Off Plan Properties: a Seducing and Flexible Investment

Buying off plan not only offers a convenient way to maximize investments whilst properties are still being built, but it is also possibly the best way to get the location and specifications you want. And as the processes of property design and construction increasingly make use of cutting edge imaging technology, those buying off plan can now see and plan their properties in three dimensions even before the foundations are laid. If buying off screen doesn’t get you excited, the possible returns might clinch the deal.

Off_PlanA leading financial centre and tourist destination, boasting the world’s largest city airport system, the largest concentration of higher education in Europe, and the first city to host the Summer Olympics three times, London has a well-deserved international reputation. But the tag “Major World Capital” rarely comes without its price. In general terms, if you live in the UK, the closer you live to London, the higher the cost of living. While Britain may be in the early stages of recovering from the global economic crisis, house prices are on the rise once again, nowhere more so than in London. Whilst buying a property in the capital is still out of reach for many, for those looking to invest, it continues to be an attractive prospect; with a market in growth, off plan properties can offer outstanding returns. In addition, many investors enjoy the chance to take part in the often-rewarding creative process of designing their dream house, whether buying for themselves, re-sale or to let, investing in off plan property can meet a variety of demands.

Like all investment, buying “off plan” comes with its risk and pitfalls, some specifically linked to the incomplete nature of the property when sale is agreed. There are many advantages though, not least when it comes to financing a deposit. Typically, you can buy off plan with as little as a 10% deposit due before completion, and so on longer-term construction schedules, this can offer you up to four years to raise the capital. It is also common for developers to offer financial incentives to early adopters in the form of a discount, in some cases up to 10% off the asked price. Additionally, investors can benefit from property price growth during construction, after the price has been agreed and before the final sum, or any mortgage payments are due. In a rapidly rising housing market, property investors may achieve substantial capital gain. The figures are persuasive: 10% property price growth on a property reserved for 10% of its price returns 100% on invested capital. To maximize returns, off plan properties should be sourced in the highest growth area you can afford, preferably on construction projects at least one year until completion.

The reasons why people choose to investing in off plan property vary, with many buying as a medium to long-term investment, owing to the fact that completion may take a few years. Off plan properties can also be re-sold before completion of construction, if this becomes necessary or advantageous. One advantage to selling early is the avoidance of up to 4% stamp duty, which is due only for fully constructed properties. For those investors who decide to keep the property, however, the balance may be paid with a mortgage or their own funds and, quite often, is then rented out.

From a quality and aesthetic perspective, those looking for a home benefit also from having their say at every stage of construction. Indeed, investors are able to choose how they wish their finished property to look and feel: from the best views to their preferred fixtures and finish. Post-completion, those who have bought off plan usually benefit from a structural guarantee issued by the National House-Building Council or another similar organisation. New build homes are also easier to maintain, manage, rent out or sell. No wonder then, that latest research shows that as many as two in five of London ́s new-build homes are now bought off plan.

Better be Safe than Sorry: As you would expect, everything may not go plan or run to schedule, so when buying off plan it is advisable to get a specialised conveyancer to review the contract, investigate the potential impact of a value fall after exchange or what would happen if the developer goes bust. Keep routine visits to the site and make sure you have to hand a tearing survey before moving in.

Buying Privately – Why It Makes Sense

With house sellers’ asking prices lifting to record highs for two months in a row, and amid a poor supply of homes for sale in many areas of the South, is buying privately the answer?

New seller asking prices in England and Wales hit a new peak of £262,594 in April, up 7.3 per cent on a year ago, marking the fastest annual rate of increase seen since October 2007. So buoyant is the market that many popular locations are suffering from for sale sign “black spots” due to properties being snapped up within days of doing on the market. In London, asking prices are up by 15.9 per cent on a year ago typically and since 2007, London sellers have typically hiked their prices by more than the cost of an average home in the North West. And it’s not just the capital, prices are higher in every region across England and Wales than they were a year ago. It’s a sellers’ market again, but can buying privately help redress the balance in power?

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Buying privately puts you in control of the buying process and offers many advantages over the more common process of buying through an agent. Primarily, communication is direct and so tends to be quicker and less complicated; you can get immediate answers to your questions and an instant decision on any offers. Negotiations too, can be quicker and more simple, and by dealing directly with the vendor, you will be able to get quick and accurate updates of the sales process. In fact, in many ways, buying privately is much easier than buying through an estate agent, but more than ever, it is advisable to do your homework before attempting to buy a property without one.

Researching the market is key no matter how you decide to buy, but not just the listed prices on agency websites. Check the actual sale prices of houses in the area using sites like Zoopla, taking into consideration the readily available market statistics to calculate the most likely up-to-date figures.

