THE GLOBAL REAL ESTATE SPECULATOR There are several ways you can build your wealth by using global real estate. In some cases, the property is just so cheap that it will have to rise in price -- furnishing nice tax-free compounding of your investment. In other instances, there are special angles that will allow you to get overseas property FREE. Real estate bargains in Bulgaria If you ask a Bulgarian, he may tell you it is already too late to make a killing in Bulgarian real estate. To a Bulgarian, real estate prices have already skyrocketed out of control there. In the town of Razlog, for example, two studio apartments are for sale. A year ago, they would have sold for 20,000 levs; today, they are on the market for 200,000 levs. A one-bedroom apartment in the Mladost residential area of Sofia, the country's capital, is on the market for 400,000 levs -- 10 times what it would have sold for a year ago. In dollars, however, those apartments can be had for $10,000 and $21,000, respectively. Bargains are not the only reason to consider investing in Bulgarian real estate. This little country, situated on the Black Sea, is well-positioned to benefit from the dramatic changes taking place throughout Eastern Europe as a whole. And unlike Yugoslavia, for example, it does not suffer from internal strife. You may, however, have some trouble finding the property in the first place. Not a lot of people in the country are interested in selling. City apartments make up most of the current market. Once you've purchased real estate in Bulgaria, too, you must decide what to do with it. You probably will want to rent it out, in order to keep money coming in on your investment. Your best option is to rent to a foreign company for hard currency. But this is easier said than done because the competition for hard currency is strong. It's much easier to rent in the local currency, the lev, and try to convert your levs to hard currency. Bear in mind that the lev will probably continue to fall against the dollar for some time. Still, privatization of state-owned properties, such as restaurants, farms, and hotels, will keep the bargains coming. As of this writing, the Trade and Foreign Investment acts have not yet been passed by Bulgaria's Grand National Assembly -- but when they are, these new laws will provide additional foreign investment opportunities. Soon you will be able to own a luxury downtown apartment, purchase a seaside villa, or own a chalet in the mountains -- all for peanuts in dollar terms. And in a few years, real estate prices may indeed be skyrocketing, not only in the eyes of the Bulgarian people, but in the eyes of the world as well. Farming around the world In a world of struggling real estate markets, farmland can still be a good buy. For example, a 100- year-old vineyard in Hungary costs less than $40,000. And an acre of farm land in Costa Rica can cost as little as $110. Belize may be an unlikely choice for anyone interested in becoming a farmer. But it offers a climate that is well-suited to agricultural enterprises. And Belize farm land, among the least expensive in the world, goes for about $200 per acre. The best buys in Chile are cattle ranches. Villarrica is a 48-hectare ranch near the Lake of Villarrica selling for $42,650. Also on the market is a ranch called Temuco, which includes 125 hectares and a house in good condition, all for $79,412. For more information on cattle ranches in Chile, contact Tattersall Propiedades, Isidora Goyenechea 3162, Santiago, Chile; tel. (56-2)233-3243. Costa Rica offers one of the world's best deals in farm and ranch land. About 43 miles east of San Jose is a 2,514-acre ranch with a river at one end and the main highway on the other. The property includes houses, farm buildings, and corrals, and there is connected electricity. The price is $278,000 -- about $110 per acre. For more information on Costa Rican properties, contact Robert A. Wasson, American Realty, SA, Apdo. 2310, 1000 San Jose, Costa Rica; tel. (506)230-328. A good starting point is a report, Costa Rica: A Tax & Retirement Haven for Americans, available for $13 postpaid from Eden Press, P. O. Box 8410, Fountain Valley CA 92728, or request their free catalog. The focus of the Eden report is more economic than lifestyle, which of course is a total delight in Costa Rica. Profiting from perestroika as an entrepreneur Despite the chaos and turmoil in the former Soviet Union, the tide of market-oriented reforms can neither be arrested nor reversed. Expectations of a better life, once kindled, cannot be easily extinguished. For courageous entrepreneurs, the opportunities in former Communist countries are as immense as the countries themselves. But so are the difficulties. Because of years of state-controlled prices, nobody knows what anything really costs. In many cases, that leads to incredible bargains. In Riga, for example, two diners can enjoy a five-course meal (with champagne and dessert) in a first-class restaurant for 500 rubles (tip included). Among the hundreds of people willing to change money on the street, a dollar is good for up to 400 to 450 rubles. So at the black-market rate, that first- class meal cost about $1 per person. Other incredible bargains abound. For example, there are beautiful properties along the Baltic coast. In a country where private property is a brand-new concept, the transfer of the use of a beach house from one party to another involves a transaction of surreal and Byzantine complexity. Nonetheless, such transactions do occur. And, as far as we can discern, these transactions take place at ruble equivalent prices between $7,500 and $20,000 -- assuming, of course, the black-market exchange rate. Look at the Baltic coast on a map. To the north is Finland and to the southwest, Germany -- both of which boast some of the most expensive real estate in Europe. Once private property is established and markets are open to the world, today's $7,500 beach house could easily be worth $750,000. That doesn't include your ability to rent it each season for up to $5,000. To have a shot at this 100:1 profit opportunity, however, you will need a local partner to execute the transaction. He will also have to thread his way through the formidable and often conflicting rules and regulations. Once the transaction is successful, he will have to arrange for maintenance and repair -- no mean feat in a country where hardware stores do not exist and, until recently, repairmen all worked for some state bureaucracy. Because of the low purchase price, such property would bring an enormous return on equity if you rented it to foreign visitors. For example, you could advertise in Western Europe, and accept payments and make bookings from an office in North America. In this way, you would earn hard-currency profits, while most of your expenses would be in soft-currency, and depreciating, rubles. For an international entrepreneur, this is the best of all possible worlds. Travel to Russia and the Baltics is rapidly on the rise. Since the collapse of the Communist party, tourism has really taken off. You can cash in on the profits -- while helping the Baltics achieve economic prosperity. And even if you never get a chance to realize that 100:1 profit, you would still have a year-round vacation home at a fraction of the cost of a time-share apartment anywhere in the world. If you have children, you can easily spend more than $7,500 on a single European family vacation. With such a property, you could spend summers on the Baltic almost free -- and for as many years as you like. And you may achieve a degree of international attention, because you'd likely be one of the first Americans to pull this off. A tale of three cities: St. Petersburg, Kiev, and Rostov-on-Don A recent Russian decree allowed Russian citizens the right to own and buy real estate. The decree allows tenants to buy up the freehold of the apartments they inhabit. Initially it was planned that people pay a price reflecting the value of the property. However, in the absence of an established real estate market, the assessment of values became problematic. Under the present arrangement, the government charges 20% of the discounted material, labor, and construction costs of a home or apartment. The situation, however, remains complicated and very confused. And we think that the establishment of a real estate market that helps to regulate values and prices will take years. Nonetheless, real estate advertisements are now appearing in the New York-based Russian-language daily Novoe Russkoe Slovo. For example, a recent issue contained ads for condominiums for sale in different republics of the former Soviet Union. One is a three-bedroom apartment in St. Petersburg. The building boasts luxuries such as an elevator and a common garden. Formerly the property