In simplistic terms property markets in oil producing nations, especially in the Middle East, are currently riding high, enjoying a construction boom. With Goldman Sachs forecasting $200-a-barrel oil over the next six to 24 months, OPEC, Russia, and Norway are going to be the winners in the global markets.
A prime example is Dubai where short term investments in off-plan property are proving profitable with prices for re-sales rising dramatically. Finished property is also a popular investment as rental yields are high, currently rising at 20%.
But nations that import oil are feeling the squeeze. Those like the UK and the US lose less than others. For example the UK's oil imports are less than 1% of GDP. But many European countries are in a worse situation. In Spain where the property market has slumped even more and where estate agents and developers are in crisis, energy imports are over 3% of GDP.
Fairing even worse are countries like Greece and Italy who are big importers of energy and also rely on tourism for a large part of their GDP.
The housing market is like a mirror of people's fears. It is a weathervane for the public mood. According to Karen Ward, chief UK economist at HSBC, the longer the property slowdown goes on the more dangerous the situation for the wider economy.
Oil has changed the property investment landscape by narrowing the potential pool of investors, making investors more aware of risk. It is the small investors who stand back first. General opinion is that potential second home or buy-to-let buyers are playing a wait and see game as they regard property as perhaps too risky or can't find the finance.
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'For many potential buyers the purchase of an overseas property is a very big step that can be fraught with anxiety,' said Ray Woods, director of a Malta property consultancy. 'The current publicity has certainly frightened many potential buyers away from overseas property. This is a shame as their opportunity to fulfill their aspirations may come and go.'
But it is not just the smaller investors who are frightened off. Major pension plans and high networth individuals are not putting their money into property right now according to Tony Key, professor of real estate economics at Cass Business School in London.
'Oil rich nations in the Middle East and Russia are getting richer. Traditionally property has been a good hedge against inflation but not now. Large investors like pension funds and high net worth individuals are putting their money into cash or gold,' he said.
So what are they doing with it and why are they not taking the chances to invest when prices are falling? According to Richard Barkham, research director at the Grosvenor Group, they will wait until the markets bottom out. 'OPEC countries are putting their vast wealth into cash or gold. They are not going to invest when the market is collapsing, they will wait for it to reach the bottom,' he said.
In such troubled economic times it is uncertain which markets will be the winners and which the losers. According to economists countries with growing oil exports should have property prices that are either stable or rising. But those who import oil not only have falling property markets, but also rising inflation, the worst situation, that many experts believe can only lead to recession.
The very latest research from the Grosvenor Group shows that the USA, UK, and the Euro zone all have weakening growth. China and Canada have moderate growth.
Professor Key believes the most promising market at present is Russia. 'Russia has a lot of energy reserves. But even this market will have to slow down at some point,' he said. 'Some money is going into Asia, especially China, India and Vietnam because the view is that these emerging economies will slow down at a slower rate than those in the West.'
Russia is also a winner at present according to Richard Barkham, along with Canada and Australia. 'Countries with good resources will do better,' he said.
Even for booming markets like Dubai and China there are doubts. 'Middle East countries with economies purely based on oil and construction probably have about three to five years,' predicted Richard Barkham. 'So in the short term they are still a good investment.'
He believes there is a huge question mark over what is likely to happen in Asia. 'In China GDP is growing in real terms at 11% per annum. Interest rates are around 6%, so there is an incentive to invest at the moment,' he said. 'But this kind of boom can end up with a mis-alignment and something has to eventually give.'
Already in Dubai there are concerns that the property market is a bubble waiting to burst, especially in the off-plan sector. Construction prices are rising, as are labour costs. Some projects have been cancelled this year and there are concerns about over supply when a large number of developments are completed in coming years.
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Mohammed Nimer, chief executive officer of MAG Group Property Development, believes prices are too high in Dubai right now. He believes that actual homeowners currently account for just 30% of the properties sold at launch as real estate sales are still being dominated by short-term investors and not end-users.
'The result is inflated prices, since units are sold-on with a premium numerous times prior to completion. The construction boom in buildings is about to peak in 2009, with three billion dollars worth of real estate either on the drawing board or under construction. From there, the value of the market will fall back to 2007 levels of around one billion dollars as more units are delivered. That will hopefully subdue rising market prices,' he said.
There are similar concerns about Morocco where the government is pouring vast amounts of money into promoting the country as a tourist destination and construction and labour costs are rising. However, experts predict that its proximity to Europe and also the building of one of Europe's biggest ports near Tangier will bring money into the economy from sources other than tourism.
Potential losers include many of the Eastern European emerging markets where a large chunk of their economies rely on tourism and visitors arriving by plane. As oil prices continue to increase fewer people are likely to travel by plane, visitors numbers will drop and investors rental yields will fall.
But even more established tourist destinations will suffer. 'Italy and Greece, for example, rely on tourism and service industries, have less competitive labour markets and high levels of Government debt,' said Dr Alex Michealides of the London School of Economics.
Perhaps the final word must come from the Grosvenor Group. 'The chances of a global recession are very high. It's time for investors to focus on the long term (10 years plus) or get out of real estate,' concluded Richard Barkham.