Monthly Archives: July 2016

Channel Island Offshore Banking and Offshore Tax Haven

The Channel Islands are a group of British Isles consisting of the islands of Guernsey, Jersey, Alderney, Sark, Herm, Jethou, Brechou, and Lihou located in the English Channel west of Normandy.

Because of their location near both France and England, the official language is both English and French. Some of the more than 200,000 residents of the Islands also speak a patiois that is a blend of both.

One of the things that is not a blend of English and French culture is the official currency, with the British pound, which is divided into 100 pence, winning out. It has a conversion rate against the U.S. dollar of £ 1.00(GBP) = US$ 1.59

These islands are famous for their tax haven status and also their offshore banking for much of Western Europe. Their close proximity to the bigger nations and strong taxation and privacy laws make them a very attractive offshore banking and incorporating location. While finance makes up a large portion of the economy; it is also fueled by agriculture, including the growing of fruits, vegetables and the raising of dairy cattle. The tourism industry is also playing a large part in The Channel Islands growing economy.

Though they are close geographically to other European nations, the Islands are not part of the European Community. Heavily influenced by English Common Law, The Islands’ laws are a mixture of local legislation, customary law, and include legislation past in the UK.

People of the Channel Islands have full British Citizenship, but are not represented in the UK Parliament. Instead each Guernsey and Jersey have their own primary legislatures, with Chief Pleas in Sark and the States of Alderney.

Not all islanders are considered European citizens even though they receive full British citizenship. A passport printed with the words “British Islands”, “Bailiwick of Jersey” or “British Islands, Bailiwick of Guernsey” is issued to any British citizen who applies for it in the Channel Islands.

Real estate investors and those who have real estate trusts as part of their portfolios, are particularly fond of the Channel Islands. These types of investments are taxed at a far lower rate than they are in the UK.

Thanks to the low tax laws on estate trusts along with offshore banking connections to Britain and United Kingdom offered to individuals, and companies from other countries, they have instilled a certain amount of confidence in the security of making a private investment using their banking system. Add to that a legal system that many Westerners are more familiar with than that of Middle Eastern countries, the Channel Islands should be on everyone’s list as a offshore tax haven.

Looking to Invest? Try Romanian Real Estate!

Are you looking for a safe market to invest your money? It may not have crossed your mind, but the Romanian real estate market has shown a huge and stable growth of over 25 percent in the last 4 years. It could possibly be the best real estate investment opportunity in the world!

Here are 6 facts that show why the Romanian real estate market is perfect for investment:

1. From 2003 to 2007 there has been a constant growth of over 25% per year. Think about this: an apartment in the center of Bucharest in 2003 was worth about 30,000 dollars you will now buy it for over 130,000 dollars.

What caused this massive increase in price? This is when banks started to mortgage loans – people were able to put up as collateral the apartment or house they bought.

This opened up a lot of possibilities, as many buyers are young families with wages above medium but with no other significant possessions.

2. In the first day of 2007 Romania joined the European Union. This is a huge social and economic step for Romania, and will bring much sought after stability.

Although there has been funding from the European Union this will increase as efforts to bring the economy to western standards become more aggressive. This means that wages and general wealth will increase, allowing people to buy more.

3. Wages are increasing more and more: Romania has seen a constant increase in wages and a constant decrease in unemployment. Jobs are being created all the time

People will have more money to spend and like most Romanians they will prefer to actually invest in the comfort of a house rather than renting one or even buying a car.

4. With the integration into the European Union, more and more Romanians will have the opportunity to work abroad. In 2006 there were an estimate 2 million Romanians working abroad bringing 8 billion dollars back in the country.

Families are on a house buying and building trend that will only increase as more money enters the country!

5. In the near future banks are planning to lower the minimum income for a mortgage loan and, better yet, actually remove the need for a down payment which at this moment is between 30 and 40 percent depending on the debt level!

This will of course be a huge spur for buyers with lower income, giving them a fighting chance to buy bigger, better and more expensive houses.

6. There is a very big deficit of houses and apartments: estimates place the need for homes at about 1,600,000 and growing! The government unfortunately can’t handle the huge numbers of facilities that must be met, so the people that can afford it actually head towards building houses and villas.

The most luxurious apartments in Bucharest can go up to 500,000 dollars – an amount that will buy a pretty decent lot and actually build a two or even three story house in a residential neighbourhood. The result is almost always better than any apartment can provide.

One normal practice for investors is to buy a few thousand square feet in one of the expanding areas of the main cities, optionally build a house or a villa and resell the property at a later date. A small number of investors that don’t want to risk a lowering of prices actually sell right away making a profit of 10, 15 and sometimes even 20 percent.

Believe it or not, Romania’s real estate market is ripe for investment opportunities! Act now!

