Reckon Aussie real estate is Tough ? Try Somalia …

Over the last 24 months I haven’t stopped hearing about how tough the Australian real estate sector is these days - with interest rates up by 1-2%, property values stagnating, no finance for projects and a lack of new stock for development.

But, it’s really just whinging when you look at what’s happening elsewhere in the world.

For instance, in Somalia where the internal warfare for power over the last few years has resulted in some major real estate sector impacts like –

• more than 1.5 million people (out a 9.0 million population) have been forced to leave their homes
• over 51,000 people have adandoned their homes in the capital, Mogadishu, because of bombing and violence
• most displaced people have to live in makeshift camps in the safer rural areas
• there aren't too many buyers for real estate where the violence exists (that's a tough selling market !)
• the safer areas are controlled by rebel groups (and I'd call that a seller's market ...)

But despite that some property developers are thriving, making money and providing for the housing needs to many.

The Wall Street Journal has a short article on this phenomenon (here) which explains that developers  -

• are buying people’s abandoned homes in cities like Mogadishu for 20%02% of their former values in the hope of refurbishing them and re-selling them when the war ends
• are doing deals with rebel groups to develop forested and rural areas to build new housing
• importing building materisls and contract workers to build new housing
• building affordable housing at different price points for families and others who need somewhere new to live

It’s really amazing what’s going on and for once  (at least) I think it’s time to thank the developers for helping people with their housing needs when no-one else can.   

And, so what if they make a profit ?

See you in a war zone real estate market.

Francesco …