July 29, 2008 at www.investdest.com
Reykjavik is a small capital city in the tiny island nation of the north Atlantic -- Iceland. In a place where unemployment, violent crime, and smog is nearly inexistent, it really is a refuge both physically and economically.
Iceland is one of the least visited western European countries, but that's about to change. Iceland Air now has new connections to the East Coast and continental Europe. Nature loving tourists will love the country's rugged coast with whale watching opportunities, green fields and long days in the spring/summer, and of course -- the geysers and geothermal spas (hot springs). The country's many hot springs, such as Blue Lagoon (pictured below, courtesy of Icelandic Tourist Board) is known for its purifying and revitalizing effects.
The country's recent surge in tourism is a testament to its unique landscape and endless attractions. Tourism has grown tremendously, averaging nearly 15% since 2000 and it seems to be picking up, not slowing down. In 2007, for instance, the number of tourists in Iceland grew by over 20% compared to 2006 (See the European Travel Commission Report). Since the country welcomes less than 400,000 visitors annually and since there's plenty of room for growth, cashing in on the tourism industry would be a profitable idea.
It's well worth mentioning that Reykjavik has also become a cruise ship port of call. As cruising grows in popularity and as more and more tourists seek northern Atlantic and Balkan itineraries, Reykjavik will increasingly become a desired destination for both premium and luxury vessels. So you can expect even further opportunities.
The city itself is a quaint yet vibrant mix of history, modern conveniences, and natural beauty. Near the southeast coast, there are views of the pristine ocean and mountains as well. Reykjavik bears striking resemblance to Norwegian coastal cities with its wooden colorful homes, cobblestone streets, and baroque national landmarks. Tourists will love local cuisine with fresh seafood, lamb, and of course plenty of great beer.
Reykjavik is a small capital city in the tiny island nation of the north Atlantic -- Iceland. In a place where unemployment, violent crime, and smog is nearly inexistent, it really is a refuge both physically and economically.
Iceland is one of the least visited western European countries, but that's about to change. Iceland Air now has new connections to the East Coast and continental Europe. Nature loving tourists will love the country's rugged coast with whale watching opportunities, green fields and long days in the spring/summer, and of course -- the geysers and geothermal spas (hot springs). The country's many hot springs, such as Blue Lagoon (pictured below, courtesy of Icelandic Tourist Board) is known for its purifying and revitalizing effects.
The country's recent surge in tourism is a testament to its unique landscape and endless attractions. Tourism has grown tremendously, averaging nearly 15% since 2000 and it seems to be picking up, not slowing down. In 2007, for instance, the number of tourists in Iceland grew by over 20% compared to 2006 (See the European Travel Commission Report). Since the country welcomes less than 400,000 visitors annually and since there's plenty of room for growth, cashing in on the tourism industry would be a profitable idea.
It's well worth mentioning that Reykjavik has also become a cruise ship port of call. As cruising grows in popularity and as more and more tourists seek northern Atlantic and Balkan itineraries, Reykjavik will increasingly become a desired destination for both premium and luxury vessels. So you can expect even further opportunities.
The city itself is a quaint yet vibrant mix of history, modern conveniences, and natural beauty. Near the southeast coast, there are views of the pristine ocean and mountains as well. Reykjavik bears striking resemblance to Norwegian coastal cities with its wooden colorful homes, cobblestone streets, and baroque national landmarks. Tourists will love local cuisine with fresh seafood, lamb, and of course plenty of great beer.
Travelers will undoubtedly take note of the clean and fresh air that's due not only to the sparsely populated and underdeveloped landscape, but the country's energy use. Unlike other developed nations, hydrogen powers most cars in Iceland. Now, Iceland is one of the most oil-independent nation on earth. So the rise in cost of oil won't make Iceland as prone to inflation over the next years as elsewhere.
Reykjavik is by no means cheap, but compared to other important cities in Western Europe, Iceland is at least better. The recent currency depreciation trend made Iceland a whole lot cheaper since it was named one of the most expensive cities in 2005-06 studies. For example, a four-star hotel such as the Radisson would run you US$ 208 compared to about $ 250 in New York. A cup of coffee or a hot dog will run about $3.50.
Doing business in Iceland is very easy. Forming an EHF corporation takes a couple of days, just US$ 6,200, and minimal individuals. New business ventures get major incentives like a 12% refund of costs for launching film or TV production. But best of all is that Iceland has much lower corporate taxes than in EU member states, having been reduced from 30% to just 18% in 2002. For more information, please visit www.invest.is
Investment Opportunities
The country is a literal hotbed of energy. You may be aware that Iceland has and uses its own geothermal energy to power up Reykjavik. Metal producers have thus moved smelting operations to Iceland where "free" energy is readily available to cut energy costs. With the rising prices of oil, natural gas, soybeans, and other energy commodities, expect many producers to fail over the next few years except for the following attractive long term investments:
BHP Billiton (BHP) was the first major aluminum producer to set up shop in Iceland back in 2006 and has been an utter success since then.