African Investment, The Next Big Thing, It’s All But Established

Investment into Africa as the next big thing seems to be all but established. But investment into property developments has been stop start, with some notable exceptions. Experts on the ground are expecting investment to pick up as Africa’s hunger for shopping malls and commercial office space continues to grow.

Many retailers that have set up operations in Africa have expressed that their expansion on the continent is being held back by the lack of suitable shopping malls. This begs the question that if there is such a strong demand for modern retail locations, why aren’t we seeing new malls being developed at a more rapid pace?

There are some worthy exceptions: South Africa’s Manto Investment Group is to construct a US$30 million shopping centre in Ndola, Zambia. Construction work is expected to commence after feasibility studies have been completed.

West property, Augur Investments and McCormick Property Development, are planning the building of a 68, 000sqm shopping mall in Zimbabwe located in Harare’s up market Borrowdale suburb. According to The Zimbabwean online (UK), this represents the biggest shopping mall in Africa, outside South Africa.

The Financial Mail reports that Resilient Property Income Fund Ltd plans to spend more than 1 billion rand building 10 shopping malls in Nigeria. The malls, 10,000 square meters and 15,000 square meters in size, will be built over the next three years in the capital, Abuja, and the city of Lagos respectively, the main commercial hubs. Shoprite, Africa’s largest food retailer, will be the major tenant. Bloomberg reports that Standard Bank Group Ltd, Africa’s biggest lender, and construction company Group Five Ltd. (GRF) are also partners in the deal.

Recently, emerging markets private equity firm Actis has been at the forefront of a number of Africa’s more high-profile property developments. The company is behind Nigeria’s arguably first modern shopping malls and has recently announced that it will invest in East Africa’s largest retail mall to be situated in Nairobi.

How we made it in Africa asked Kevin Teeroovengadum, a director for real estate at Actis why we aren’t seeing new malls being developed at a more rapid pace. Teeroovengadum believes there hasn’t been significant enough interest from international property developers to invest in sub-Saharan Africa. South African developers were focused on the local market due to the football World Cup, while European firms were concentrating on Europe and the Middle East. However, the recession in Europe has prompted some European real estate companies to look at Africa for growth opportunities. Post-2010 many South African property players have also turned their attention to the rest of the continent.

Something that players in the industry point out is that the development of shopping malls is time consuming. This referring to the red tape involved with dealing with multiple countries, different regulations and laws and political interference.

Teeroovengadum said. “But if I look at today, and compare it with five years ago, there are far more players involved in the real estate sector. We can really see that happening on the ground. I think if we fast-forward two or three years from now, you are going to see more shopping centres being built in places like Ghana, Nigeria and Kenya – the big economies. You are going to see a fast-tracking of property development happening in Africa.”

Africa south of the Sahara, not including South Africa, has a little in the way of the modern shopping mall experience. Most shoppers still have to frequent a variety of places for their shopping requirements.

However, there appears to be an inclination towards convenience where a variety of products can be found in one location. “Clearly we are seeing in all the markets where we have invested a type of evolution of people moving from informal to formal shopping centres.” Says Teeroovengadum.

One of the challenges continues to be access to funds for property developments in much of sub-Saharan Africa. With the exception of many of South African developments that are funded with up to 100% debt, the rest of the continent developers often need to put down around 50% in cash. Currently there are few banks that are willing to lend for 10 to 15 years. However it is reported that this is improving, as markets become stronger, local banks become stronger, and changes are occurring in markets like Ghana, Zambia and Nigeria in this regard.

Although Africa is drawing the attention of increasingly greater numbers of international investors, interest in the property sector remains relatively passive. On a macro level, more investors are looking to invest in Africa. Barely a week goes by that one doesn’t see an article about Africa, and its growth opportunities and increased foreign direct investment.

However when it comes to property it is a different situation says Teeroovengadum. He refers to the number of investors who made poor returns over the last decade due to the asset bubbles in the US, Europe and Middle East. They are very hesitant about investing more into property. Those who are willing are typically development finance institutions, those institutions that have long-term money for Africa. There are a couple of international pension funds who are looking at investing in Africa, but there are very few these days.

When the question was posed to Actis directors about how they decide which African countries to invest, in they replied that at a basic level they look for a ‘strong economy’ like Nigeria, Ghana Kenya, Uganda and Zambia. This indicates that these countries have good fundamentals, a large population, GDP growth and increasing GDP per capita etc. A Strong legal system was also referred to.

Africa wants shopping malls and companies like Resilient and Actis are gearing up to deliver.

Africa is not an island and is subject to the ebbs and flows of the world economy and its whims and fancies. Nevertheless for whatever reasons Africa is emerging as the next big thing in world investment and economic growth. But is the time right while the world is reeling from financial crisis upon financial crisis. Time will tell if those who were brave enough were foolish or wise.