It’s easy to buy an off plan property, but can you rent it and be successful?

Landlordzone.co.uk offers advice and tips to landlords across the UK. An article that caught my eye is entitled “20 steps to successful residential landlording� and details guidelines to follow.

As overseas property is slightly different to the more regulated UK market, I have made a guide of 11 points to consider if you want to become an overseas property landlord.

1.  Do you have a Strategy and goals?

Questions to ask:

Who is your target audience? By aiming for the higher end of the market it can mean fewer rental problems however these clients are more demanding in terms of furnishings etc.
What publications, websites and newspapers do they read?
Are you in the bottom, middle or upper part of the lettings market?
Are you going to rent your property out for the long term, short term or both?*

* Longer-term rentals generate less overall income, but a stable rental income allows better planning of your finances; short-term rentals generate potential large incomes during peak season, but you have to fight for rentals in the slower seasons and rents are lower. The upside is you can still maintain some personal use of your property.

2.  What are your Expectations?

Be realistic about what to expect; your first year will be a test to see what works and years 2 and 3 can build on that knowledge to create a rental machine.

Don’t expect overseas agents to do all the work of marketing your property for you, lets face it, if they have 300 properties to rent out, what makes yours special? Spend some time doing your own marketing featured in my next property post.

3.  Develop some procedures

Continue reading ‘11 Secrets to buy-to-let Property rental success abroad’

The officially known Turkish Republic of Northern Cyprus has upped its stakes in the overseas property game with a recent announcement by the Government to declare the Northern sector of Cyprus a tax-free shopping haven, in the hope that it will provide a further boost to North Cyprus property investment. Non-Resident Shoppers can claim a complete cash or credit card refund of their 15% value added tax (KDV) on Jewellery, clothing, fabric, perfume, electrical goods, mobile phones, sunglasses, computers, cameras and shoes at dedicated tax refund offices as they leave the country via main air and seaports.  This further reduces the prices for goods that are already far cheaper than mainstream Europe and constitutes massive saving for shoppers. Further tourism encouragement comes in the form of VAT reducing on local handicraft items aimed at highlighting North Cyprus as a shopping haven similar to that of Gibraltar.

Property prices in Northern Cyprus remain lower than its Southern counterpart mainly due to often unfair generalisations leading to uncertainty surrounding the legal status of property in North Cyprus. However the ‘YES’ vote in 2004 to the Annan Plan for peaceful reunification of Cyrpus resulted in EU aid and an direct increase in Foreign Direct Investment leading to improvements in infrastructure, amenities and the decision by many to invest in North Cyprus property development.

Latest releases onto the North Cyprus property market include:

Sweetwater Bay enjoys a stunning seafront location east of Kyrenia below the picturesque village of Tatlisu. Access via the new coast road improves travel times to Ercan airport (serviced by Cyprus Turkish Airlines) from several UK airports. The development site has been designed to include a wide range of property types from to garden apartments and penthouses with prices starting at ₤48,000 rising to ₤142,00 for Bungalows and villas. Onsite attractions comprise a variety of public features and facilities, including swimming pools, dining, recreation and access to a private beach.

Property construction will be completed over three phases (November 2007 (phase I),  May 2008 (phase II) and November 2008 (phase III). Public facilities will be completed within phase II.
Continue reading ‘North Cyprus Property Developments offer value for money’

Many people have strong opinions on this subject, so lets start the debate.

Real Estate Agents have always made their money from commissions. It is generally a percentage of the property sales price and can vary enormously according to the local industry standards or size of the developer and their marketing budget. The percentage rather than fixed rate has always been a long running dispute between property buyers and sellers and the property agent. Does a property agent’s work rate go up inline with the value of the property they are selling? There are many agents that will counter that this IS the case with high dollar property and their subsequent clients who respond a higher quality of marketing thus raising promotional and sales costs. However, an argument for having a fixed agent rate is that it will make the market more competitive and stop some agents favouring higher value clients over first time buyers for example.

Commission Rates

Inman the US real estate Blog discussed the Zillow.com coming out party and questions were raised like - Do you need to pay 6% for an agent?
In many overseas property markets including Spain, Bulgaria and Cyprus, commissions paid to agents can be as high as 25%, which in my opinion is ludicrous when you compare varying levels and quality of service given by different agents. There are those that drop you at the sales office and hang around long enough for you to sign your contract and then there are those that offer a life-time of service from lawyer recommendations, furniture and rental assistance to local restaurant recommendations and handy area tips.

Off Plan Property commissions are governed by what developers the emphasis that they place on the agent network. Many developers use agents as the marketing tool to drive clients to their sales offices. Again the commission percentage offered can vary wildly depending on the profile of the developer/agent. Whilst overall marketing costs may be higher, it is usually the case that no more marketing is required to sell and penthouse in comparison to the lowest price apartment on the development, in fact as a general rule of thumb, the lowest price properties on a development tend to sell out first. What you tend to find (although this is not always the case) is that a good development will sell itself and as such agents will get a lower commission as the developer has a good reputation and has other means of marketing, like a property Blog!

