1. BrazilThe Brazilian property market has got a lot going for it. The country is attracting a lot of inward investment, has one of the world’s fastest growing economies, a rapidly emerging mortgage market, a general shortage of quality homes, and has been selected to host the 2014 football World Cup and 2016 Olympic Games. This will lead to the construction of new and improved infrastructures and homes across Brazil.Property investors from around the world are flocking to Brazilian shores with a view to snapping up real estate, in anticipation of future capital growth.One local expect projects Brazilian property prices could appreciate by up to 200% over the next decade, driven by the country’s burgeoning economy, and the pending introduction of mortgages to overseas nationals.Investment banking firm Goldman Sachs believes that Brazil’s economic growth could outstrip that of the other BRIC (Brazil, Russia, India and China) member nations over the next few years.Brazil’s economy is widely expected to become the fifth largest in the world by the time the Olympic Games kicks off in 2016, and yet Brazil property and land prices still remain a fraction of those found in more developed nations.The Brazilian president Luiz Inacio Lula da Silva has already pledged to spend up to £11.5bn on building a million new homes in Brazil between now and 2011.However, potential high property investment rewards are not with out their risks, as crime and corruption still remains widespread in Brazil.2. FranceIn stark contrast to the relatively high risk, high return nature of investing in Brazil, the risks associated with investing in French property are far lower.France has traditionally always been a rather safe haven for property investors. The nation was the first European country to come out of recession in 2009, reflecting the fact that the global credit crunch had much less of an impact, compared to other European counterparts.France’s strong economy is having a positive impact on its property market, which now appears to be on the road to recovery.Increasing property and mortgage transactions are boosting residential values, with the latest FNAIM data revealing that the average price of a French property appreciated by 2.8% between April and September 2009.Although average prices remain down 7.8% year-on-year, the market is generally expected to improve further, due to France’s prudent attitude to mortgage lending.Anyone taking out a mortgage in France is generally only permitted to borrow one third of their total gross monthly income. This has ensured that mortgages remain readily available, with 100% loan-to-value home loans available at competitive borrowing rates.Consequently, mortgage lending in France is soaring. French mortgage broker Athena Mortgages reports that there was a 21% rise in mortgage enquiries in Q3 2009 compared with the previous quarter.The buy-to-let and leaseback sectors are reportedly attracting particular interest from investors, due to improved yields across the country.The capital city of Paris has long been identified as one of the most attractive European cities for investment, and is typically the most popular place to buy a home in France, along with Cannes, Marseille and Nice, which are all located along the southern Mediterranean coast.3. USAThe USA property market may be showing tentative signs of improvement, following one of the worst economic and property crashes in living memory, but the downturn has come at a cost to many US homeowners.Data from RealtyTrac shows that a record high of 938,000 US homes foreclosed in the third quarter of 2009. If this trend continues, foreclosures would reach around 3.5m by the end of 2009, up from around 2.3m properties last year.Properties in Nevada had the highest foreclosures rates in Q3, followed by homes in Arizona, California, Florida, Idaho, Utah, Georgia, Michigan, Colorado and Illinois.
Rising unemployment levels – currently at a 26-year high of 9.8% – was cited as the main reason for the increase in foreclosure levels. Yet, there may be worst to come, as the unemployment rate is not expected to peak until mid-2010.Unfortunately, one person’s misfortune is another’s gain. With around 7m properties currently in the foreclosure process, compared with 1.3m for the same period in 2005, predatory investors are buying up distressed, abandoned and repossessed homes at bargain-basement prices, as now appears to be the ideal time to fill your boots.Although the sub-prime mortgage crisis started in the USA, there are growing signs that the property market may now be at or near the bottom of the cyclical downturn. Various indices reveal that average residential prices started to rise, albeit marginally, during the second quarter of 2009.4. NorwaySales in Norway have nosedived over the past year or so, as residential values have cooled.However, the Norwegian property market downturn, which has not been anywhere near as severe as in other neighbouring countries, appears to have already bottomed out, and looks ready to lead the Scandinavian property market recovery.The key to the Norwegian property market is the strength of the country’s economy, which has made it one of the wealthiest in the world, while new housing output has dropped below average, which could fall short of demand next year.Norway is rich in both gas and oil and this helps to support the country’s economy and ensure that its currency also stays strong – both alluring to property investors.The country’s population is estimated to increase by 23% – approximately one million people – over the next 40 years, which should make sure that long-term residential demand is robust.Another positive is the fact that unemployment is extremely low – approximately 3% – compared to its European counterparts.Almost half of the Norwegian population resides in the counties of Oslo, Rogaland, Akershus and Hordaland, and so this is where property investors should focus their attentions. Property prices in these places remain relatively cheap compared to wages in Norway.5. SwitzerlandMany of the high earners currently living in Britain look set to quit the UK in droves ahead of the introduction of a 50% top tax rate in April 2010, and escape to more tax-friendly shores, such as Switzerland.The Swiss authorities are actively lobbying to attract many of these disillusioned high-net worth individuals, who are being tempted by assurances that they will be allowed to steer clear of European Union regulation and Britain’s Financial Services Authority.It is estimated that hedge funds managing in the region of £10 billion in assets have already moved to Switzerland in the past year alone. This has increased demand for homes to rent and buy.Due to canton restrictions, it has previously been difficult for foreigners to buy property in Switzerland. However, the country has now eased its strict property buying regulations, and opened its doors to more international buyers, partly through the introduction of ‘residence de tourisme’ style investments, which is similar to the ever-popular ‘leaseback’ formula in France.Switzerland, one of the richest nations in the world, is of course a tax haven.
