Saturday, June 05, 2021
Dear Your Overseas Dream Home Reader,
Welcome to your Weekly Wrap-Up!
Dogecoin Real Estate
There’s a joke about cryptocurrency that goes like this:
A boy asks his dad for $10 worth of bitcoin…
His dad responds: $9.67? What do you need with $10.32?
In other words, bitcoin is laughably volatile and thereby entirely impractical as an everyday currency.
I was reminded of the joke when reading about a recent real estate deal in Rhode Island.
The seller of a residential lot accepted an offer of 160,000 dogecoins—a cryptocurrency invented as a joke—worth a value of about $50,000 at the time.
By the time the contract was drawn up, the 160,000 dogecoins were worth $116,000—so the seller was up big on the deal.
Then, later that same night, the price took a tumble when Tesla CEO Elon Musk called the dogecoin a “hustle” while hosting Saturday Night Live.
As I write, 160,000 dogecoin is worth $58,961…but don’t be surprised if that number has changed by the time you read this.
It looks like crypto is here to stay in one form or another. And that means we’ll continue to see it play a role in real estate deals, at least while the market is riding high.
When I was scouting the Algarve last week my contact there mentioned he had had some queries about buying real estate with crypto.
If I owned any crypto I’d certainly be looking to parlay it into tangible, preferably incoming-earning, real estate.
Indeed, Portugal appears to be leading the charge when it comes to crypto acceptance. No doubt boosted by a favourable tax regime that’s popular among crypto investors.
In any case, Portugal is no stranger to innovation. In recent years, it’s been getting its act together and doing smart things…promoting a thriving entrepreneurial ecosystem…and incentivising the kinds of things that drive growth and create buying moments. Crypto is just its latest move.
Indeed, right now in Lisbon you can buy a two-bedroom apartment for 1,901,452 dogecoin, 19 bitcoin, 265 ethereum, or, if you’re a traditionalist, €580,000.
However, I wouldn’t put down your deposit just yet. You don’t need crypto to find volatility in Lisbon…
As you know, I’ve been calling a crash in Lisbon real estate for a while now.
Prices are far too high to be sustainable. And despite the global real estate boom, I see things unravelling there.
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Prices have been skyrocketing for over a decade due to a confluence of factors, including the Golden Visa; the abolishment of rent control and the ensuing building frenzy; gentrification; and ferocious tourism growth.
You have a lot of new supply. Supply that needs a flow of tourists and investors to keep it all moving. The tourists have stopped, for now. And things feel fragile to me, because it doesn’t make sense.
The Golden Visa money will dry up if the government follows through on its plans to make Lisbon ineligible. And already the Golden Visa set are starting to look beyond Lisbon—where their money will stretch much further.
In Portugal, we see markets at various states and stages. I’m bullish on the Algarve because it’s positioned to do extremely well from the accelerating trends we are seeing.
But Lisbon is punching above its weight. I can see why someone would pay €800,000 for an apartment in London or Paris, but Lisbon doesn’t have the same underlying fundamentals.
Salaries are extremely low. The minimum wage is about €700 a month. Even senior management aren’t going to afford a 700-square-foot apartment in middle of Lisbon selling for €800,000 with their salary.
There’s not enough to sustain the market as it is. and the pinch is coming.
The only question is when…
RETA members stay tuned. I’ll be discussing this in more detail in an Alert next week…
Crisis at the Office
From the first days of the COVID crisis it was obvious that the global response to was acting as a massive trend accelerator.
And it’s created big opportunities, whether your goal is to own a bargain dream-home in historic Europe for under $100,000 or build a sizeable portfolio of income-producing real estate…
In RETA, we’ve been tracking the massive growth of Work From Home…the rise of the rental…the proliferation of national programs to lure masses of mobile people…falling interest rates…and changing travel habits.
But one trend that’s been quietly gaining momentum in cities across the world is the repurposing of commercial space.
As with many trends sparked by COVID-19, the pandemic accelerated the rate of retail closures and a trend away from brick-and-mortar retail as consumers turned to e-commerce in greater numbers.
Likewise, the shift to Work From Home has left huge amounts of office space in prime locations vacant. Before Covid, less than 5% of Americans worked from home. Now one-third of workers are fully remote. The shift is permanent…a trend that’s just been sped up a few decades.
The question is what will happen to all the vacant space? And right now, the consensus seems to be moving towards adaptive reuse.
Just as the abandoned factories in New York’s Soho were transformed into artists’ lofts after the recessions of the 1970s and 1980s, we’re now seeing a new move towards repurposing empty office and retail space for housing, flexible workspaces, and entertainment businesses.
In cities like New York and San Francisco we’re seeing conversions of office and hotels to housing and short-term workstations for the newly remote workforce.
In London, developers are snapping up vacant retail and office sites in for apartment blocks and retirement villages.
Singapore is pushing a plan to redevelop old offices with new incentives for converting excess car park spaces into residences, restaurants, and indoor farms.
The South Korean government meanwhile, said it will add 114,000 homes for public housing within the next two years by buying empty hotels and offices and converting them into residences.