In the off plan property industry an estate agent will receive an agreement from a developer, which generally means a payment of the full commission will be made on the signing of the clients contract. Some agents will hurry you to sign the agreement, as they want paying. Make sure you have all your finance in place before you sign on the dotted line, don’t be rushed.

Agent’s justification for commission

Continue reading ‘Real Estate Agents Commissions too high?’

There is money to be made in offplan properties. That’s why crooks are everywhere in the industry. There are always so-called ‘investment opportunities’ that turn out to be worse than useless. No doubt, this summer will see lots of media stories about UK investors who have been fleeced by these tricksters. Use this five-step guide to assess opportunities on offer…

Apply the first rule of assessment - ask yourself ‘Is this opportunity too good to be true?’

It’s essential to remember that high returns and high risks go together as do low returns and low risks. Anyone who tells you different is either wrong or a con-artist. You simply don’t get high returns and low risks!

With offplan, you can save and make big money if you buy the right property, right place etc and can sell on as the market rises; or can find tenants (whether holiday or ongoing etc) who will rent the property in due course.

But there are risks, whatever might be said to the contrary! The risks are that you might buy the wrong property in the wrong location etc. The market may trip over itself and stop price-rising. The biggest risk – and it’s one that even bona-fide sellers will gloss over – is that you might find it harder to sell on or let on completion. Much depends on the supply-demand mix as always. If you have bought into a 600-unit complex, it doesn’t take a genius to work out what will happen to asking prices and rentals if 300 come on the market at the same time.

Here’s your bottom line Continue reading ‘5 rules for offplan property due diligence’

Definition: A property bubble is characterised by rapid increases in property prices until they reach unsustainable levels relative to incomes, other economic factors followed by a rapid decrease in prices resulting in negative equity (mortgage debt is higher than the value of the property itself). It means many people are priced out of the market and real estate prices either have to drop to get the market moving or incomes need to increase to afford the high prices.

So is this the case in Spain?

Mark Stucklin of Spanish Property Insight has written very comprehensive information regarding this matter. Here is a quick synopsis:

After running a poll on their website, Spanish Property Insight obtained the following results from property buyers (71% of which are British, 11% Spanish, 6% Irish, 12% other) showing that foreigners are more divided on this question, with 57% saying there is a bubble, and 43% saying there isn’t. When Spanish votes are included, the figures are 61% saying there is a bubble and 39% saying there isn’t, almost the same as the British vote when isolated from other nationalities. To demonstrate their discontentment with state of Spanish property prices, on May 14th, young Spanish people are planning a mass sit-down demonstrating against the high level of property prices as reported by Euro Weekly News.

Have your say in our poll below:
[poll=1]

It appears that the consensus is that a bubble does exist, but on what grounds?

Prices of Spanish property prices have risen to record levels since 2000, it became the must have of the last few years and many investors/home buyers have bought in Spain, with large concentrations of buyers in the coastal areas of the Costa del Sol and the Costa Blanca. Many investors have bought with the expectation that property prices would keep going up enough for them to sell up and make a healthy profit. The reality at present is that this isn’t possible in many cases, with many reports of property prices falling on the Costa del Sol and parts of the Costa Blanca. As the market is so slow, owners who need to sell are reducing prices to attract buyer interest. However remember that not all parts of Spain are in this scenario, the less popular areas of Costa de la Luz, Costa Tropical and Costa Dorada are still seeing good growth.

Factors for popularity of Property in Spain:

Low real interest rates
Spanish mortgage market has opened up
Incomes have been rising
Changing demographics and lifestyles
Foreigners buying in Spain
Property is a good investment
Travel time from most of Europe is short
Fashionable to have a second home

The Overseas Property industry in recent time is now a growing global market with investors and homebuyer shifting their buying power to new emerging markets, the likes of Dubai, Bulgaria, Morocco and Cape Verde. This has had a knock on effect as the pool of people buying in Spain has shrunk. This is evident in the commercial marketplace as many Spanish Property companies have expanded to sell in many hot property markets all over the world!

My thoughts…

It has been reported that the Spanish Government has proposed that non-resident capital gains tax will be slashed from 35 per cent to 18 per cent as of January 1, 2007. This is not set in stone yet, as it hasn’t been passed as law, but it is expected. The property selling costs in Spain have always been high and have led to a black economy in second hand property and are helping the stagnating market Spain has at present in its most expensive areas. So is the government’s trying to soften the bump for the Spanish Property market?

Over time I believe that owners in Spain will see good returns on their investments, but people have to be realistic, a property in Spain is not for Christmas, it is a longer-term investment.

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Housing Bubbles are a hot topic all over the world. Will they burst, what does that mean for me etc…. As each market becomes intertwined into the global economy, a change in the US can affect the Spanish market for example. I have gathered some references below that discuss other reasons for property bubbles (US biased):

http://housingpanic.blogspot.com/
http://overvalued.blogspot.com/
http://crash2006.blogspot.com/
http://economicrot.blogspot.com/
http://www.economist.com/finance/displayStory.cfm?story_id=4079027
http://www.businessweek.com/bwdaily/dnflash/jun2005/nf20050622_9404_db008.htm

EU ascension seems to be a sure-fire way to boost your real estate prices and three members of the Baltic State are actively generating strong interest in attractive off-plan investments.  Former Soviet controlled Estonia, Latvia and Lithuania all joined NATO and the European Union in 2004 with their investment appeal further increased as Ryanair and Easyjet started to offer low cost city connections.

