 Research has suggested that more than three quarters of potential international property buyers want to buy either off-plan or new build property. Whether to look for new build or older property is a question that depends on your reason for buying and location. New properties are generally easier to maintain, an important consideration for investment property or a second home. Many new build properties are within developments and a sense of community can add value to a rental property especially if you are aiming for holiday lets. A number of developments have been specifically constructed with the investment market in mind and by far the most popular is off plan property. Buying off-plan simply means purchasing a property before the building has been completed. Instead of physically looking around a completed building the buyer works from artist impressions, plans, computer generated images, detailed information about location and potential yield if it is purely for investment. This arrangement suits both developer and purchaser. Off-plan property is generally sold at a discount to market value, sometimes up to 50%, in order to compensate buyers for the inconvenience of waiting for completion. It is not uncommon for prices to rise in three or four, perhaps even more stages. The property will be most heavily discounted upon its initial release. As the development nears completion the developers risk exposure lessens and they raise prices accordingly, eventually catching up with “market value”, however, in the majority of cases the developments are sold out prior to completion because of the discounts available. Selecting a development The primary reason for selecting a development is that you believe it is a good investment. Perhaps there is a five star hotel on site to help attract paying tenants, or indeed, perhaps the property is within a five star resort managed by an international hotelier whose business it is to introduce paying guests? Perhaps you feel the off-plan prices are undervalued for the location. Whatever your rationale, you need to ensure that the off-plan promise translates into reality when the development is completed. There are simple measures you can make to ensure that you are making the right choice of development as most risk lies in ignorance. Look at the developers’ track record; see what developments have been completed or nearing completion. Look at their business partners; you can be assured that household names will have carried out the strictest due diligence to protect their branding. Study the floor plans with a fine toothcomb. Are the communal areas and swimming pools large enough for the amount of families or guests within the complex? What are the recreational facilities like? Are there sufficient restaurants and shops close by? Safeguarding your investment Ask to see copies of title deeds and building regulations, these are of specific importance if the construction has yet to start. In some instances full planning permission will have yet to be granted. This is where the higher discounts tend be offered as there is an element of risk involved, however, developer insurance, taken out by the company and guaranteeing at least your money back if the project falls through, will help keep your investment safe. Diversify your portfolioDiversifying is simply a matter of hedging your bets. Tempted as you may be to snatch up as much as possible within a development or indeed a continent, think again. Any unexpected change in the market will endanger the whole, rather than a small proportion of your investment.
The ideal approach is to split your investment and buy as large a range of property and indeed alternative investments as possible. Should your budget be limited then instead of buying a single property you should perhaps look at fractional ownership which would enable you to buy in multiple locations. Buying on different continents will reduce your risk exposure even more, by limiting the impact of regional events on your portfolio. Alternative ethical investments such as carbon offset and sustainable timber are also worthy of consideration. Off Plan discounted property investments currently available:
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