The World’s Most Improbable Real Estate Booms

In 2010, reports of Somali pirates flooding Nairobi’s mid- to high-end real estate market began to emerge from the Horn of Africa.

Cash hoarding, these rogue investors are said to be turning illegally obtained ransoms into residential and commercial real estate in Nairobi’s bustling Eastleigh district. Property prices in Eastleigh – the longstanding center of Kenya’s Somali community – are reported to have doubled as around $100 million entered the market.

“They usually pay in cash, often bags full of dollars,” said Bernard Ochieng, of Crystal Valuers, a real estate company in Nairobi. He estimated that 20% of his customers at the time were Somali. “They buy condominiums and entire condominiums, usually investment property, and mostly between $400,000 and $1 million and $2 million.”

With the number of piracy attacks down two-thirds this year, according to Ochieng, Somali pirate trade has fallen by almost 50% since 2010. Either way, investments in Nairobi are symbolic of an emerging trend towards buying property in very unusual and unexpected locations around the world.

The driving forces behind the trend are as extensive as the buyers themselves. Some are turning illegal profits into tangible assets, some are nationals who want to invest in their safer areas, while others buy to support specialist interests, such as fly fishing and conservation.

Upper- and middle-class Mexicans in Texas’ tiny border towns are seeking shelter from the drug war raging in their homeland. Wealthy Venezuelans, who already have a second residency in New York or Miami, dramatically increased their presence in neighboring Aruba this year as President Hugo Chávez assumed a third term in office. .

Dubai, still recovering from its 2009 bankruptcy, has benefited this year from a 30% increase in the number of good buyers from Afghanistan eager to buy properties abroad as its country prepares for the withdrawal of US troops in 2014.

Elsewhere, from Scandinavia to southern Africa and lower Patagonia, wealthy buyers are converting savannahs or woodlands into individual sport and nature reserves.

Joachim Wrang-Widen, regional director for Europe, Middle East and Africa at Christie’s International Real Estate in London. “They crave a connection with their purchase, as if they were collecting vintage motor cars or fine wines,” he adds.

Whether experiencing a few sales or a small-scale “boom,” unusual markets can sometimes serve as a pointer to mainstream interest in international real estate. As immense global wealth and economic uncertainty go hand in hand, the remote nature of these markets is attractive to both illicit wealth and wealthy buyers, many of them prefer authenticity and exclusivity to luxury and high end.

Head to the town of Portobelo near the port of Colón in Panama. Away from the center with the skyscrapers of Panama City, Portobelo’s Conquistador history, Afro-Caribbean culture and rustic, unspoiled beauty are attracting buyers from Europe and Latin America.

Local developer Ulrich Schwark said: “There is always history wherever you go, adding that beachfront lots can still be found in Portobelo for around $20 per square foot. “There is no definite model yet, but buyers seem to prefer small plots of land to build houses or small farms.”

That number of buyers, Schwark says, is about 20 a year, and his company, the Two Oceans group, has been quietly advising more than a dozen buyers from Northern Europe and North America who have spent between $100,000 and $4 million la for properties in Portobelo.

Those numbers are sure to grow, however, when Two Oceans opened the first Kempinski resort in Latin America with 106 guest rooms and 75 luxury residences, in 2015. Portobelo is likely to be further eroded by the launch of a far larger residential resort, nearby Bala Beach, a new trans isthmus highway and the expansion of the Panama Canal completed in 2014 .

Much more expensive “edge” property markets – and beyond – are now growing in trout and fly-fishing destinations in Europe and South America. Located along the fjords of Norway, salmon fishing establishments, rare and infrequently brought to market, proved particularly attractive to wealthy, aristocratic Britons.

Øyvind Olstad, of Oslo-based real estate firm Regent Eiendomsmegling, said: “These are extremely hard to find and many are owned by their British counterparts or by other private individuals. usually in collective form.” Christie’s Wrang-Widen adds that properties of similar style are now starting to see buyer interest in Russia’s Kola Peninsula north of the Arctic Circle, which is also emerging as a Upscale tourist destination.

Meanwhile, in Patagonia, fly-fishing enthusiasts are buying secluded, riverside lodges of 100 hectares or more near the small town of San Martin de Los Andes, close to Buenos Aires. 1,000 miles to the west. According to Luis Bonsegnor, president of ReMind Group, the Buenos Aires branch of Christie’s is priced between $1 million and $8 million, while undeveloped land costs between $3,000 and $5,000 per hectare. Lago Bueno for $13 million.

“Most buyers come from Europe and the US,” says Bonsegnor. “The property always has its own water source and is close to the airport.”

In the US, where sales figures in “over-explored” markets like Miami and Manhattan are hitting all-time highs, a series of unremarkable towns in south Texas have posted unprecedented growth. doubt. Some of the buyers are middle- and upper-class Mexicans fleeing drug-related violence in neighboring border communities.

Local agent Rene Galvan of RGV Realty says most buy in safe, controlled developments like the Sharyland plantation near Mission village. And most pay just under $300,000 – modest by Manhattan or London standards but enough to boost the housing market in one of America’s most depressed areas.

“These people can certainly afford to spend more, but they don’t want to show off their wealth, they want to blend in,” says Galvan. “Lower-priced homes are also easier to sell if there’s demand.”

At the opposite extreme is Portugal, where the luxury property market has proven buoyant despite price drops of 4.5 to 15 percent in nearby Paris and Rome, according to the Global Cities Guide. in early November of Knight Frank.

Local dealers say Portugal’s resilience amid a three-year economic downturn is the result of choosing the right timing, smart planning and luck. Angolans and Brazilians – attracted by colonial and linguistic ties, and financed by oil and commodity-based wealth – became buyers throughout the Lisbon area. Tiago Queiroga, Sotheby’s Realty Portugal partner, says today they account for about 30-40% of Portugal’s luxury market.

Rafael Ascenso, managing director of real estate agency Porta da Frente, the branch of Christie’s in Lisbon, said: “At the highest level, property prices have only dropped by as much as 10%. However, even the most expensive properties in the Lisbon area, such as the Atlantic front homes in nearby Cascais and Estoril, are still a third of comparable property prices in most. Western European resorts, Ascenso adds. “We don’t over-build, we don’t raise prices, and we have links to these old colonial rich communities,” he said.

While it may not be enough to bail out the rest of the country’s economy, such prudence and modernity have made Portuguese assets an unexpected success story for the EU during the crisis. euro area crisis.

In addition to Portugal and Panama, east Africa and Argentina, Christie’s Wrang-Widen addresses both the Namibian wilderness, where conservation-minded buyers are creating private game reserves and mineral-rich Mongolia. real estate like other markets at the edge of conventional real estate consciousness. Other locations include Beirut, with a steady supply of Middle Eastern money and residential towers, and even agricultural areas in Ukraine.

“The majority of buyers today are still focused on the most mature markets,” says Wrang-Widen. “But for those willing to look beyond, property isn’t just about preserving wealth. These clients really have a different approach to using their real estate investments.”

While both Somali pirate attacks – and property purchases – have declined in East Africa, the investment boom of 2010 has clearly left its mark on Nairobi’s high-end property market.

As reported by Knight Frank in November, property prices in Nairobi have increased by almost 18% this year, making it one of the world’s best performing capitals. Ben Woodhams, chief executive officer of Knight Frank Kenya, attributes much of this spike to the reported $100 million that Kenyan expats send home each month. But, like Panama’s Portobelo – where the 17th-century pirate war first helped make the area rich – robbers and their bounty could still prove beneficial for less-populated locations. known.