Hosting the Eurovision Song Contest in 2002 also played a major part in putting Tallinn, Estonia’s capital city on the map. According to the Telegraph, Estonia was Europe’s property hotspot last year with an annual survey from the Royal Institution of Chartered Surveyors reporting a house price boost of 28 percent in Estonia compared to the UK’s 3 percent. Much of this can attributed to capital city investment and neighbouring Finland which provides much of its investment.

On the market with Arc-Property : A 15 minute drive from Tallinn’s main business district, the Karneri project features apartments in twin residential towers on a quiet, side street location. Just 100 metres from the western shore of Kopli bay, apartments overlook a nature reserve to the north-west and the old town to the north east. Within close proximity is the Rocca Al Mare shopping centre, the Saku Surhaal Concert/Sports Arena and a large supermarket. The only development in this area is the Estonian Open Air Museum, a vast collection of traditional Estonian buildings joined by trails through the woodland. Prices start from £57,600 and the apartments can be purchased with a deposit of only 20%.  

Continue reading ‘Look East for rock bottom off-plan property’

With off-plan real estate projects launching in Dubai almost every five minutes, it is getting difficult to keep track and with developers like Emaar expanding their portfolio to Morocco, Tunisia and Turkey interest in their projects remains high. Emaar is now committed to 6 major new development projects in Morocco. The latest 3 projects on offer include:

Oukaimeden: Known as the valley of four winds Oukaimeden Village, is located in the Atlas Mountains. Set to become Middle East and Africas only golf and ski resort, Emaar are creating a year round mountain destination
for recreation, entertainment, relaxation and residence, combining commercial, office (business &conference), retail and entertainment space. Residential options will feature authentic Berber design in keeping with its historical location.

Tinja: Intended to be a haven of peace and tranquillity, Tinja lies 20 minutes from Tangiers between seafront and natural indigenous forest. Designed to offer a Riviera lifestyle, Tinja will blend over 670 homes, hotel rooms together with a variety of leisure facilities around a vibrant marina location on Morocco’s impressive Atlantic Coast. This new development will be well places close to Ibn Batouta airport (currently served by British Airways, Iberia and Royal Maroc) and the main coastal highway and a gateway to explore the rest of Morocco.

Saphira: As reviewed yesterday, Saphira is located on the Rabat Corniche and is set to be a leisure and tourism hub of Rabat City comprising 9 districts, this particular development project is one of Emaars largest.

The initial 3 projects Emaar unveiled last year were:
Continue reading ‘Emaar adds three more new developments to its Morocco portfolio’

Dubai based developer Emaar Properties has broken ground on the waterfront site of its Rabat development. The fourth of its luxury planned communities in Morocco, the $3.4 billion Saphira real estate project will offer high quality residential communities alongside a variety of hotel and leisure facilities. In joint venture with ONA group, Emaar is committed to providing the necessary infrastructure required to support a destination for world-class tourism, work and culture, single-handedly enhancing the appeal and reputation of Morocco’s capital city.

The ground breaking exercise marked the start of Emaar’s international expansion and a major 10 year investment vision to skyrocket Morocco’s tourism interest in a similar fashion to that of Dubai, creating golf, ski, spa and Riviera-style communities in key locations from the Atlas Mountains to the Atlantic coast.

Saphira will cover 11 km of picturesque Atlantic coastline, the Corniche of Rabat is located on western side of the city. Comprising 9 distinctive districts, major structures will include a marina district offering waterfront living, convention centre with resort hotel, arts district with opera house, concert hall and mixed-use business and retail space.

The residential zones of Grand Littoral,  Beaux Rivages, Nouvelle Vague and  Trois Rives will offer a variety of aspects from the beachfront Medina Maris district to the peace of lakefront living. Family-friendly neighbourhoods incorporate parkland whilst the apartment complexes boast a plethora of onsite activities.

At the developments core will be the pedestrianised Le Grand Souk, a road and electric tram system will ease traffic flow while cycle paths and green spaces integrate seamlessly connecting new with old. The entire community will benefit from medical, educational, sporting amenities together with local services, whilst leisure outlets incorporate shopping malls, health spas and country clubs.

This is no mean feat, construction on phase one of the Saphira project is expected to take 10 years, with the first residential owners and retail tenants taking occupancy in two years. Emaar’s winning formula of themed mixed-use communities is a big attraction for the Moroccan government who hope that in translating this concept to Morocco, Emaar is laying the framework for self-contained, amenities-rich neighbourhoods which will hopefully generate the same success attracting the lifestyle-conscious home buyer as proven with Dubai.

Separate reviews of Emaar’s further four projects continue tomorrow