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Off the Grid

7/14/2014

Photo Credit morguefile.com

Observations by Martin Armstrong on Global Real Estate

"The high end has been bought by Europeans and Chinese trying to get off the grid."

Edited & bulleted from July 12, 2014 armstrongeconomics.com

U.S. real estate market remains very diverse.
U.S. high end bought by Europeans and Chinese trying to get off the grid.
Chinese biggest buyers on price of U.S. real estate.
Canadian biggest buyers on quantity of U.S. real estate.
Prospects of bail-ins coming in Canada.
Texas & Florida property cannot be seized even in a court judgment.
Hawaii topping the list of U.S. price advances.
Europe's real boom was clearly in London real estate.
Germany’s house price rises slowing, yet are still positive.
South German house prices are extremely cheap.
Germany’s overall house price index slowed for 7th consecutive month at April 2014 after the September 2013 high.
Lithuania’s demand for, and new construction of, property is recovering gradually as its economy has produced growth.
Copenhagen and Denmark experiencing a real estate boom as prices rise and may soon surpass pre-financial crisis levels.
Armenia’s property market recovering gradually following several years of falling house prices and now being driven by the inflow of wealthy Armenians from Russia and ethnic Armenians from Syria trying to escape political turmoil.
Chinese average prices of new homes in 100 major cities fell 0.3% M/M (April-May 2014); the first decline since June 2012.
China’s share markets peaked in 2007 and the bulk of domestic capital moved into real estate causing a great worry that banks would soon be overstretched with bad loans to developers as many projects were left vacant.
Shanghai has a (low) supply problem. Demand keeps rising sustaining prices at high levels.
China-style housing bubble is concerning.
China's weaker real estate market means less cement being poured and less copper being purchased and that impacts the commodity prices in the West, which have declined.
China's real estate market is similar to the land boom in the 1830's USA more than the 2007 bubble created entirely by bankers.
Macau’s property prices continued to dramatically surge even after double-digit annual prices rises in recent years.
Macau residential property prices skyrocketed about 50% Y/Y in 2013.
Myanmar’s property prices and rents have surged with new government allowances since 2011 and from a sharp increase in overseas investors and persistent land and building shortages.
South Korea’s house prices are rising after more than a year of falling house prices and a 2014 recovery of robust economic growth.
Singapore’s house prices now starting to fall from the problem of hunting expats by Europe and American governments despite a reasonable rate of economic growth.
Malaysian house prices continue to rise even following anti-speculation measures.

Bulls and Whales

6/30/2014

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Stealth Money
Taxation & Invisibility

Nadeem Walayat has been calling for bull markets in the U.K. and U.S. housing for quite a few years pinning his argument to:

"...an exponential inflation mega-trend which is the primary consequences of perpetual money and debt printing monetization programmes that the government is engaged in, in an attempt to buy votes through high deficit spending, an inflation trend that asset prices are leveraged to and oscillate around..."

I think real estate prices are zooming in London for another reason: TAXATION. Martin Armstrong makes the observation that:

Unlike the USA, Britain does not tax worldwide income. The rich have flocked to London by the boat and plane load and this is driving property prices way up and you see more high end cars everywhere – many with Arab plates.

The French “rich” have left France and many moved to London. Yet this is still just a tiny fraction of the trend. Since you do not pay taxes just to live there on your earnings outside of Britain, they can live in London effectively tax free ON THAT FOREIGN income.

And in the U.S. it's Corporate Law that provides INVISIBILITY as New York Magazine's Andrew Rice observes: "Manhattan Condos Are The New Swiss Bank Accounts For The World's Super-Rich"

Behind a New York City deed, there may be a Delaware LLC, which may be managed by a shell company in the British Virgin Islands, which may be owned by a trust in the Isle of Man, which may have a bank account in Liechtenstein managed by the private banker in Geneva. The true owner behind the structure might be known only to the banker. “It will be in some file, but not necessarily a computer file,” says Markus Meinzer, a senior analyst at the nonprofit Tax Justice Network. “It could be a black book.” If an investor wants to sell the property, he doesn’t have to transfer the deed—an act that would create a public paper trail. He can just shift ownership of the holding company.