Why property is still a sound investment

30 August 2010

Last week I was lucky enough to visit an Egyptian resort on the Red Sea, and concluded that the whole town was a triumph of pure force of will over seemingly impossible natural conditions.

The location officially receives zero annual rainfall and where tourism has not touched it, the area as inhospitable as it can get - dusty, dry desert as far as the eye can see.

That hasn’t stopped huge development and a drive into the desert reveals isolated hotels and apartment blocks that speculators presumably hope will one day be engulfed by the growing town and become prime locations.

Growth continues with cranes everywhere this in a relatively impoverished country with effectively infinite land resource if you are prepared to build infrastructure. Contrast this with the UK where land and housing are limited and precious resource.

It quickly becomes clear why over the long term property prices inexorably rise in the UK and remain a good investment for both private individuals and for businesses associated with the sector in the medium to long term.

Remaining with a global theme, Hong Kong could reasonably be considered an extreme version of the UK scenario - a tiny island with rapid population growth, to the point that the pollution forecast comes before the weather forecast on television.

Result?Some of the most expensive and rapidly rising real estate in the world. Who needs a crystal ball?