of a cooperative, the asking price is $7,000. For $3,000 you can become the owner of a two-room apartment with kitchen and bath. It is located in central Kiev. Given that it is such a bargain, you probably won't mind the walk up to the fourth floor. If this price is still too high, try the studio apartment with kitchen and bath currently advertised in Rostov-on-Don. It goes for $1,500. There is a catch. The owners advertising these apartments are Russians who intend to emigrate to the United States. And while the individual republics are establishing independent legal and economic systems, a wave of protective localism and nationalism permeates the reform process. Local rules in St. Petersburg, for example, a city well-known for its particularly anti-Communist administration, prohibit the sale of property to non- St. Petersburg residents. This means that not even a Muscovite Russian is allowed to purchase property. Kiev and Rostov are more liberal, although the properties can only be sold to Ukrainian or Russian citizens, respectively. Furthermore, no financing is available. But with prices as low as $1,500, there seems to be hardly any need for it. And it's possible that, once private property is established, apartments in premium neighborhoods could appreciate as much as 1,000%. That means you could have real estate worth as much as $250,000 or more from a nominal investment. For a subscription to Novoe Russkoe Slovo, contact the paper at 518 Eighth Ave., New York, NY 10018; (212)564-8544 or (212)564-8545. How to double your money in Hungarian property Tired of hearing about the dismal real estate market in North America? If so, you will be glad to know that in many other countries, the market for property is rising. Indeed, the Hungarian real estate market is not only up but has all the markings of a good old-fashioned boom. Unlike other East European countries, where the economy is falling apart, Hungary is already well on its way to making the transition to a capitalist economy. No longer a matter of conjecture, the free market in Hungarian real estate is well-established -- and new participants are joining each day. Prices, while no longer dirt cheap, remain considerably below those in neighboring Austria. What's more, prices will no doubt rise to near Austrian levels some time within the next five years. This makes Hungarian real estate one of the lowest-risk speculations anywhere in Eastern Europe. In fact, the procedure for buying Hungarian real estate has become so simple that once you find a property, actually purchasing it has become a matter of routine paperwork. Since October 1990, foreigners have been permitted to own 100% of Hungarian companies, which in turn can own real estate, both commercial and residential. Though they are still formally called joint ventures, such companies need have nothing joint about them. Furthermore, setting up one has become a simple, painless proposition. Income from rental property may be freely repatriated along with capital gains whenever you decide to sell. With ownership this easy, it is really not surprising that the market has begun to heat up. With both prices and liquidity steadily rising, a number of brokers have already set up shop. One, Buda Haz Interproperty BT, 63 Carlton Hill, London NW8 OEN, England; tel. (44-71)624-0869; fax (44-71)372-2397, for example, has been in business since August 1990. The firm handles the full gamut of real estate transactions in Hungary and maintains listings on a variety of properties. Prices are usually quoted in pounds sterling. With a separate office in Budapest (IV. Xziv u.50, Budapest 1063, Hungary; tel (36-1)147-5776), it serves clients both in Budapest and abroad. Indeed, a fairly large support network for Westerners interested in investing in Hungary has begun to develop in the capital. And as more Western companies have made Budapest the headquarters of their Hungarian and East European operations, arriving executives have spurred on the already robust demand for housing. These new arrivals serve not only as potential buyers for flats and houses, but also as renters for properties owned by other Westerners. This makes Budapest, with its notorious shortage of housing, even more of a sellers' market. Indeed, Buda Haz predicts hard currency prices will double in five years. Of course, real estate companies have a vested interest in forecasting higher prices -- no matter what country they're in. In the case of Hungary, however, we regard Buda's predictions as only mildly over- optimistic. Another attractive aspect of the Hungarian real estate market is that Western anti-capitalist notions, such as rent control, have not shown signs of catching on in the formerly socialist East. As of this writing, Buda Haz has on its books a number of promising listings in all price ranges. Do you hunger for some peace and quiet, and moreover, enjoy good wine? How about a three-level house with a mansard roof in the Tokaj foothills -- not far from the source of the famous Tokaj wine? Best of all, the asking price is only the pound sterling equivalent of $28,000. Perhaps you'd prefer to be in Budapest. How about a 1,200-square-foot apartment in the heart of Budapest's prime ninth district, very close to the city center? This is a place to live in, or to rent. Complete with central heating and a telephone (difficult to find in Hungary) and located in a turn- of-the-century building, the apartment has an asking price that is the equivalent of about $90,000. Most of the flats and houses currently available belong to Hungarians who purchased them from local municipal authorities. Larger estates -- including some castles -- may also come on the market. Here, however, you may have to negotiate directly with the state. And when dealing with a foreign bureaucracy, you'll find that a realtor can be of invaluable assistance. For example, Buda Haz is currently negotiating with the local authorities on behalf of a client for a small castle about 100 kilometers south of Budapest along the Danube, not far from the airport. What's more, the price is only $90,000 -- well under the median price of a home in North America. If you're looking for development projects, you may want to consider buying a larger, hotel-sized castle or sporting estate. Here, the government's preference has been to structure a joint venture whereby it retains an interest in the property -- which, typically, it would like to see developed. Often, such deals will stipulate the purchase price as well as the money necessary to develop the property. The former becomes the government's equity stake, the latter the stake of the foreign investor. To reduce the purchase price in forints, some investors engage in the common, though officially frowned-upon practice of coupling the official transaction in forints with an unofficial one in hard currency taking place abroad. By reducing the official purchase price this way, however, an investor incurs greater tax liability upon sale. Of course, by repeating the same thing at sale time, that investor could reduce tax liability accordingly. Similarly, many rentals, particularly those to Westerners, are conducted in hard-currency terms. It is actually legal to charge rent in hard currency when letting to a foreign entity, such as an agent located in London. If you want hard-currency income from local residents, one common arrangement is simply to make an off-the-books cash deal with your tenant. As you would in any real estate market, make sure that the title to any property you buy is clear and uncontested. In the case of smaller properties bought from Hungarians who previously purchased the properties from the state, title is easy to establish. With larger properties, greater uncertainties may arise, as prerevolutionary owners may yet come forth to claim their former property. A second caveat is the chance of a currency devaluation in the future. However, such an event would have little effect on real estate values as measured in hard-currency terms. One final difficulty with investing in Hungary is that, because of the country's high rate of inflation, mortgages bear extremely high rates of interest. Thus, most investors have secured their financing abroad. All told, while some caveats exist, investing in Hungarian real estate is probably one of the best ways to participate in the rebirth of Eastern Europe -- and a potentially highly profitable one as well. While the idea of owning property in Hungary, Latvia, Ukraine, or Russia may seem pretty far-fetched, we have discussed the possibilities here for two reasons. First, purchasing property in the former East bloc represents a good illustration of the need to think more broadly and a bit unconventionally to find the best profit possibilities. You will never get rich by doing what