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56: Sophisticated Investors Follow Value - property, oil/gas, ore and gems!


01-27-2006

PropertyInvesting.net

 

Visitors to PropertyInvesting.net spend their valuable time in search of value. This might be areas to increase their capital values in, or areas to increase cashflow. Disciplined investors view investment as a profession that drives them to have the following investor traits:

 

 

At PropertyInvesting.net, we give objective impartial advice based on analysis of economic fundamentals and trends. These analyses are based on thorough research into global macro socio-economic trends. It is not for the short term, but for the medium to long term – in a 2 to 10 year time frame.

 

Sophisticated investors need to know when to invest, when to hold and when to sell (re: "get their money off the table"). The timing depends on economic cycles, inflation trends, demographic movements and stock, property, commodity trends.

 

The following insights have been developed over the last year or so and are the outcome of following global trends and projected demographic forecasts.

 

China and India: It is PropertyInvesting.net’s belief that property investment in industrialising parts of China and India will see huge capital value increase in the next 10-15 years. In India, the population of over 1 billion will seeon have a middle class of 300 million people – in search of mid-up market property in good areas close to high-tech and manufacturing centres. Area such as Bangalore and Mumbai represent exciting areas, as does Shanghai and south coastal China.

 

Energy Play: Meanwhile, oil and gas prices are likely to rise further – this will transfer billions of dollars of wealth from non producing to producing countries. Countries will small populations but large oil and gas production and reserves will do particularly well – and hence property prices in such countries will likely rise robustly. These include:

 

Norway

Qatar

Libya

Saudi Arabia

Abu Dhabi / Dubai

Oman

Brunei

Equatorial Guinea

Angola

Russia

Kazakhstan

Azerbaijan 

Australia

 

Countries that will be hardest hit are those with no production, some old inefficient manufacturing plants (high power and labour costs) and/or countries with no good energy alternatives or natural resources –examples include:

 

Italy,

Greece

many African countries (Tanzania, Kenya)

many eastern European countries (e.g. Belarus, Moldova, Ukraine)

 

Countries that have huge natural resources like USA and Canada as well as China and to a lesser extent India would likely escape high oil prices if alternative such as coal, wood and renewables could be used.  Japan could escape because of its nuclear power and high tech innovation. These trends need to be considered when selecting a country to invest in. Ideally, it should be a politically stable country with booming energy sector and massively increasing population, with shortage of land – if it stays politically stable, then Qatar is a good example, as is Dubai and Abu Dhabi.

 

As alternative energy sources are developed which use corn oil, sugar cane, sugar beat and methanol / ethanol (substitutes for gasoline) – countries with huge expanses of farmland for agriculture will come back into their own. Examples include the Corn Belt of USA, the arable expanses of Ukraine, and the Canadian Prairies. Countries with heavy oil sands such as Canada and high quality coal such as USA (Wyoming) could also survive an energy crisis better than most (note: the USA has the biggest hydrocarbon resources in the world in barrels of oil “equivalent” – these are held in high grade Anthracite coal in NW USA (e.g. Green River area). So property investment close to these booming areas is also worth considering.

 

Finally, when there is an oil boom, this wealth will shift to the Middle East, Russia and some African countries – this creates a boom in gold and jewellery – something we can see the beginnings of now. Property investment in gold mining areas such as Mongolia, South Africa and Australia is worth considering. Essentially – as China and India have an ever increasing demand for raw materials – the countries that provide them will prosper. Other ore producing countries (Copper etc) are Peru and Chile.

 

So essentially, if one follows the new manufacturing centres of India and China (lowest cost efficient labour centre and new high tech / services centres) whilst also considering energy (oil, gas, coal, renewables) and commodity centres (gold, gems, copper, iron ore mining areas) – you will find a rich vein or wealth – something a property investor should always be interested in. A few countries shine out from the rest:

 

The PropertyInvesting team hope this article helps you - if you ave any comments, please contact us on  enquiries@propertyinvesting.net

    

 

 

 

 

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