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Adaptive reuse isn’t a new concept. Walk through any city and you’ll see old industrial warehouses converted into trendy cafés, food halls, or art galleries. But what is new since the pandemic is the growing will among governing bodies to accelerate the process.
As I pointed out when I wrote about this phenomenon last October, this opportunity should only interest real estate investors if the roadblocks are removed: “Even if you can bank an undervalued commercial property in a great location, there are many regulatory bottlenecks to contend with. Zoning laws, legal regulations concerning conversions, and local objections all need to be ironed out.”
What we’ve seen since, is a concerted effort to open the floodgates. In California, for instance, state lawmakers are moving to pass new laws to get around zoning barriers. A bill that cleared the state Senate recently would let developers build houses on most commercial sites without changing the zoning.
Likewise in New York last month, a bill passed that would allow building owners sell their properties to the state to allow for the conversion to affordable housing.
Similar moves are being made by governing authorities in cities around the world…
To be clear, I don’t seem immediate actionable opportunities emerging from this trend for us yet. But it’s something I’m keeping a close eye on.
Rezoning changes have often played into the hands of RETA because we work with developers who sit on large land holdings, often waiting decades for the right moment to make their move.
Now, we’re entering a period where the rules are changing, and if they change in our favor, we’ll be ready…
Never Miss a RETA Deal
We are in the midst of a historic buying moment.
Around the world real estate markets are in a frenzy, yet uncertainty is everywhere. This is when it pays big time to be laser-focused, calm and steady.
Thanks to our group’s deep roots, insider connections and network we are getting incredible deals….RETA-only deals that are among the best we’ve had in the entire 13-year history of our group.
Buyers have been thin on the ground in most corners of the world because of travel restrictions. Amid the uncertainty, anxious developers are even more willing to meet our RETA requirements. We’ve leveraged all this into killer deals…and we’ve done it with our group buying power…
This year also we’re seeing RETA members take delivery of condos locked down in previous RETA-only deals. For example, if you missed this video I took when in Playa del Carmen recently I urge you check it out. It shows exactly what a finished (almost) RETA deal looks like…
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But you’re probably more interested in deals coming soon… Here’s a quick taste…
- There’s a project in the heart of the hottest area of Playa del Carmen— just a block from the beach. It’s perfect for rentals and I’ve secured RETA-only discounts in the range of $50,000 to $60,000…perhaps best of all, it’s pretty much move-in or rental ready. The location is perfect and it’s a stunning building with rooftop infinity pools and a luxury boutique vibe. Full details coming this weekend.
- We have a RETA-only deal at a one-of-a-kind marina community on the northern coast of Mexico’s Yucatan, It’s in a beach destination that’s long been a haven for wealthy Mexicans and sun-seeking expats. It’s firmly on a Path of Progress and best of all you’re just a short drive to the stunning colonial city of Merida.
- In Europe, I’m working on a new deal in Spain on the Costa del Sol. You might remember we had 50% off luxury condos there in August of last year. I’m using our group buying power to work on a similar incredible deal. These opportunities are growing scarce…this might be the last one.
- I’ve got new deals in the pipeline on the Algarve in Portugal, one of Europe’s premier vacation destinations. The first potential opportunity is an area totally new to RETA, on the edge of a historic town and close the beach. Looks like we’ll have an insanely low RETA-only price. Even better, foreign buyers can get mortgages in Portugal, starting from rates of just 0.5%. Leverage makes this deal even hotter.
- We’re back this year in Costa Rica’s idyllic Southern Zone where we have the chance to invest in ocean-view lots at discounts of $40,000 to $50,000. These properties are backed by the soaring Talamanca Mountains and surrounded by pristine, wildlife filled rainforest. In a region where developable land is scarce, properties like these tend to appreciate rapidly.
- And, a hot deal in Tulum, luxury condos starting under $200,000, but planned amenities like a rooftop infinity pool—with views across a national park to the Caribbean…free membership to my favorite beach club… Whether you want the Tulum lifestyle for yourself or supercharged rental income, there’s no community like it in town at any price point, let alone under $200,000.
And there’s the long-running search for the right deal in Cabo… we came so close last month but when my team’s due diligence turned up unexpected questions about water I called a halt. I need to be 100% comfortable to bring a deal to you. This happens. In fact, there are hundreds of deals that never make the cut. Water is a big issue in Cabo, which is why, when I do have the right deal it will be all the stronger. We need all the boxes ticked before we act.
This is precisely the reason I employ a team to help me rigorously look into every aspect of a prospective deal…
And many of that team, along with myself, are scouting—another critical step in the research.
I have guys going to France, Panama, Italy soon…I’ll be back in Ireland… I have more flash deals on the way from Nicaragua and Belize, too, and if they look like they stack up I’ll pass them on to you here in Real Estate Trend Alert.
Coming Wednesday, I’m bringing you an opportunity to ensure you are along for the ride…it’s a rare invitation. Make sure you check your email to get yours.
Wishing you good real estate investing,
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Ronan McMahon, Real Estate Trend Alert
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