everyone else is doing. Few people, relatively speaking, do get rich. Thus, in order for you to get rich, you must be one of the few, not one of the many. There is no guarantee that buying property in Minsk or Kiev will make you rich. But by so doing, at least you are beginning to think (and act) in a way that could make you rich. Second, property in these troubled and confused areas of the world is priced so cheaply that you could get it free. Just look at the numbers. Let's say you buy an apartment in St. Petersburg for $20,000, using a home equity line on your existing home as a source of financing...at 10% interest. The interest is deductible, so the out-of-pocket expense of the money is only about 6%...or about $100 per month. For all the turmoil, St. Petersburg is still one of the great cities of the world. It was the home of the Czars and is the site of the Winter Palace and the incredible art collection at the Hermitage. There are a lot of Americans (and others) who want to visit St. Petersburg for business or pleasure. And they don't have a lot of choices about where to stay. It would be a fairly easy matter...especially with the right partner...to fix up your new apartment to an appropriate level and rent it out to these visitors. You might be able to charge as much as $2,000 per month -- which would still be a big savings compared with staying a month in a local hotel. Thus, if you rented your place for just the four months of summer, you'd gross enough to pay the mortgage for nearly six years! Or to look at it another way, you'd be earning an annual gross yield of about 40% on your investment. And you'd still have the use of the apartment for eight months of the year...not to mention the capital appreciation. How to get a free home in the South of France...or almost anywhere else you want to go The secret of this angle is arbitraging the difference between local and international rental rates. Today, thousands of Americans travel overseas for weeks, months, even years. Likewise, thousands of foreigners -- Dutch, Swedish, English, Chinese, and Indian -- travel too. Typically, overseas business and vacation travelers pay much higher rental prices than locals. You have only to contact an agency to find the truth of this. In the South of France, for example, an especially attractive spot for visitors, it can cost a lot of money to rent a cottage. But as a friend of ours discovered recently, not much of that money ends up in the hands of the landlord. Our friend paid $4,000 to rent a cottage. While there, he made friends with the landlord, a British man who lived in the chateau nearby. The landlord only received $1,500 of the rent our friend paid. The rest went to middle men. Cottages in that region of France sell for about $100,000. So, here's the obvious angle. Buy the cottage and use your American connections to rent it out. The local French landowner doesn't know how to reach American renters. Usually, he can't even speak English. You have a terrific advantage. All you have to do is to run ads in specialized travel magazines...in your local newspaper...or in international travel and lifestyle publications. Here is how the numbers work. You pay $100,000 for the cottage. Just to keep it simple, borrow the money from your local bank...maybe using a home equity line on your U.S. dwelling. You might have to pay about $12,000 a year to pay off that loan. But look, if you can rent the cottage for just three months of the year at $4,000 per month -- you've done it. You've got the cottage free. Plus, you have free use of it nine months of the year. Or perhaps you could rent it for another couple of months and make a profit of $8,000. Or maybe you'd rather lower the rent to get a more steady tenant...and be content to acquire the property FREE over the period of the mortgage. We have used the example of a cottage in France. But it could be almost anywhere you'd want to go. Because if you would like to travel somewhere, chances are, others would, too. The only hitch is that the place must have a two-tiered rental market that you can take advantage of. In top, prime resort areas, the local rental rates and the international rental rates tend to run together. In that case, you'll be lucky to get enough in rentals to cover the mortgage. But in many, many places...you will be doing your fellow Americans a big service by letting them rent your overseas property at two to three times the going local rate. Mexico: A major boom is in progress If the forces of migration and demography create pockets of real estate opportunity in the United States -- where property prices are in an overall decline -- imagine what they can do in other countries where the overall economic outlook is far more favorable. One of the areas of the world where this is the case is Latin America. Mexico has been called the South Korea of Latin America. President Salinas' free-market reforms have transformed the country from an economist's nightmare into an economic powerhouse within a matter of years. As a result of deregulation, privatization, and tax-rate reduction, Mexican inflation and interest rates have been falling steadily. The favorable economic climate and the pioneer spirit of the new Mexico have attracted foreign investors like never before. In 1991 alone, Mexico enjoyed a foreign capital inflow of more than US$15 billion. For real estate investors, Mexico not only offers an unspoiled environment with thousands of miles of beautiful beaches and tropical vegetation but also boasts a cost of living that is substantially below that of any Western industrialized country. Many Mexicans who have been living in the U.S. for decades are now investing their money in Mexican properties and businesses. Investors also are moving to Mexico, anticipating a real estate boom of epic proportions. This boom will be fueled by two demographic developments. One involves new internal patterns of migration. The majority of Mexico's middle class lost most of their wealth during the early 1980s. This means that today the workplace and the availability of work is the determining factor of where a family will live or move. Mexico's industry is still concentrated in densely populated (and notoriously polluted) metropolitan areas, such as Mexico City. However, President Salinas' policy of economic decentralization and the electronic revolution in the workplace are powerful arguments for a new demographic trend whose force has only begun to appear. In the next 10 to 15 years, a migrational pattern will unfold that will be very much like the U.S. migration from the cities into the suburbs in the 1950s and 1960s. Young, prosperous Mexicans (like North America's so-called yuppies) who are now employed in the cities, will increasingly move to the surrounding rural areas. This movement will follow the large traffic arteries, such as the new highways currently being constructed. An example of this trend will be the new route between Mexico City and Acapulco. Centers of suburban development will include areas around Monterrey, Nuevo Leon, particularly in scenic Cividad Mt. Aleman. Cities in the vicinity of Mexico City, such as Puebla, Jalapa, or Veracruz, will also become focal points of the new trend. Additional demand for Mexican real estate will come from north of the border, as prosperous members of the U.S. baby boom generation reach retirement age. But not only foreign retirees will drive up property values in scenic Mexico. Increasingly, professionals will take advantage of the "electronic commute" option. This implies relocating to a low- cost, semirural environment while connecting to a remote office through modems, interactive television environments, and computers. Westerners will head for unspoiled regions in Baja California, where they will increasingly encounter young Mexicans engaged in trade and commerce along the California border. Particularly La Paz, currently a small town of 20,000, will attract Mexican yuppies and retiring boomers alike. The town has all the trappings of a coming property magnet, including an excellent hospital, a university, and unlimited access to the maritime paradise of the Sea of Cortez. Other ideal locations will be in the state of Jalisco, near Lake Chapala, the country's largest lake. Guadalajara and Ajijic in particular will attract sun- hungry Americans with a taste for rural living with quick access to modern amenities and entertainment. On the Mexican High Plateau, San Miguel de Allende provides a haven for seekers of arts and culture. Article 27 of the 1917 Mexican Constitution decrees that no foreigner may be registered as the owner of real estate within the "forbidden zone." This zone consists of a 30-mile-wide strip of land along the Mexican coastlines and 50 miles along the U.S. and Guatemala/Belize borders. Unfortunately, it