Buying Off Plan

Off Plan Purchases

'Off Plan' purchases have provided excellent returns for many people and in many countries. The real key as to why buying 'Off Plan' can be such a good investment lies in the fact that normally you only have to pay a small amount of the purchase price as a deposit, and then often nothing until completion of the property, when the rest can be financed with a mortgage if necessary.

Buying Off Plan has benefits for both the developer and the purchaser. The developer is able to attract working capital for the project, with less potential reliance on bank finance and the purchaser will generally buy at a discount to the expected market value of the property upon completion. It is also not uncommon for the buyer to sell the purchase on, even before it is completed.

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Unbelievable !!! Britain is short of 60,000 homes a year

Britain is facing a shortage of 60,000 homes a year, according to the HBF. A decade of debate since Labour came to power means that there is now a consensus that we need more houses. Even green campaigners now concede that this is so. What we still can not agree on is what type of properties these should be and where to put them. This is what Brown will have to decide.

Builders claim that only 10 per cent of land in Britain is being developed. They argue that there is no shortage of land, only a shortage of planning permission, and that more land needs to be made available if we are to meet the Government’s target of building at least 200,000 new homes a year by 2016.

Last year, 160,000 new houses and flats were built. At the same time, more than 220,000 new households were formed. The Government also estimates that the number of households will continue to rise at a rate of 223,000 a year until 2029.

Aware that the provision of new homes was failing to keep up with the level of new households, the Government suggested four main growth areas for housing — Thames Gateway, Milton Keynes & South Midlands, London-Stansted-Cambridge-Peterborough, and Ashford — in its sustainable communities plan of 2003. It is also supporting 29 new growth points across the country; these involve new homes, new jobs, town-centre regeneration and higher design and environmental standards.

Times - April 2009

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Top Ten Property Hotspots

By Ann Adenius of Signature Residences Worldwide

We have asked industry experts to give us their hot tips for the property market in the coming year…..

1. DOMINICAN REPUBLIC

The Dominican Republic is one of the fastest-growing Caribbean destinations:
The World Tourism Organization named the DR the “Caribbean's No. 1 Destination,” ending Puerto Rico's 40-year reign.

25% of all travellers to the Caribbean pick the Dominican Republic as their destination, according to the Minister for Tourism.

Dominican Republic recorded an 8% increase in visitor arrivals in 2008 and aims to reach 5 million by 2012.

Not only is the nation committed to maintaining its status as one of the most reasonably priced Caribbean destinations, but millions of dollars of investment are going into everything from golf courses to marinas and from upscale shopping malls to sports facilities.

Dominican Republic already has more golf courses than any other Caribbean destination, with courses designed by legends such as Jack Nicklaus, Arnold Palmer, Gary Player and Nick Faldo. There are 27 courses either operating now, under construction or in the planning stages.

The Dominican Republic has seven international airports, more than any other Caribbean island, making travel easier than for other similar locations.
For investors, a combination of increasing tourist numbers, lower prices and occupancy rates that average above 85% in the most popular areas mean that rental property in Dominican Republic can produce excellent returns.

2. PANAMA

After Panama announced its canal expansion project in 2006, GDP growth rose to 11.2%, outstripping China, and making Panama not only the fastest-growing Latin American economy but, according to the IMF, one of the fastest-growing in the world. Now that growth has proven to be sustainable, Panama is firmly on the radar of European, Russian and Middle Eastern property investors.

The canal expansion, which will double shipping capacity, is expected to bring in an additional US$13 billion in direct revenue for the first 11 years, following completion in 2014. Already, the canal project is estimated to be adding an additional 1% to the GDP annually.

Panama City, home to the largest concentration of international banks in Latin America, continues to grow in importance as a financial hub — it hosts about 150 banks from all over the world. The Panamanian banking sector, which is attracting significant new investment, currently has a market liquidity of US$14 billion.

Being allied with the world’s foremost currency has its benefits, with monetary and price stability — almost unique in emerging markets — the net result.

Political and fiscal stability, combined with a mood of confidence, have triggered a construction frenzy — mainly luxury developments in and along the coast around the capital. These developments cater to an upwardly mobile local market, as well as an influx of North American buyers.

Hotel development is rampant, as developers rush to keep up with demand. A steady annual tourism growth of 12.5% shot up to 30% in 2007, the biggest spike in visitor numbers in the Western Hemisphere. The World Travel and Tourism Council predicts revenue from tourism will double by 2018, creating a need for another 8,000 rooms, 1,800 of which will be added in 2009–10.  

