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Peter Cooper is the editor and publisher of the ArabianMoney Investment Newsletter and website. He was formerly a partner in, sold in a private equity deal in 1996. His book 'Opportunity Dubai: Making a Fortune in the Middle East' was a best seller, and his latest... More
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  • Best places in the world to buy real estate for long term price rises! 0 comments
    Aug 16, 2010 3:18 AM

     This article is an analysis of the real estate chapter in the recently published book ‘Supertrends’ by Danish futurologist and entrepreneur Lars Tvede. He is looking beyond the short term fluctuations of the economy, or the real estate cycle itself, and a decade or more into the future.

    His main contention is that societal supertrends favor real estate as an investment class. The world’s population will grow by two billion within 40 years and these folk have to live somewhere. Over the same time frame he predicts a wealth explosion, up 200 to 300 per cent in developed markets and 400 to 600 per cent in what today are emerging markets.


    Massive urbanization will result. This has been a trend over the centuries after all. Between 2010 and 2050 some 100 million new urban residents will have to be accomodated every year, mainly in low cost units. India and China will see the biggest urban expansions.

    Then again as the rich countries get richer the demand for second homes will mushroom. The best locations are going to be in short supply and the price will go up. Land is not a commodity that can be manufactured, unless you think of Dubai and its famous palm islands.

    And once the Chinese reach the level of affluence that leads to the buying of second homes that will unleash a powerful buying wave. If five per cent of 1.3 billion Chinese want holiday homes that is 65 million units, not the 650,000 suggested by Mr Tvede – he seems to have got his millions and billions muddled up.

    Preferred locations

    For where to buy real estate you should consider access to transport, low taxes, the rule of law and natural resources, and where people want to work. The Mobile Wealthy Residency Index rated destinations by 11 factors important to rich people and came up with the following list in 2009: Switzerland, London, Singapore, New York, Hong Kong, Jersey, Cayman Islands, Isle of Man, Monaco, Dubai and Guernsey in that order.

    Buying property in one of these preferred locations ought to be a better investment than elsewhere. Mr Tvede sums up his approach: ‘You don’t want to invest in real estate located in an area that is going nowhere, you don’t want to buy at inflated prices and you don’t want to buy close to the peak of a property cycle’.

    He advises buying in a recession, and possibly buying real estate company equities as an alternative to outright ownership which can be an onerous commitment. It’s a jumble of thoughts about the future of real estate but there is a lot of insight and wisdom here.

    Those Chinese real estate tours to Dubai are not just taking in the sights, they are looking at the sites.

    Disclosure: Villa in Dubai
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