includes the favorite beach cities of North American and European holiday takers, such as Puerto Vallerta, Ixtapa, Acapulco, Cancun, and the entire Baja Peninsula. From 1917 to 1972, the only way to hold property in this zone was to put it in the name of a Mexican citizen. This was risky business, as the gringo investor was dependent entirely on the good will and honesty of his Mexican business partner -- who could take over the property legally at any time and kick his ex- partner out of the country. But U.S. tourist dollars soon became too important for the Mexican economy. Mexico no longer could afford scaring off potential real estate investors and retirees by the prospects of fraud and legal hassles. In 1972, The Ley de Fideicomiso, or Trust Law, was established. The title to the land could now be held by a Mexican bank for a foreign buyer who was then named beneficiary under the trust. Under this trust agreement, the beneficiary has full control of the property for 30 years. Subject only to local zoning laws, the foreign owner can build on his property, modify it, and develop it. Commercial use includes subdividing, renting, leasing, and even selling at any time. This situation is nearly as good as having direct ownership. To find out more about your own Mexican real estate option, contact Mrs. Linda Neil, c/o International Real Estate, The Settlement Company, 3451 Greer Road, Palo Alto, CA 94303 USA; tel. (415) 857- 9259; fax (415) 852-9649, or Zaragoza y Guerrero, San Jose del Cabo, BCS Mexico 23400; tel. (52-684) 22006; fax (52-684) 22016. Mrs. Neil's firm can help you locate a suitable property and handles services such as closing, title searches, tax payments, permits, prorations, and authorizations, as well as supervision of registrations and recordings. The company also has access to a new on-line multiple listings database of more than 400 individual properties. It takes care of applications for master trusts and permits, as well as marketing studies and programs. A variety of business opportunities are also available in Mexico, and Mexican law has recently been changed to allow foreign franchises to open. A number of major shopping malls are under construction, so this type of retailing is expected to boom. Tourism-related franchises, in such fields as hotels and car rentals are particularly likely to succeed, since this will be the first time that names with world recognition can be used in Mexico. A good starting point for information on business opportunities and franchising in Mexico is The Mexican Opportunities Report, available for $18 postpaid from Eden Press, P. O. Box 8410, Fountain Valley CA 92728, or request their free catalog. The report covers the nature of the Mexican market, foreign investment regulations, tourism, franchise opportunities, the maquiladora program, and specifics about NAFTA. Boomtown abandon: cashing in on China's hothouse property market In most places around the world -- North America, Europe, Australia and Japan, for example -- property prices are either falling or barely holding stable. But in the special economic zones of Southern China, real estate prices have more than doubled in the last year. In a moment, we'll show you how to get in on some of the action. But first, let's examine two of the forces driving Chinese property prices through the roof. First among them are some of the highest economic growth rates in the world. Along the Pearl River delta, roughly the region between the river town of Guangzhou (formerly Canton) and Hong Kong, economic growth has hit double digits for more than a dozen years. According to recent figures, Chinese industrial production is expanding at an annual rate of nearly 18%. Trade is growing 40% a year. Nowhere in the world is new wealth being created at a faster pace. Moreover, the Chinese save their money. This means that Chinese growth is sustainable in a way that some of the world's other fast-growing economies -- which save little and depend on capital borrowed from abroad -- is not. In China the average savings rate is a phenomenal 36% of gross domestic product. That's more than enough to continue to finance a high level of investment -- provided that capital markets continue to evolve at a sufficient pace. In the world's most populous country, there has always been a strong latent demand for housing. But until parts of the Chinese economy were opened up to capitalism, no one had the money to pay for it. That is no longer the case today. Another source of housing demand comes from Hong Kong. This is especially the case in Shenzhen, the special economic zone adjacent to the Crown colony. The reason demand from Hong Kong is spilling over into China in a big way is that Hong Kong real estate prices have climbed to unaffordable -- and perhaps unsustainable -- heights. According to an affordability index devised by one local bank, at current prices, housing costs consume as much as 75% of the average family income. Because of the fixed link between the U.S. dollar and the HK dollar, Hong Kong interest rates were forced to match the decline in US rates from 1989 to 1992. But unlike the United States, where inflation has also fallen, Hong Kong's inflation rate is still in double digits. As a result, anybody who keeps money in the bank is actually losing 8% to 10% a year in real terms. In order to keep ahead of inflation, everybody puts money into shares and property instead. Property prices in Shenzhen, which are still only a third to a half of Hong Kong levels, look like incredible bargains to investors from places like Hong Kong or Taiwan. Not surprisingly, about 70% of the property transactions recorded in Southern China involve foreign buyers. So what's the best way for a foreigner to profit from the Chinese real estate boom? One way is simply to buy an apartment from one of dozens of real estate developers now building projects in China. For example, Hong Kong-based New World Development Ltd. has contracts to develop 40 to 50 million square feet of real estate in Guangdong Province (which encompasses Guangzhou, Shenzhen and the Pearl River Delta). Many of these residential units will be presold to buyers willing to put down between 10% and 20% of the final price long before the project is even finished. But unless you are fluent in Cantonese and have good family or business connections inside China, buying a flat outright is likely to be very daunting. One common pitfall stems from that fact that most Chinese real estate is divided into three types: one which may be sold to foreigners, one only to locals and one to either. Unfortunately, the class to which a specific property belongs is often difficult to determine. And an investor who buys the wrong class by mistake will wind up with no property and no refund. Another potential pitfall is an uncertain legal climate. Although the government still owns all land, the Chinese constitution was recently altered to provide a legal basis for the trading of long-term (up to 50 years or more) leases. All the regulatory and enforcement details, however, are left to the whim of local governments. Having a strong personal relationship with local officials is at least as important as anything written in the Chinese constitution. With local officials on your side, virtually anything can be negotiated -- even relief from the prohibitive capital-gains taxes on profits from the sale of property. Without their help, almost nothing is possible. Further complicating this situation is the possibility that a local official who is on your side today may not be tomorrow -- particularly if someone else has offered him a better deal in the meantime. But if you don't have the time, resources, Chinese-language skills and the necessary connections for direct real estate investment, don't despair. It can be pretty easy to hitch a ride on the back of someone who has what you lack. The best way to do this is to buy shares in experienced property development companies with large commitments inside China. Of these, our favorites are New World Development and Hopewell Holdings. New World Development's projects presently include two residential complexes in Guangzhou, a residential and commercial complex in Huizhou, and a golf-course and residential complex in Foshan. In addition, the company has a share of such infrastructure-related projects as the Northern Ring highway around Guangzhou and a Guangdong power plant. To request a copy of the firm's annual report, contact New World Development, 30th floor, New World Tower, 18 Queen's Road, Central, Hong Kong. New World Development is listed on the Hong Kong stock exchange. It also trades in North America in ADR form (NDWX-OTC, Cusip=649274206). One ADR is equal to five ordinary shares. Hopewell Holdings' projects inside China also include both