Dominos

Dominos
The domino theory is at work twice in the international real estate business. The classic domino theory (as used to justify Viet Nam) is a bunch of dominos standing up. One gets pushed down and the rest are knocked down in order. That theory is being demonstrated right now as the rest of the world reacts to the recession (there, I said it) in the USA. As the stock market here palpitates and makes waves around the world, investors must be finding good old dull real estate more and more attractive. The worldwide commercial real estate market is still strong. http://www.nnnex.com/news/
The game of dominos we played as kids is a little different. Do people still play dominos? The numbers on the dominos have to be matched up end to end. This is similar to international real estate investing. The currency trends need to be matched to the yield and risk rates of the property itself. There are actually two possible matches for each set of numbers, depending on the investors perspective.
When one economy has a strengthing trend against the other, currency profits can be made in addition to the real estate profits. The converse is also true. If the currency of the target market weakens against the home country of the investor the losses can wipe out any profits from the investment.
Currency differences also make bargain opportunities. People in the Americas bought European properties when the Euro was worth $.83. They did very well. Now Europeans are buying American properties and taking advantage of the strong Euro and the strong Pound Sterling. The jury is still out on how well they will do. Anyone for a game of dominos?
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com