Anyone who sets up permanent residency in Switzerland would be entitled to take advantage of the country’s favourable tax law, including the lump sum taxation, which charges a levy based on people’s lifestyle and spending habits.Given that one’s taxable income is charged at just five times their annual rent or rental value of their property, and the fact that assets outside Switzerland remain tax-free, should ensure demand for Swiss properties – to rent and buy – remains strong for years to come.Historically, Swiss property values have typically appreciated in line with inflation. Properties located at the top end of the market, in cantons like Valais and Vaud, have reportedly increased by up to 20% in the past year.6. AustraliaThe Australian economic and property market recovery has been swifter than the other leading nations around the world.It has been claimed that the revival in the country’s property market and economy is as much as 12 months ahead of the other developed countries in the economic cycle.Unemployment peaked in September 2009, in stark contrast to Britain and the USA, while increasing commodity demand from China has forced the Australian Central Bank to raise benchmark interest rates. Yet this has failed to cool strong residential demand, which coupled with a general housing shortage, is forcing property values higher.The latest Australian Bureau of Statistics house price index shows that the average price of a residential property in Australia appreciated by 4.2% in the third quarter of 2009, which means that in the year to September, residential prices increased 6.2%.Australia could be set for a residential property price boom over the next few years, as the country’s economy continues to show genuine signs of recovery.A recent Australia property report projected that average residential prices in nearly all capital cities would increase by between 11% and 19% by 2012, with the greatest property price rises expected to be recorded in Sydney, Adelaide and Melbourne.7. MalaysiaI tipped Malaysia to be the number one place to invest in property in 2009, due to the country’s robust property ownership laws, lack of capital gains tax and attractive mortgage rates.However, residential sales were sluggish during the early half of the year, as the market struggled as a direct consequence of the global credit crunch, while there are some political uncertainties emerging.But with consumer sentiment improving, the recent positive market recovery, supported by the construction of new residential schemes across the country, should continue in 2010.While property prices race ahead across much of Asia – in countries like China, Vietnam and Singapore – which has led to heightened fears of budding property bubbles, the Malaysian property market has merely stabilised, making it suited to more balanced investors.With an extremely young and well-educated population, long-term demand for property in Malaysia looks set to grow.Domestically, an increasing number of people are moving from the countryside into the larger cities, while internationally Malaysia looks set to cross a demographic landmark of huge social and economic importance.Malaysia’s population is growing by around 2%, or an extra 500,000 people, every year. The World Bank projects the country’s population will grow annually by 1% until 2050, which will place further pent-up demand on property values.Malaysia’s property prices are still lower than they were in 1997, due partly to the Asian financial crisis in the late 1990′s, suggesting very real room for growth.8. Abu DhabiThe recent property price falls in the fast growing UAE capital of Abu Dhabi, the richest and largest of all the seven UAE states, have been nowhere near as severe as in neighbouring Dubai.The tax-efficient emirate has the largest fossil fuel reserve in the UAE, is the fourth biggest natural gas producer in the world, has the world’s highest income per capita, is home to almost all of the Arabic Fortune 500 companies, and is currently sitting on over 88 billion barrels of proven oil reserves.Yet Abu Dhabi is now actively trying to reduce its reliance on oil, and is diversify its economy into the financial services and tourism sectors. Billions of pounds have been allocated for infrastructure projects and the development of residential, leisure and cultural schemes across the oil-rich emirate. The plans are truly remarkable.Nevertheless, investors seeking out bargain deals will find some of the best opportunities for distressed property investments in the Gulf region in Abu Dhabi.The recent slowdown in the property market means that just 45,000 are anticipated to be completed in the capital in the next four years, augmenting the exiting housing shortage.The supply of housing stock remains scant, partly because Abu Dhabi is not part of a community master-plan like those pioneered by Emaar and Nakheel in Dubai.The housing shortfall in the capital is expected to stand at around 15,000 homes next year, which could mean that property prices and rents are forced up, while residential demand – domestic and international – is expected to increase.Because Abu Dhabi does not have the same high level of exposure to the global financial crisis, compared with other UAE emirates, mortgages for non-residents – at up to 75% loan-to-value – are readily available again. This is likely to appeal to buy-to-let investors, as well as those people seeking equity release and to remortgage their properties in Abu Dhabi.9. OmanThe relaxed Arabian state of Oman, voted ‘destination of the year 2008′ by Vogue magazine, has long been a popular holidaying destination for people living within the GCC.With a population of around 2.3m, Oman is being modernised and liberalised culturally and economically by hereditary Sultan, Qaboos Bin Said Al-Said, a forward-thinking leader.Sultan Qaboos strategy for economic growth – Vision 2020 – aims to diversify Oman’s economic dependency on oil, and focus on other industries, such as property and tourism.Demand for property in Oman is primarily being driven by the Sultan’s decision to introduce legislation in 2004 – ratified in 2006 – permitting foreigners to buy freehold property and land in designated tourist areas, most notably Muscat. These projects are referred to as Integrated Tourism Complexes (ITC). Furthermore, foreign homeowners can now apply for residency visas.A number of luxurious developments are being erected across