property and infrastructure development. Among them are Guangzhou's China Hotel Complex, the Shajiao 'B' and 'C' Power Stations in Guangdong, and the Guangzhou-Shenzhen-Zhuhai (GSZ) Superhighway. One section of the highway due to open in 1993 will cut the travel time between Hong Kong and Guangzhou to 90 minutes from five and a half hours. Hopewell will also develop 10 million square feet of residential housing along the highway interchanges. In the planning stages are a 33-kilometer bridge- tunnel project (modeled on North America's Chesapeake Bay Bridge) across the mouth of the Pear River, and a 105-km elevated rail system linking Guangzhou and the Portuguese enclave of Macau. The space underneath the railroad will be used for commercial development. To request a copy of its most recent annual report, send a letter of request to Hopewell Holdings, 64th floor, Hopewell Centre, 183 Queen's Road East, Hong Kong. Hopewell trades on the Hong Kong stock exchange. But like New World Development, it also trades in North America in ADR form (HOWHY-OTC, Cusip=439555202). One ADR is equal to five ordinary shares. Real estate may be in the doldrums in most of the developed world, but not in China, where prices are climbing with boomtown abandon. So stake your claim on a piece of the property fortunes of the Wild East. Buy some shares in Hopewell and New World Development and watch your gains compound for the next 10 to 20 years. For even greater gains, you might try to time your purchase to coincide with one of the inevitable periods of stock market weakness that inevitably accompany the runup to the Chinese take-over of Hong Kong in mid-1997. Chile: Sitting pretty at the foot of the Andes Mexico scarcely offers the only promising real estate market in Latin America. Other countries do as well. And that is mostly a result of the continent's dramatic abandonment of government run economies in favor of more market-oriented policies. After decades of lunatic leftist economic policies, Latin America has been privatizing inefficient state-owned companies, opening up markets to foreign investment and competition, and cutting taxes. In the past several years, a dozen Latin American candidates have won elections promising to do what should have been done years ago -- adopt market- oriented economic policies. Latin America is also blessed with an abundance of natural resources, a developed economic infrastructure, and long traditions in trade and commerce. Nationalization of foreign holdings -- once the bane of foreign investors -- is virtually a thing of the past. One way to get in on the ground floor of the coming South American boom, therefore, is to invest in real estate. Ironically, this turn toward freer markets began in Chile under the repressive General Pinochet. Since then, privatization of industry and encouragement of foreign investment have made Chile the polished jewel of the South American continent. Because of dramatic economic growth, bargain properties in Chile are disappearing fast. In some parts of the country, prices have doubled or even tripled since 1986. But there are also a lot of good buys left. And if you move quickly, there is still time to get in on the next boom in Chilean real estate. Chile is arguably Latin America's most beautiful country, spanning over 2,600 miles of the Pacific coast. But at its widest point, it is only 265 miles across. This narrow strip of land comprises five distinct geographic regions, including the spectacular Andes Mountains, the longest mountain range in the world. To the north, the Atacama desert covers one-third of the country. It is considered one of the most arid places on earth, but is extremely rich in minerals, especially copper, Chile's main export. Central Chile boasts green valleys full of fruits and flowers, grain, peaches, tropical fruit, and avocados. This is also the home of Chile's famous vineyards. Farther south is the Lake District, a 1,000-mile region of beautiful, unspoiled scenery, resorts, forests, sparkling rivers and streams, waterfalls, volcanos, and sea-green lakes. The southern tip of Chile, the archipelago region, includes the famous Cape Horn. Overall, Chile's climate remains consistently mild, with summer (December to March) temperatures ranging from 50 F.-86 F. and the temperature in the rainy season averaging 53 F. Chile boasts Latin America's fourth largest rail network, having connections with Bolivia and Argentina. The Pan American Highway links 75% of the country and airports and seaports have access to most of the world's transport lines. Both telephone and postal communications are expansive and efficient. In 1973, Gen. Augusto Pinochet Urgarte's military coup d'etat established a dictatorship that lasted until 1988. Chile returned to its tradition of democratic government in 1989, and, in 1990, elected Christian Democrat Patricio Aylwin Azocar as its president. Since the new civilian government's political interests depend on maintaining the health of the Chilean economy, the outlook for the nation's business climate is very positive. Recent developments in economic policy strongly encourage free enterprise and a market open to international investors. Chile has always offered an economic environment favorable to foreign investors and relatively free of bureaucratic restrictions. The privatization of industry and free market policies were designed by experts from the University of Chicago and remain integral parts of Chilean economics. There are no restrictions on foreign ownership of property or industry except for those placed on residents of neighboring countries, who may not own land along Chile's borders. Otherwise, Chile has the most open market in South America, perhaps one of the most open in the world. These policies have generated notable foreign investment. The unemployment rate has steadily decreased in the last three years and is currently 6.7%. In turn, the quality of life in Chile is high. Santiago is the urban center of Chile. It sits near the foot of the Andes Mountains, only 90 miles from the Pacific coast. Once a colonial Spanish town, it still displays an Old World grandeur, combined with the conveniences of a modern metropolis. Prices in Santiago and its suburbs are comparable to some cities in the United States. But unlike their North American counterparts, Chilean cities still seem to be at the bottom of a property boom. We have previously observed how the aging of the post-World War II generation portends falling demand for housing for North America -- as well as much of the English-speaking world. In Chile, however, those same demographic statistics point in the opposite direction. For example, of the 12.5 million Chileans, half are under 25 years of age. Among those over 15 years of age, 92.5% are literate, many educated at one of Chile's eight state universities. A large, educated, and highly motivated young population translates into a large demand for quality housing 10 to 20 years from now. As a result, a dramatic expansion of Chile's urban and industrial centers lies ahead, boosting property prices. Additional demand will come from foreigners, eager to participate in the Chilean investment boom. While urban Chilean real estate has already risen considerably in price, the real bargains are outside the country's capital. Good buys are farmland and properties in resort areas such as Vina Del Mar and Arica. Like most investment opportunities in Chile, there are no special restrictions regarding the purchase of real estate. If you find a property you are interested in, simply contact the owner or the handling agency. However, we recommend thoroughly investigating the property claims and titles prior to purchase. Financing is available in Chile, typically in the form of a 20-year mortgage at a real (inflation-adjusted) interest rate of 8.5%. Usually, a 25% initial deposit is required. For general information regarding foreign investment in Chile, you can contact the office of the Secretary of Foreign Investment, Teatinas 120, 10th Floor, Santiago, Chile; tel. (56- 2)698-4254. For more information on properties available in Chile, contact Mr. Fernando Vargas, c/o Tattersall Propiedades, Isidora Goyenenchea 3162, Santiago, Chile; tel. (56- 2)233-3243, or Mr. Klaus Lettecke, c/o Hobbins Propiedades Ltda., Luz 2926, Santiago, Chile; tel. (56- 2)232-1030. Uruguay: The Switzerland of South America Wedged between Brazil and Argentina on the Atlantic coast, Uruguay has traditionally been regarded as the Switzerland of South America. Only living expenses in Uruguay are much cheaper than in Switzerland, you pay no income and little property taxes, and it is much easier for a foreigner to buy and own property in Uruguay. (In Switzerland, foreigners are permitted to purchase property only in government- designated