Alcoa (AA) followed suit and moved smelting operations to Iceland in 2007 and operating expenses are down significantly since.
Rio Tinto (RTP) bought Icelandic smelter Alcan for US$ 38 B in order to join the other major producers at cutting costs with geothermal energy.
Century Aluminum (CENX) faced several hurdles as conservationists vowed to "save Iceland" and cease further construction of smelting facilities. Century released its plan earlier this year to begin smelting by 2010. But in the meantime, energy costs continue to drain the company. Perhaps it'll be worth buying next year.
As previously mentioned, the Icelandic Krona plunged to a new low against most major currencies on concerns that its banking sector would have trouble this year. The country's central bank reassured investors and even raised key interest rates to 13% to encourage holding Kronas, their highest rate ever. The Krona is terribly oversold and will rebound this year as banks and institutional investors seize the opportunity to take out loans in currencies with low interest rates, like the US Dollar, Swiss Franc, or JPY and re-invest them in Icelandic Krona (currency carry-trades).
The 13% Icelandic savings bond might be enough to lure you there, but the imminent increase in the Krona's value will add to your savings bond investment.
If this sounds attractive to you then the easiest way to obtain one is through the following:
Everbank.com has had online bank accounts available with the ability to get a 3-month certificate of deposit (CD) at 13% . Contact them for further details.
With its emerging tourist industry, business-friendly environment, an undervalued currency, a double digit interest rate on savings bonds and low energy costs, Iceland truly is a destination investor's dream.
Photos courtesy of the Iceland Tourist Board
Reykjavik is by no means cheap, but compared to other important cities in Western Europe, Iceland is at least better. The recent currency depreciation trend made Iceland a whole lot cheaper since it was named one of the most expensive cities in 2005-06 studies. For example, a four-star hotel such as the Radisson would run you US$ 208 compared to about $ 250 in New York. A cup of coffee or a hot dog will run about $3.50.
Doing business in Iceland is very easy. Forming an EHF corporation takes a couple of days, just US$ 6,200, and minimal individuals. New business ventures get major incentives like a 12% refund of costs for launching film or TV production. But best of all is that Iceland has much lower corporate taxes than in EU member states, having been reduced from 30% to just 18% in 2002. For more information, please visit www.invest.is
Investment Opportunities
The country is a literal hotbed of energy. You may be aware that Iceland has and uses its own geothermal energy to power up Reykjavik. Metal producers have thus moved smelting operations to Iceland where "free" energy is readily available to cut energy costs. With the rising prices of oil, natural gas, soybeans, and other energy commodities, expect many producers to fail over the next few years except for the following attractive long term investments:
BHP Billiton (BHP) was the first major aluminum producer to set up shop in Iceland back in 2006 and has been an utter success since then.
Alcoa (AA) followed suit and moved smelting operations to Iceland in 2007 and operating expenses are down significantly since.
Rio Tinto (RTP) bought Icelandic smelter Alcan for US$ 38 B in order to join the other major producers at cutting costs with geothermal energy.
Century Aluminum (CENX) faced several hurdles as conservationists vowed to "save Iceland" and cease further construction of smelting facilities. Century released its plan earlier this year to begin smelting by 2010. But in the meantime, energy costs continue to drain the company. Perhaps it'll be worth buying next year.
As previously mentioned, the Icelandic Krona plunged to a new low against most major currencies on concerns that its banking sector would have trouble this year. The country's central bank reassured investors and even raised key interest rates to 13% to encourage holding Kronas, their highest rate ever. The Krona is terribly oversold and will rebound this year as banks and institutional investors seize the opportunity to take out loans in currencies with low interest rates, like the US Dollar, Swiss Franc, or JPY and re-invest them in Icelandic Krona (currency carry-trades).
The 13% Icelandic savings bond might be enough to lure you there, but the imminent increase in the Krona's value will add to your savings bond investment.
If this sounds attractive to you then the easiest way to obtain one is through the following:
Everbank.com has had online bank accounts available with the ability to get a 3-month certificate of deposit (CD) at 13% . Contact them for further details.
With its emerging tourist industry, business-friendly environment, an undervalued currency, a double digit interest rate on savings bonds and low energy costs, Iceland truly is a destination investor's dream.
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