Having already sold your home, or being a first time or cash buyer can put you in a strong negotiating position. Whether or not your offer is accepted may depend upon other factors and your own personal circumstances. Be sure to include this information when you make an offer, particularly if it is in your favour. It is also worth getting all the necessary information ready to go before you make an offer. Simple things that make you look well-organised and reliable, like supplying your contact and financial details promptly can make a difference.

Meanwhile, the Royal Institution of Chartered Surveyors (Rics) predicts that house prices will continue surging by around 6 per cent annually for the next five years, mortgage support schemes such as Help to Buy and improving consumer confidence have prompted more buyers to flood into the market in recent months, and London continues to attract strong interest from overseas investors. It seems like the sellers’ market is here to stay, but buying privately is one way to lessen the cost and stress of purchasing property, making it the right time to buy too.

A Second Scramble for Africa

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This article first appeared on Hubbis.com
African ultra high net worth (UNHW) rose by an impressive 6.9% from 2012 to 2013. The main reason for this rise in high net worth is the continent-wide resources boom, where resources like copper, cobalt and, most notably crude oil, are being exported at exponential rates. It is no coincidence that out of the seven African countries with most billionaires, six – Egypt, Nigeria, South Africa, Kenya, Tunisia and Angola – have benefitted from the resource boom. The Wealth-X and UBS Billionaire Census 2013 tells us that there are 14% of African billionaires who have made their fortunes in the oil and engineering industries. Moreover, out of South Africa’s billionaires, who account for 30% of the regions wealth, 22% are in the metals and mining industries.

Traditionally government officials and entrepreneurs have capitalised on these vast resources, based on a quick-buck strategy, importing infrastructure and scientific know-how from the rapidly expanding economies like China and India, as well as established ones like the US.  In Equatorial Guinea for an example: of the 10,000 people employed by the Equatoguinean oil industry, the majority are US citizens. This lack of local infrastructure has led to Nigeria despite being Africa’s biggest oil producer, exporting 40% of its oil to the US, Nigeria itself presently imports a staggering 85% of the oil it consumes because it lacks  basic infrastructure like oil refineries. Therefore, to continue growth, UNHW individuals in African countries should focus on long-term projects, like improving home-grown scientific and engineering knowledge in order to prolong this period of growth.

Africa’s rise is by no means a bad thing; the continent has become a major player, which is a necessity in what is now an interconnected, global market. However, if Africa’s new UHNW individuals wish to continue sustainable growth they will have to pursue strategies that benefit of the continent as a whole. Previously many African-born UHNW individuals have migrated elsewhere, to havens where they are confident that their wealth will be protected and grow in a sustainable manner. However, if opportunities are seized upon now and suitable investment made there is no reason why Africa can not sustain this boom for many years to come.

Battersea Power Station

Battersea Power Plant London’s Battersea Power Station developer plans to sell luxury apartments for as much as 30 million pounds each, anticipating buyers will pay a premium to own prominent pieces of the historic building.

Battersea Project Holding Co. bought the Battersea site for 400 million pounds last year after its previous owner was put into administration, a U.K. form of bankruptcy protection. They will begin by selling 250 apartments at 2,500 pounds a square foot in April. The estimated price of a penthouse, to be built in the second phase of construction, is 25 to 30 million pounds.

The Battersea plant is Europe’s largest brick building and built in the 1930s consists of four 350-foot-high smokestacks, it is an investment that comes with the opportunity to own a genuine piece of British history in a unique location. The development is part of the Vauxhall Nine Elms Battersea Opportunity Area south of the River Thames and across from the Kensington & Chelsea and Westminster boroughs. It’s the U.K. capital’s largest redevelopment area and includes a new U.S. embassy and an extension of the London Underground.

The developer’s Malaysian roots may help it reach Asian buyers who have been snapping up London new homes following property curbs in their home country. Two-thirds of new London homes sold before completion are being purchased by Southeast Asian buyers. Measures taken by Singapore and Hong Kong to cool their housing markets have prompted buyers to seek investments abroad.Luxury-home developers are planning to build more than 20,000 properties in London over the next decade. The Battersea development has about 6,000 registered customers and there’s no risk of oversupply of luxury apartments in the area. The project’s first phase was sold in excess of 1,000 pounds a square foot and the third phase is expected to come to market in September next year at 1,800 pounds a square foot.

Off plan property is once again becoming a darling child of the property investor’s arsenal (read a previous blog post here explaining how it works) and we are in a position to provide advice and opportunities in Greater London with percentage discounts into double figure. Contact me for further information.