areas.) Uruguay is one of the few countries in the world where an investor still can make money on rental property. Resort houses and apartments rent for astronomical fees during peak season. Theoretically, you can make enough during the first three months of the year to pay for your mortgage and maintenance costs for an entire year. And you are almost guaranteed appreciation on the value of the property. Uruguay is also an attractive destination for anyone looking to retire abroad. The climate is tropical and ideal for farming or breeding cattle. The beaches along the Costa del Oro (which extends from the country's capital, Montevideo, to Punta del Este, a major seaside resort on the Rio de la Plata) are beautiful. Real estate prices in Uruguay -- particularly in Punta del Este, Colonia, and other resort areas -- are driven by heavy investment from Argentine investors, who use Uruguay as a haven to protect their capital from inflation and economic fluctuations at home. Condominium developments in Montevideo often have a much better investment potential than houses. Prices range from US$35,000 for a furnished 1-1/2 bedroom apartment at a Punta apartment complex to US$120,000 for a luxurious three-bedroom apartment condo overlooking the ocean and the Rio de la Plata. Farmland can be a bargain for as little as US$200 an acre. Rentals in the prime residential areas of town run between US$500 and US$600 a week. In addition, purchasing property involves surprisingly little red tape. For example, there are no residency requirements and no foreign exchange taxes. It involves few fees, and it is not necessary to hire an attorney or open a bank account at a Uruguayan bank. All your transactions can be executed in U.S. dollars. (One source told us you can even make your down payment with your credit card!) To locate a suitable piece of property, you should work through one of the local real estate agents. Although many of them speak English, be prepared to negotiate in Spanish. Unfortunately, financing is nearly unheard of in Uruguay. You normally have to pay in cash -- a few places, however, are beginning to offer limited financing to attract foreign investors. One apartment complex in Punta del Este, for example, is offering three-year financing at 12% with a 30% down payment. You are penalized for this, however. The cash price for a one-bedroom apartment is US$48,000; if you finance the purchase, the price is US$55,000. For more information on purchasing property in Uruguay, you should brush up on your Spanish and contact a Uruguayan real estate agent, such as Rodolfo Estevez Altieri, Av. Roosevelt 203, Rutaq 1, Colonia del Sacramento, Uruguay; tel(6598-522)2335; fax: (598- 522)3133; Arteaga Hill, Rinco'n 675 Montevideo, Uruguay; tel. (598-2)959822; Sebastian Erviti, Av. Artigas entre 26 y, Atlantida, Uruguay; tel. (589- 372)5753; or Leonardo Blois Roig, c/o Immobilaria Pinocho, Rambla y Sierra, Piriapolis, Uruguay; tel. (589-432)2269. One reason to purchase property through a corporation rather than as an individual is the Uruguayan inheritance law, which is rooted in the concept of primogeniture. Any property you own as an individual will upon your death go to your eldest son, no matter what your will says. Shares of stock, however, can be left to whomever you choose. In each of the previous examples, you can put the fundamental principles of international entrepreneurship to work. First, by purchasing property across an international border, you can probably reduce or eliminate many of the taxes that would otherwise eat up most of your gains. (Except for the United States and the Philippines, most other countries do not tax the profits of their citizens provided those profits are made and remain outside the country.) Second, by buying property in an region in which the demand for housing is growing, you harness the power of incremental gains, the awesome power of compound interest. As we observed earlier, the power of tax-free compounding can be breath-taking indeed. A US$100,000 property in one of the region of opportunity we have described, could easily appreciate at a rate of 10% per year. That means it will be worth US$259,372 in 10 years. That's almost like getting a home for free. In effect, you have made US$159,000 -- more than you paid for the place originally. Compare that to a US$200,000 home in the present suburbs of the English speaking world -- where values are falling at 5% per year. That would leave you with only US$126,049 in 10 years. The net difference in wealth accumulation over the 10 year period is a stunning US$408,000 (home value, US$259,000 plus cash saved, US$159,000, equals US$408,000)! But as you will see, this is just the beginning. France: Last chance for bargains If you bought property along the French Mediterranean coast 20 years ago, you probably no longer have to work for a living. Real estate prices along France's Mediterranean coast are now astronomical. Investors were able to do fabulously well as prices rose close to 20% per year. A flatter property market has made rapid appreciation in most vacation spots a thing of the past. Uncontrolled development has turned the Mediterranean into the biggest sewer of Europe. In many places, untreated sewage is pumped into the sea from the monstrous concrete buildings that line the boardwalks. No wonder tourism is shifting to other areas where prices are still moderate. One area that is set to profit from this trend is France's Atlantic coast. And now may be your last chance to get in on a major French real estate wave. The Cote d'Atlantique offers excellent value, double- digit appreciation potential...and the most breathtaking ocean sunsets in the world. Only marginally affected by the U.S. recession, Europe has continued to post steady economic growth rates. And by the time the United States emerges from recession, Europe will have shaken off any lingering weakness. Europe's older, affluent, and more mobile population is expected to travel abroad more. In addition, travel-starved East Europeans are taking advantage of their newfound liberties to visit places in France, Spain, and Italy. Prosperous North Europeans will escalate demand for warm coastal real estate -- something unavailable in those countries. As travel and currency barriers disappear in Europe and cross-border banking takes hold, more and more Europeans will take their five- to six-week summer vacations abroad. For all its beauty and easy accessibility, prices along the Cote d'Atlantique remain comparatively low. Whereas US$100,000 hardly buys you an outhouse on the Cote d'Azur, it can buy you a house or condominium in La Rochelle, perhaps the most beautiful spot on the Atlantic coast. We have identified a wide range of reasonably priced dwellings for vacation or rental property in this up-and-coming region. La Rochelle is situated midway up the coast. It first gained fame as a Protestant stronghold besieged by Louis XIII in the 17th century (Alexandre Dumas fans will recall the adventures of the three musketeers on that occasion.) Later, the city was a stopping-off point for emigrants bound for Canada. Today this resort town, with its old port, whitewashed townhouses, and elegant 18th-century buildings set off by broad, white beaches, is the retreat of French President Francois Mitterand. If you fancy a bright apartment overlooking the sea, the real estate firm Plaisance Immobiliare had a two-bedroom condominium with ocean views available for an asking price of only US$125,000. With a garden terrace and master bedroom overlooking the sea, a second bedroom and a large, open living room with views of the water, the unit features a state of the art European kitchen, bathroom, and top-quality new construction. It is located near the harbor, in a central part of town. Looking for something a little less expensive? With an asking price of only US$100,000, a small house in the La Genette quarter of La Rochelle might be to your taste. With a yard, two bedrooms, kitchen, dining room, bath, and workshop, it is convenient to the beach and all amenities. If you are willing to spend more money, in the LeMail quarter a three-bedroom condo on the water can be yours for about US$350,000. With three bedrooms, a large open living room, a kitchen, an office and two baths, the condominium offers a great view of the sea. Foreigners can easily obtain mortgages in France. Although you may have to put 50% down, rates of 10%-11% are competitive. France is not experiencing the banking crisis of the United States, and banks exist to grant loans -- so loans are more readily granted. Besides La Rochelle, Biarritz, the grand lady of the coast near the Spanish border, is also experiencing a renaissance. Once the favorite spot of Queen Victoria and Bismarck, Biarritz offers dramatic cliffs and rosy