment opportunities. The opportunities, however, will likely be had by those individuals who understand the Chinese culture and how things work. If you needed another reason to get to know the Chinese culture, here you go. I personally love learning about other cultures, so this type of thing is right up my ally. If you are like me and love to experience and understand new cultures, then why not head to the nearest Chinatown and celebrate the Chinese New Year? You might discover a great new investment opportunity, or you might just have a lot of fun–you can’t go wrong either way.

The Chinese economy is growing at an astounding pace, and has been for some time. It won’t be long until China emerges as the number two economy in the world, and they may even end up overtaking the U.S. for the number one spot sometime down the road. It is my belief that learning about new cultures is never a waste of time, but if you were only going to pick one culture to learn and understand in your lifetime, the Chinese culture would probably be the best one to choose from an investment perspective. The investment opportunities stemming from this country are only going to grow, so why not get in on the front side?

NuWire published an article today about investing in Chinese real estate and last year at this time, we wrote an article about the Golden Pig baby boom in Asia. That article will give a little insight into how important the animals associated with each New Year are.

Labels: international, investments, real estate

Today is Fat Tuesday, which is the English translation of the French Mardi Gras, which marks the final day of Carnival and the last day before the start of Lent. This celebration has a long history and is celebrated in many countries across the world. I’m sure you are wondering how exactly this impacts investors, so let's get to that.

Many people might not realize how huge Fat Tuesday is or how much money these celebrations bring to local economies in areas that celebrate them. The biggest Fat Tuesday celebration in the U.S., as most people are probably aware, happens in New Orleans. Each year on Fat Tuesday--and to a lesser extent the other days of Carnival--hundreds of thousands of tourists gather in New Orleans. Last year more than 800,000 people gathered in New Orleans for Fat Tuesday. It doesn’t take a genius to realize that anytime that many people gather in one spot, there is going to be opportunity for investors.

During this time, hotels in New Orleans run near full occupancy and many locals rent out their homes--or rooms in their homes--to travelers. In addition to lodging, partiers also buy a ton of food and little trinkets (namely beads), among other things, which also spurs the local economy and businesses.

While everyone knows about New Orleans, there are some lesser-known areas that investors might be able to get in on which will see Carnival profits that investors could get in on at lower prices. Real estate prices in New Orleans have dropped substantially because of the damage caused by Hurricane Katrina. Property prices in the French Quarter are still pretty steep, though. If you are set on New Orleans, there is the potential to benefit from Go Zone investment incentives. Some other places in the U.S. that have big Fat Tuesday celebrations are Mobile, Lafayette, and St. Louis. Mobile and Lafayette also qualify for the Go Zone incentives.

In addition to U.S. destinations, there are many international places that celebrate Carnival. The Carnival celebrations in Brazil, the biggest of which happens in Rio de Janeiro, are among the most famous. Another large celebration--lesser-known than that in Brazil--happens in Montevideo, Uruguay.

There are numerous other places across the U.S. and the world that celebrate the Carnival season, and with the celebration come investment opportunities. There is plenty of profit potential in business and real estate across the board. Not only that, but it is also a lot of fun to party, especially--for me, at least--in other countries. To get a chance to experience other cultures and celebrate with them is always a great experience. So next time you go to that Fat Tuesday party, keep your eye open for investment opportunities. If that party happens to be in another country, all the better.

Labels: international, investments, real estate

Thaksin Shinawatra was ousted as prime minister of Thailand by a military coup in 2006; Thailand subsequently lost a lot of foreign investor confidence. Now that Thailand has elected a new leader, one who desperately wants to revive foreign investment, how will the investment climate change?

The newly elected prime minister is Samak Sundaravej, an ally of Thaksin. If Samak is indeed able to get his new policies through, Thailand’s foreign investment climate should recover nicely--however that is a big "if." It will undoubtedly be hard for Thailand to regain investor confidence after the military coup, especially considering that a close ally of the ousted prime minister was elected. After all, what is to stop the military from doing the same thing over again?

Any time investors choose to invest in foreign countries, they face political risks. While it is likely to take some time for the new prime minister to regain the confidence of investors, this move is undoubtedly a step in the right direction. Any country being led by its military could make investors wary, so the mere fact that Thailand now has a prime minister will be a boost in and of itself.

In time, Thailand will likely regain the confidence and excitement foreign investors previously had for the country, but considering that Thailand is heavily dependent upon exports, and that the U.S. in particular is struggling economically, it could take some additional time for Thailand to see results. Thailand is an attractive country for tourists and investors alike, and the present time--while confidence is low--could prove to be a great time to buy.

Labels: international

From Bloomberg:

“Australia's dollar led gains against the yen yesterday among the 16 major currencies, rising 1.1 percent as investors returned to the so-called carry trade.

In these trades, investors get funds in a country with low borrowing costs and buy assets where interest rates are higher, earning the difference. The risk in this strategy is that exchange-rate swings erode gains from rate differentials.

The Bank of Japan's benchmark rate is 0.5 percent, the lowest among industrialized nations, compared with 11 percent in South Africa and 6.75 percent in Australia.”

From Daily FX:

“…with prices teetering on the edge of deflation, consumption remaining weak, labor market conditions deteriorating, and businesses reflecting some slowing, the BOJ would likely be doing more harm than good to the Japanese economy by raising rates from 0.50 percent.”

From Reuters:

“Fujii at Bank of America said the dollar and other currencies were likely to be underpinned against the yen by Japanese households and individuals investing winter bonuses in foreign assets in the next few weeks.

A variety of new funds have been launched this month to lure such cash looking for better returns than those available in Japan, where 10-year bond yields are just 1.5 percent and domestic stocks have underperformed other equity markets.”

Labels: international, investments

From the Houston Chronicle:

“The Bank of England cuts interest rates for the first time in two years by a quarter of a percentage point to 5.5 percent amid fears that the global credit crunch will significantly slow economic growth. The European Central Bank holds its rate steady at 4 percent as it waits for more data on the economic outlook.

THE SIGNS: Calls for a rate cut in Britain, despite rising inflation, were accelerated by surveys showing the country's decade-long house price boom is coming to an end and deteriorating consumer confidence. The ECB was under less pressure to move, despite surging inflation, because of relatively solid economic growth in the euro zone.”

From Forbes:

‘”Although output in the United Kingdom has expanded at a brisk pace for the past two years, there are now signs that growth has begun to slow,’ said the Bank of England.

Meanwhile, the European Central Bank said it would hold its key interest rate at 4.0% on Thursday, a move widely expected by economists after eurozone inflation showed no sign of easing last month.

‘The latest information has confirmed the existence of strong short-term upward pressure on inflation,’ said the ECB on Thursday. Monthly inflation estimates from the European Commission in November showed price increases hitting a six-year-high of 3.0%, up from 2.6% in October.”

From Guardian Unlimited:

“’The reappraisal of risk in financial markets is still evolving and is accompanied by continued uncertainty about the potential impact on the real economy,’ said Trichet. ‘We will therefore monitor very closely all developments by acting in a firm and timely manner.’

However, Trichet made clear the ECB was not dropping its guard on the danger of knock-on or ‘second round’ effects of high oil prices on broader inflation, despite the turmoil on financial markets.

‘We will ensure that second round effects and risks to price stability over the medium term do not materialise,’ he said.

The Bank of England cut interest rates by a quarter percentage point to 5.5 percent earlier on Thursday, while the Bank of Canada surprised markets with a similar cut on Wednesday. Economists expect another rate cut from the U.S. Federal Reserve on Dec. 11.”

Labels: economy, international