Real Estate Investing

So we’ve discussed the flourishing real estate markets of Mexico and Canada. In other international real estate news, one story may come as a bit of a surprise to many — the Baghdad real estate market is heating up. In fact, many Iraqis are trying to find homes, but are unsuccessful because the demand so far outweighs the supply. Amidst the rubble of a war-torn city, it seems a new type of war is emerging — a bidding war. According to the Los Angeles Times:

“Lured by news of decreased violence, thousands of displaced Iraqis returning to Baghdad’s safer neighborhoods are fueling a bit of a real estate frenzy. Last year, home prices plummeted and rents dropped as Iraqis left town in search of more stability. But now, some say it’s almost impossible to find a place to live with sales prices doubling in certain neighborhoods and the most affordable homes being snatched up as soon as they’re placed on the market.”

In Baghdad, homes are more expensive than in America, but the average middle-class income is considerably lower. The article cites a 750-square-foot home in a lower-middle class neighborhood as going for $150,000, whereas a “typical middle-class income” is listed as $400 per month. These numbers don’t quite seem to add up, and makes one wonder whether Iraqis will soon be dealing with something like the American foreclosure epidemic.

The Iraqi culture is inclined to save up money for purchases. However, this is not as feasible an option nowadays, the article points out. Many Iraqis undersold in the recent past to quickly escape the escalating terrorist attacks. They scored quick cash for their escape and are now returning with all their money gone.

Take, for example, the plight of former military officer Alla Mussa, 38, who recently returned from Egypt with his wife to find a home in their native country. According to the L.A. Times:

“To buy a home, he sold his land in a middle-class neighborhood for $41,000, hoping he could put the money toward a home. He has saved an extra $17,000, but even that’s not enough. ‘Maybe if I sell my car, I can get an extra $5,000,’ he said. ‘With my wife, I am roaming, searching for my house, but the supply is low. I have very few choices.’”

Some of the home qualities Iraqis are seeking parallel the concerns of American home seekers, like a safe neighborhood. In fact, to maintain affordability, many Iraqis are trading square footage in exchange for neighborhood safety. Other desirable housing qualities, like bullet-proof glass, are quite different from what most Americans would value. At any rate, while there are still certain neighborhoods of Baghdad that are not safe at all, the bigger picture of a healthier real estate market may be a good sign that the country is getting on its feet.

 

Well, it’s nice to see that our neighbors are prospering. Even though the U.S. housing market isn’t doing terrible, per se, the markets of Canada and Mexico are absolutely flourishing!

 According to The Real Estate Bloggers, Mexico is seeing a boost in its market because of several factors, including new lending rules and a shortage of 6 million homes. By and large, Mexicans do not finance their homes, although new Mexican president Felipe Calderon has set a goal of 10 million new mortgages by the year 2010. Still, most Mexicans currently inherit their homes, build them by hand or buy them with cash. The falling interest rates and other factors are expected to drive the number of Mexican mortgage lendees higher than the current six percent.

“The trend could even slow immigration from Mexico by generating millions in jobs and personal savings as a fresh supply of loans gives many their first chance to own a house,” the Associated Press reports.

In Canada, meanwhile, the natives are comfortably immune to the much-publicized American real estate nosedive of late 2007. In fact, last year proved the strongest year ever for Canadian real estate. The Bank of Canada recently issued an interest rate cut, and average home price in 2007 reached as high as $307,265, an 11-percent increase over the previous year. Average home price in the fourth quarter of 2007 saw an even larger year-to-date increase at 12.1 percent. According to the Canadian Real Estate Association, summing up the nation’s real estate activity in 2007:

“There were 520,747 homes sold, a 7.6% increase from 2006. The previous record was set in 2005. Sales for 2007 marked the first time 500,0000 homes sold in one year. Activity also represented the largest year-over-year percentage increase since 2002.”

Ann Bosley, president of CREA, said lower interest rates will help keep housing affordable in light of price increases in the seller’s market. However, consumer confidence could be swayed by the U.S. real estate scene, thus affecting the Canadian market, Bosley said. Maybe instead, with such prosperous real estate markets so close by, the American market will be boosted through something like an osmosis effect.

The real estate market in India is hot. So hot, in fact, that Kroger may be jumping on board. That’s right, the Ohio-based $66 billion U.S. grocery store giant is in talks with Indian realty companies to create joint ventures on some commercial projects. According to India’s Economic Times, Kroger reps have already met with three or four of India’s most prominent real estate development companies.

The move would be more profitable for Kroger than merely entering the retail market, and it would also create familiarity with the Indian culture should Kroger decide to enter the retail market down the road. Furthermore, if that time comes, Kroger will be better positioned to secure the commercial placement that has eluded other retailers. In fact, many retailers have shelved their plans to expand into India because there simply isn’t enough good property available currently. For an outsider looking in, Kroger’s interest in Indian real estate seems oddly random, though it could prove very strategic and beneficial.