Global Opportunities - Knight Frank Report

Global Opportunities report by Knight Frank - Residential Research

This is a short report that was published recently by Knight Frank, available for download free on their website.

Mainstream Markets - Overvalued or undervalued?
This graph caught my attention.  Knight Frank uses data (Price to rent ratio / Price to Income Ratio) and puts the mainstream OECD markets on a chart seen below.

Overvalued
Property markets on the left of the chart are over-valued, based on Knight Frank's definition.  The most over-valued market is Norway, followed by Canada, Belgium and then New Zealand.  The prices in those market are still rising.

Undervalued 
On the other extreme, Japan is the most undervalued, followed by Greece and Germany.  This is a very interesting observation.  Currently, quite a number of Singaporeans have started buying into Japan.

Property Market Cycles
This is another useful pie chart.  If you believe that property is in cycles, then this pie chart is worth a second look. Netherlands, France and Italy are bottoming.  However, if you look at the earlier chart, Knight Frank said that Netherlands and France were over-valued markets.

So, what do we make of this?  Do we buy into an over-valued market that is bottoming out?  Interesting to ponder.  Perhaps we should buy into Germany.  It is a rising market yet undervalued.  Any good deals there?

The second part of the short report looks at second home acquisition.  Given that Knight Frank's business is to sell properties, we should take this with a pinch of salt.   They claim that more people are now interested in buying a second home.  What is this second home that Knight Frank is talking about?

European Second Home
Look at the typical locations for a 2nd home in Europe.  Very interesting.  Evian!  Fancy a home there? It is a high-market holiday resort and spa town, on the shores of Lake Geneva.  The G8 Summit was also held there before.

Royal Hotel, Evian, Host of 2003 G8 Summit

Dining Room, Hotel Royal, Evian

What about Gascony, France?  Prices dropped 45% and are now rising.  The chart below shows destinations for second home in Europe.  Well, I am not expert in this market, so read it for what it's worth. Some of the prices have dropped a lot since 2008.

Caribbean Second Home
Another market for second homes would be in the Caribbean.  Again, I have no clue what these markets are, just read for what it is worth.

Imagine owning a holiday home in St James, Barbados.  Oh well, we can keep dreaming.

Would a holiday home in Barbados be a good investment?

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Happy Investing!