Oman including, The Chedi, Azaiba, Wadi Kabi, The Wave, Barr Al Jissah Residences, Jebel Sifah, Salalah Beach, The Malkai, Muscat Hills, Al Madina A’Zarqa, Jebel Sifah, and Salalah Beach.The fact that Oman appeals to end-users – not just investors – means that the medium to long-term prospect for Omani property market growth looks good.10. South AfricaSouth African property market conditions look ripe for investment, as the country starts to come out of recession. Recent property price falls appear to be bottoming out, while FIFA’s 2010 football World Cup fast approaches.From the moment world football’s governing body, FIFA, awarded South Africa the rights to host the World Cup in 2010, shrewd property investors from around the globe have been looking on with great interest, with one eye firmly on cashing in on the sport’s popularity.The first ever FIFA World Cup to be hosted on African soil has the potential to be the biggest sporting event of all time.The tournament is expected to attract around 350,000 football fans for a month of football mayhem, starting on 11 June 2010, which is tipped to contribute around £1.5bn to South Africa’s gross domestic product and generate another £500m in government taxes.South Africa property prices haven softened over the past year or so, due to a fall in residential demand, caused by reduced housing affordability, higher inflation and interest rates.But residential prices could soon experience growth, on the back of what should be a reinvigorated economy, spurred by the football tournament.While the odds may be stacked up against the South African football winning the World Cup in 2010, it is not too far fetched to assume that the country’s housing market could prove to be the real winner of the tournament, generating significant returns for property investors in the process.
Top 10 Overseas Property Investments in 2010
Alternative Financing Vs. Venture Capital: Which Option Is Best for Boosting Working Capital?
There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.
In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.
But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.
Different Types of Financing
One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.
Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.
But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.
Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.
Alternative Financing Solutions
But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:
1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.
2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.
3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.
In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:
It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.
A Precious Commodity
Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).
Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.
Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?
Payday Advance – Looking at Both Sides of the Coin
The guy who invented the concept of “payday advance” was either a genius, or a product of the saying: “Necessity breeds invention”.Whoever he was, it’s a pretty great idea. Theoretically, if you find yourself strapped for cash between paydays, all you have to do is go online and find the nearest payday advance company in your area, for example, if you’re living in Ontario, then you’d be well-assured that there are many companies offering payday a in Ontario, whether it’s on-site on the loaning premises, or even online. Once you’ve given them your information, you’re pretty much in the money, if you excuse the pun.Now, doesn’t that sound so great? One minute, you’re up to your elbows in debt, or you’re tearing your hair out worrying about where you’re going to get some extra cash, then less than a couple of hours later, you’re walking out of your bank or loaning company premises, with a big grin on your face and a wad of cash in your hands.Hold your horses though! Like everything else, payday advances, especially online ones, do have their pros and cons. For the sake of argument, both sides will be presented here:ProsFast – In less than an hour, you’ll be approved and have cash on hand.Easy – All you have to do is send some basic information, and wait for them to assess you.Safe – No more dreading whether or not some mugger is waiting for you once you have the cash in hand such as when you leave the loan premises, which are less safe than at the bank.Minimal Paperwork – Online payday advance companies will require very little to no paperwork from you, unlike other companies that requires faxing your information to them, then waiting for them to manually check each piece of information given to them.No Time and Geographical Restrictions – Since many companies use online checking systems, you can virtually send your information to them anytime, anywhere.Impersonal, yet Service-Oriented – Since it’s online, you’ll still deal with professionals, but you’ll also be avoiding those awkward moments that you encounter if you’re going to borrow money from family or friends.However, there are also a few cons that come along with this deal, so stop and take a while to consider these things.ConsHigher interest rates – Of course, you always have to keep in mind that this IS a business, after all. The company will still charge you higher interest rates than if you get a loan from friends or family, who most likely will not charge any interest at all.Scams – This is the biggest danger that you face in doing business with online payday advance companies. There are so many out there that will just get your sensitive information such as identity and credit card information, and use them, or worse, sell them on the black market. Suddenly, you get a bill for a cruise to the Bahamas you never went on, or a down payment for a car you never bought. So be careful!Can only solve short-term problems – Remember, higher interest rates will result in much higher bills over time. So if your money problems are recurring, or long-term, don’t use online payday loans over and over again.In the end, it will still be up to you whether or not using payday loans is right for you. Be sure to go over all the pros and cons, and think about your individual situation, and you’re sure to make the most sound financial decision you can make.Money Loans Company – Payday Loans and Cash Advance
20 Eglinton Ave. East
Toronto, Ontario, Canada
M4P 1A9