sunsets. We recently saw a newly renovated one-bedroom apartment with views of the sea, a terrace, and a gourmet kitchen, with an asking price of about $140,000. And the picturebook town of St. Jean de Luz, also in the Basque country, is only a sailboat's ride north of the Spanish border. It possesses a gorgeous port and a wide, sandy beach in the shape of a half- moon. While these prices may not strike you as exactly bargain basement, you have to consider the investment potential of the whole area. Considering the growing popularity of Biarritz and La Rochelle, we anticipate an annual increase in tourism of about 10% a year for the next five years. Aside from the rapid appreciation, you will be able to rent out your condo or home to tourists in the time you are abroad. Rents for tourists are considerably higher than regular rates (which typically are in the US$900 a month range.) Property prices outside La Rochelle are dramatically lower. You can buy 500 square meters of land for around US$25,000, then custom build a house according to your own needs. For further information on real estate in La Rochelle, contact Eric Baudon (who speaks English) at Plaisance Immobiliare, Agence de la plage, les Iles du Ponant, 2 avenue du Lazaret, 17000 La Rochelle; tel. (33-46)44-17-26 or 3346-44-03-33; fax (33-46)45-11-27. For real estate in Biarritz, contact Danielle Moruau at Agency Benquet, 4 place Clemenceau, 64200 Biarritz; tel. 59-24-04-91; fax 59-24-99-25. In St. Jean de Luz, contact M. Goudin at Agency Benquet (no connection with the one above), 86 rue Gambetta; tel. 59-26-04-92. Portugal: Poised for growth If you had owned even a few acres of the part of Orlando, Florida that became Walt Disney World about 20 years ago, you'd no doubt have a wealth of amusements at your disposal today. Yet when Walt Disney first set his sights on the swampy land (which he bought for less than US$100 an acre), he was almost laughed out of the state. Great real estate opportunities are hard to come by -- and even harder to recognize. But there is a market in Europe with Orlando-like potential. We have discovered the virtually untapped promise of Portugal, which could make real estate a worthwhile investment for business people...or those just dreaming of peaceful retirement in a temperate climate. With a cost of living half that of Germany or France, and one of the lowest crime rates in the world, we predict Portugal will become the haven of choice for both retirees and vacationing baby boomers, as well as investors. For real estate speculators, that means a chance to profit in the Portuguese boom towns of the next decade. Once regarded as an economic wallflower outperformed by the more flashy Euro players such as Germany or Spain, Portugal has recently developed one of Europe's faster-growing economies. In part this has been a result of extensive reworking of tax and fiscal policies, environmental and safety regulations, and employment policies. Portugal has also embarked on privatization of state-controlled monopolies and development of investment incentive programs. Also, the country has some of the lowest wage rates in the Community, which keeps the cost of living low and foreign investment high. The tourist industry has played an increasingly important economic role in recent years, as new resorts and hotels spring up around the country. In 1991, tourism will account for 8% of the country's gross national product. At the same time, the population of foreign residents has nearly doubled in the past eight years -- from 60,000 in 1982 to over 101,000 in 1990. While the majority of foreign residents is North African Arab and South American, the ranks of American and European residents (particularly British) are swelling as well. No doubt the first attraction of the Iberian Peninsula is the mild Mediterranean climate. For years Portugal's Atlantic coast has been a favorite vacation spot for prosperous Northern Europeans. Beaches there are pristine and sunny. The area that has benefitted most from the tourist boom is the Algarve. Accordingly, prices here have appreciated dramatically over the past few years -- and will continue to zoom upward. Non-tourist businesses in manufacturing and service industries are rapidly springing up. Traveling northward along the Algarve, you will find plenty of Old World traditions mingled with a modern pace. Behind sports cars speeding along the main road you will also see donkeys pulling orange carts, women in black balancing baskets on their heads, and children going to the beaches armed with harpoons. This is where bargains abound. The countryside is dotted with ancient castles, artisan villages, churches, and ruins. One historic property we found is located on the outskirts of a quiet village near Paderne along the Algarve coast. This nearly 100-year- old cottage could be converted into a three-bedroom villa. A 45-minute drive from Faro International Airport, this property includes a walled fruit garden. But, although it is equipped with a phone, plumbing, and electricity, the cottage is in need of some major repairs. Accordingly, the asking price was about US$60,000. (It could probably be bargained down closer to US$50,000.) For more information, contact Joan Browne Ltd., Maritenda, Boliqueime, 8100 Loule, Algarve, Portugal; tel.(351-89)366-704. More removed from the prime Algarve tourist area, the Serra de Monchique and Serra de Caldarao are still widely undiscovered by real estate developers. These are the "Disney World" regions of tomorrow. Here prices are still low; you'll find quaint old farmhouses that can be bought for as little as US$30,000 and renovated. There are also plots of land for sale. In a developed region, a two-bedroom house built by a respectable builder starts at about US$32,000. We found one 2.5-acre plot in Serra de Caldarao that cost US$6,700. In the fishing village of Estoril near the port of Cascais, we noted prices for luxury town houses with one, two, and three bedrooms ranging from US$30,000 to US$100,000. For current listings, contact Movi Ltd., P.O. Box 19, Estrada Marginal B1. 3,1, 2750 Cascais, Portugal; tel. (351-1)483-1032. You can rent out properties as well. The Algarve in particular has a healthy rental market in the summer months. (One American resident we spoke to rents his villa out for US$6,000 a month in the summer.) In general, full-time renters find tenants for 20 weeks of the year during European vacation months. If an agency handles rental details, you can expect a return of 50% of the rental price. Once you decide on a place, you should continue the purchase process with the help of a lawyer. You will be asked to sign a promissory note for a minimum of 10% of the purchase price of your home or land. You can finance the rest through a Portuguese bank. The promissory note is good for three months. We advise that you be on hand to sign it -- Portuguese bureaucrats may need the pressure of your presence to be galvanized into finishing all the paper work before the note expires. You also should obtain an import permit to take money into the country. Otherwise, you may not be able to take the money back out should you sell your property. The permit also gives you the flexibility of choosing to make your transaction in a currency stronger than the Portuguese escudo. There is a 10% tax on the purchase of most properties. With lawyer and notary fees, your actual cost comes to nearly 15%. With EC development funding, Portugal is slowly incorporating the modern facilities and technologies into its infrastructure. This, coupled with the influx of foreign residents and travelers, is a bullish indicator for future growth. For more information on real estate and investment in Portugal, contact the Portuguese Trade Commission office, or commercial attache at the Portuguese Embassy, in your country. Ireland: some of the lowest priced real estate in western Europe By European standards, property is amazingly inexpensive in Ireland. Recently, a seaside cottage on the scenic Dingle Peninsula sold for less than US$15,000. Another picturesque home with a view of the Blasket Islands went for about US$27,000. Couple these bargains with the generous tax incentives for business, and you could enjoy a life that is both peaceful and profitable. Ireland offers a maximum 10% tax rate for manufacturing businesses, and for international financial service businesses located in the Dublin free zone. There are also special tax holidays for businesses in the Shannon area. Contact the Irish Industrial Development Authority office or the commercial attache of the Irish Embassy in your country for more information. In addition to its favorable economic climate for foreign industry, Ireland is one of the world's top retirement havens. To gain approval for permanent residence, you need only