There are significant tax incentives offered to investors in Panama. For instance, some new construction projects are exempt from real estate tax for 20 years.
All these plans are great indicators that the fledgling investment property sector is being built upon solid and sustainable foundations, backed by the Panamanian government’s continuing commitment to a long-term programme aimed at making Panama more desirable and its people more wealthy.

3. KOH SAMUI, THAILAND

Thailand's incredible growth is fuelled primarily by a boom in tourism. With the number of travellers who flock to the Southeast Asian nation for its white sandy beaches, tropical climate and friendly, relaxed atmosphere increasing by 20% per year, resort properties on the island of Koh Samui will continue to attract a great proportion of these visitors. And that means property prices will continue to grow strongly.

Koh Samui offers the amenities of a developed destination, yet manages to retain the feel of a romantic tropical island. This, combined with its year-round sunshine, low cost of living and great hospitality, has made the island one of the most sought-after holiday and retirement spots in the world.

Several luxury resorts are planned for Koh Samui over the next five years, and aircraft seat capacity on international flights is expected to increase by 62% to accommodate the rise demand.

Koh Samui has also adopted stringent building laws to protect the island’s natural beauty and to prevent the construction of the type of highrise developments which blight so many resorts around the world. This means that no buildings over three storeys can be built in certain areas, and large properties cannot be developed on or near the beachfront.

The island is very accessible, with direct flights with Bangkok Airways from Bangkok, Singapore, Hong Kong, Kuala Lumpur and mainland China. The recent opening of a direct route from Bangkok to Koh Samui by Thai Airways International has added to the tourist boom by bringing in 300 tourists a day to the island.

4. SILVER COAST, PORTUGAL

The Silver Coast in Portugal has become one of the hottest properties in every sense of the word.

While Panama’s national currency is technically the “balboa”, it is matched on a 1:1 basis with the U.S. dollar and, for all but minor transactions, the American greenback is normally used.

Located on the west coast of Portugal on one of Europe's most spectacular coastlines, the Silver Coast is significantly less developed than the Algarve and offers superior value and investment potential. Property on the Silver Coast is on average at least 25% cheaper than the Algarve, with prices rising by 10-20% annually over the last five years. Returns have consistently outperformed the Algarve.

As well as offering close proximity to Lisbon and easy access to the airport, the region has breathtaking cliffs, long sandy beaches, medieval towns, charming fishing villages, fascinating historic and architectural sights to explore. The Silver Coast has been labelled the “real” Portugal.

Strict planning restrictions aim to prevent excessive development and preserve the area’s natural beauty, which is one of the aspects that make the Silver Coast so attractive in the first place.

5. VIETNAM

Real estate investors see in Vietnam the same opportunities presented by Thailand 20 years ago. In fact, many believe that Vietnam, with its breathtaking landscapes, friendly people and good food, will become the next Asian star, thanks to its wide appeal to both holiday-makers and those seeking a second home.

Vietnam’s recent policy changes on direct foreign investment are already attracting investors from around the globe, with an estimated US$44.5 billion plowed into projects in the first seven months of 2008 alone. Most of the newly licensed projects are in the real estate sector.

There is also enormous potential for tourism. Vietnam enjoys a 3,300-kilometre-long coastline, much of which comprises untouched sandy beaches and forest hinterlands. Experts predict Vietnam has the potential to become a prime resort destination in Asia, similar to Thailand and Indonesia’s Bali.

Luxury hospitality firms including Six Senses, Banyan Tree and Viceroy are already entering the country, signalling the start of Vietnam’s coming-of-age.

St. Lucia, recently voted by Condé Nast Traveller as one of the four most beautiful islands in the world, is enjoying worldwide attention, with a 7% increase in arrivals for the first eight months of 2008over the previous year.

Along with a booming tourism trade, St. Lucia benefits from a stable government and economy. It has a well-established real estate market, where buyers get a lot more for their money compared to more developed islands such as Barbados.

Property prices in St. Lucia are currently 35-40% of the price in Barbados, a gap likely to narrow in the next few years.

A World Bank report has ranked St. Lucia, which benefits from good air transportation links, among the Top 30 places in the world in which to do business. Private property is well-protected on the island, where the legal tradition is based on British common law, with the highest court of appeal the Privy Council in London.
St. Lucia also gets top marks for its warm climate, stunning beaches, crystal-clear sea and charming people, making it a leading island destination in the Caribbean for North American, British and European visitors.

7. BERLIN, GERMANY

Berlin represents one of the most attractive property markets in Europe, with prices currently below those of Prague, Budapest and Warsaw. Many private equity funds and investors have already invested billions of euros, believing the property market is still trading at a significant discount to other comparable Western European economies.

