Opportunities arise where chaos reigns!
To say that the mature markets are in a state of chaos is an understatement, with authorities fast-tracking bail-out plans, big names folding and a flurry of closed door secret meetings.
The struggling US bank bail-out is set to broaden its scope and will barely scratch the surface of the root problem. The figure of US$ 700bn seems to be chosen on the basis of what would pass congress rather than what is actually required. The US deficit will race to a record US$450bn 2008 and set to exceed US$600bn 2009 with some 10 000 new baby-boomer retirees every day in the US biting at social benefits.
In the UK closed door meetings with big banks are in progress and one could anticipate announcements soon. Pressure is mounting on the BoE to act as lending dries up and companies find it increasingly difficult to issue commercial paper, forcing them to draw on more expensive credit lines and thus placing additional stress on the financial system.
All these events are indicative of economies heading for recession and it will take a monumentous effort to slow down the juggernaut, let alone turn it around! The banking crisis, combined with the problems facing US investors, has presented foreign property investors with powerful opportunities but these should be thoroughly researched, preferably using expert knowledge in the market being considered.
We still feel the UK market to be the primary source of opportunity despite significant oversupply of property stock in certain sectors. We are also concluding some commercial property transactions in East Berlin using the outgoing Foreign Direct Investment allowance. We regard Eastern Europe as an emerging market, much like South Africa, where prospects are good for sustained growth.
So whilst stress levels are rising offshore, it is business as usual in South Africa, albeit with some serious politicking which passed by almost unnoticed globally. It is often easier to criticise than to complement but SA owes a great deal of respect to the treasury and finance department advisors for their incredible foresight. For sure there will be impact but SA will emerge relatively unscathed from the global credit crunch.
To end off, worth a mention is the tenacity of Neill Bernstein in securing the Trump organisation to invest in South Africa. Certainly with the global crises, we should be able to attract many more property investors to our safe property haven. Negative perception is something that only we (SA) can create and likewise only something we can change. We cannot sit back and expect investors to flock to our shores ... we need to do "The Bernstein Thing"... change the perception and show the opportunity.
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