prove financial independence. While Dublin boasts all the usual cultural trappings of city life. Outside Dublin are peaceful country retreats, beaches, ancient villages, and resorts. In general, older cottages in the countryside go for about US$25,000, while newer bungalows in the countryside go for closer to US$50,000. The most attractive places to live are along the seacoast, and far in the west. To buy property in Ireland, contact a house agent, estate agent, or auctioneer. (Estate agents charge a commission of 1.5% of the purchase price). Be aware that Irish banks and building societies do not approve mortgages for retirees and non-residents. So chances are you will have to pay cash or get a loan from a local bank in your home country. Traditionally houses are sold at public auctions; however, because the market is so depressed, this option is disappearing. Irish auctions can be cut- throat, so we suggest hiring a solicitor or estate agent to do the bidding for you. A solicitor will charge about US$500. In addition to houses, non-citizens can also purchase up to five acres of land for private residential use. To do so, you need the permission of the Land Commission, (Agriculture House, Kildare Street, Dublin 2; tel. (353-1) 789-011 or (353-49) 61022.) You will have to make a down payment of between 10% and 20% of the purchase price, and you'll pay a stamp duty of between 3% and 6% as well. Although property is fairly reasonable, the cost of living in Ireland is considered high. Appliances, clothing, and cleaning supplies are about double the price in England. In addition to property taxes (1.5% if your residence is valued at more than US$130,000), when you purchase a house you also pay a stamp tax. Still, there are many personal tax breaks. In addition to high personal exemptions, residents over 65 are entitled to an age allowance of approximately US$500. Married couples over 65 are entitled to about US$650. You can write off medical insurance premiums, health expenses, rent if you are over 55, and interest on loans. Also, homes or gardens of architectural, scientific, or historic significance are often exempt from property taxes. For more information about taxes in Ireland, contact: Office of Revenue Commissioners, Division 1, Dublin Castle, Dublin 2; tel. (353-1)679-2777. If you can imagine yourself hiking in Sligo, with its dramatic landscape and prehistoric gravesites...or wandering in the morning mist that rolls off one of Killarney's many lakes, then you are ready for this serene adventure. Campione: little known tax-free backdoor to Switzerland Campione, on the shores of Lake Lugano, is distinguished by its very uniqueness. It is a little piece of Italian soil, completely surrounded by Switzerland. There are no border controls so there is complete freedom to pass in and out of Campione. It is located in the Swiss Canton of Ticino, about 16 miles from the Italian border, and 5 miles from Lugano by road. It has about 2000 inhabitants. Campione belongs economically to Switzerland, and uses Swiss banks and governmental facilities such as post office, telephone, telegraph, and traffic laws. Cars registered in Campione bear Swiss license plates. Unlike Switzerland, there is no problem for foreigners in obtaining residence rights in Campione, so the enclave is enjoying a sudden popularity with people looking for a way to obtain Swiss residence. Having a house or apartment in Campione is all that is necessary to obtain a residence permit in Campione, although the local authorities do require that registered residents spend at least some time in Campione. The lack of border controls gives Campione residents totally unrestricted access to all of Switzerland and Liechtenstein, so it can be a most valuable European executive base. Besides its residence attraction, the enclave is also gaining in popularity because it has a unique tax haven status. Although part of Italy and subject to Italian law, there are special tax requirements for Campione. There is no personal income tax and no municipal tax as all of Campione's income is raised from the operation of a municipal casino. Campione residents are not subject to Switzerland's many double taxation agreements with such countries as Canada, the U.S. and most of western Europe. Companies formed in Campione have many advantages over Swiss companies, as they are able to use Swiss banking facilities, have a mailing address that appears Swiss, but not be subject to Switzerland's relatively high income and withholding taxes. Company law is the same as in Italy, and a corporation can be formed with a minimum capitalization of about $1000. Company formation takes longer than in Switzerland, but unlike Switzerland, a Campione company can be entirely owned and directed by foreigners. The formation work is usually handled by Italian lawyers in Milan, and the fees are modest, since this is not a special or complex matter. The personal and company tax exemptions do not apply if the resident is doing business with Italy, but business with Italy can readily be done through a Swiss or Liechtenstein corporation as an intermediary. Foreigners may buy real estate in Campione without restrictions, unlike Switzerland, so acquisition of a site in Campione for a European regional headquarters is readily carried out with minimal red tape. Demand for real estate in Campione has pushed prices well above the level or surrounding Ticino. As a part of Italy, the European Community regulations apply to businesses, and this includes such things as the right to establish a business and residence by any citizen of another EC country. The official language is of course Italian, and the enclave is in the Italian speaking portion of Switzerland. Many international schools are located in Switzerland, so school arrangements for children of transferred executives can be easily made. The recent referendum in which Swiss voters rejected an affiliation with the European Community means that Campione will continue to have its special value for sometime to come. Without the free access to Switzerland that EC affiliation would have provided, the backdoor route via Campione will continue. There are many recreation facilities in the immediate area, including golf, ski resorts, and water sports. Milan, and all of its cultural attractions, is only an hour away. Campione's unique status has its origins in the Thirteenth Century when the village and its territory were presented by the Lord of Campione to the Church of St. Ambrosius of Milan. This feudal property survived European upheavals and remained secure to the end of the 18th Century, and then joined the new Cisalpine Republic. Afterwards Campione fell into Austria's hands for a short period and was finally incorporated into the new Kingdom of Italy. It is one of the world's most unique, and least- known, tax havens, and a most attractive base for companies looking for a regional headquarters in Europe. It is also one of the most expensive tax havens for real estate, because there is so little of it. Apartments will range from $2500 to $3500 per square yard, and you usually pay the broker a 3% buying commission on top of that (the seller also pays 3%). Getting started in Campione is much more difficult than in other tax havens, because the enclave is not promoting itself, and there is no central office of information to which one can turn for instant literature. You are not unwelcome, but nobody is going to go out of their way to let you in on this secret haven. So there are no promoters or agents that you can write to in advance to send you packets of nice brochures. The only effective way to establish in Campione is to make a personal visit and spend time talking to people. Even the real estate brokers are not particularly interested in whether or not they get your business, and may not answer your letters. The following contacts are suggested for those who are serious, but at the Campione end they may not think you are serious until you arrive. Peter Wehner, Viale Marco 27, Campione. Tel. 0041 91/68-75-49 or 68-63-45. Speaks English and has rental apartments. Immobiliare Witzel, Via Matteo at the Lido (beach), Campione. Tel. 68-67-19 or 68-60-65. This is the major brokerage firm in Campione, but they do not speak English. Ralph E. Koklar, SAS & Co., Corso Italia 2, Campione. Tel. 68-52-44 or 68-55-10. Local property developer who sometimes has something available. Mr. Werner Schilling, InterPresent & Co., Corso Fusina 2, Campione. Tel. 68-58-59. Part-time broker. A good source of further information is The Campione Report, available for $125, including airmail postage to anywhere in the world (or $100 by slower surface mail) from Scope International Ltd., 62 Murray Road, Waterlooville, Hants. PO8 9JL, Great Britain. They also accept Visa & MasterCard.