A large majority of Berliners live in rented accommodation, mainly apartments. Only 14% of the city’s residents own their own homes, a figure extremely low by EU standards, and also significantly lower than the 42% home ownership rate in Germany as a whole. The resulting strong rental market presents an excellent opportunity for a buy-to-let investor looking for reliable and secure rental returns.
In addition, there are signs of an increasing willingness among Berliners to purchase their homes, which is creating an increasingly stronger resale market.

With Germany’s economy dependent on the production of automobiles and consumer goods, there has been a slight downturn in prices recently as the recession takes hold. But the experts are still bullish on Berlin, forecasting that over the long-term, the city will be one of the great investment destinations for property buyers.

8. RIO GRANDE DO NORTE, BRAZIL

North Brazil, including virgin coastal areas of Fortaleza, Natal, Recife and Salvador, is attracting interest from investors as it is relatively underdeveloped and has a wealth of natural beauty. Brazil offers some of the most beautiful landscapes in the world, with thousands of miles of unspoilt sandy beach coastline. Northeast Brazil has the added bonus of being free of hurricanes, tsunamis and earthquakes.

The importance of tourism in this area is paramount, prompting the region’s authorities to invest heavily in infrastructure. A huge new $560-million airport — expected to be the largest in Latin America and one of the seven largest in the world — is being built in the city of São Gonçalo, about 30 kilometres from the region’s capital, Natal. Once completed in 2011-12, a dramatic rise in visitors is expected as air carrier routes continue to be added and airlines compete for business.

The region is reported to have the cleanest air and the purest water in the whole of South America — second in the world behind the Antartic. And in a recent survey, Natal was found to have the lowest crime rate and one of the highest quality of life rankings in Brazil.

With an average temperature of 30°C, 360 days of sunshine a year and up to 400 kilometres of spectacular beaches, it is not hard to understand Natal's popularity. It also offers exceptional food and entertainment at a fraction of the cost of its more southerly competitors. As a result, it is becoming a firm favourite amongst tourists, especially Europeans, who only have to fly seven hours to reach its sandy shores.
Experts predict that investment in high-end property is likely to be lucrative, since Natal is currently devoid of sophisticated luxury resort developments. The nearby opening of a David Beckham soccer academy in Cabo Sao Roque should also increase Natal's global profile.

Brazil has been named as the host nation for the 2014 FIFA World Cup, which will bring in more tourists and turn up the heat on the property market. With Natal’s property market tied to growth in tourism, infrastructure and overseas private investment — experts predict that property investors will continue to see healthy returns.

9. FLORIDA, UNITED STATES

Florida — with its renowned sunshine — stands out as a property hot spot in the United States. More than 82.4 million tourists visited the state in 2007, which is among the world's top tourist destinations.

Property prices are traditionally low compared to other tourist meccas, and attract those seeking a second home, a good investment, or a rentable property. With attractions such as Disney World, Universal Studios and many, many golf courses, it is little wonder that Florida has become a leading tourist haven.

Thanks in large part to Miami, a city that is becoming a cultural and commercial centre for the whole of Latin America, Florida is also a business mecca. Trade between the United States and Latin America is increasingly important, and experts believe that with NAFTA and the growing numbers of Spanish Americans in the U.S., this trend will accelerate. For property investors, Florida offers opportunities. Badly hurt in the U.S. property crash, Florida now has property for sale at less than half the price it was selling for a year or two ago. This is good, well-located and brand new property. Experts believe that the bottom of the Florida property market has been reached – or is very close to being reached – and that this is an excellent buy for capital growth over the medium term. Select and buy well and rental return rates of 4% or 5% should be achievable.

10. MOROCCO

Morocco is appealing for a number of reasons:
It is close – hardly any further than Spain.

It has good weather almost all year round.

It has a government that has committed itself to a 10-year infrastructure improvement plan with a view to boosting tourism. Much has already been done in the past seven years. Morocco has long been a favourite tourist destination for the French, and there are now more and more tourists coming from Britain and Ireland. Of these tourists, quite a number are now deciding to buy property. Mortgages are now available at sensible rates. There are, in effect, three different markets in Morocco: the Mediterranean coast, the Atlantic coast and Marrakech. Each is unique. But for investment purposes, the experts prefer Marrakech because there is not only a strong foreign market, but it is also highly favoured by Moroccans. In fact, many wealthy Moroccans have a home in Marrakech. This is important because when you sell, you are not solely dependent on one particular market.

In summary, we think there are good property investment opportunities in many countries around the world, provided that you take advice and make sure you buy the right property in the right location at the right price. Go for quality property, as quality will always outperform inferior property.