Buying off-plan means that you have control over your investment
You can land a bargain if you are prepared to do your research, writes Timothy Barber
Buying a property can be pretty much the most stressful process you can put yourself through. You can multiply that by ten when it comes to buying abroad. Whether looking for a holiday home or a simple investment, a new-build luxury development or a modest apartment, dealing with local regulations, by-laws, customs and bureaucrats can descend into a horrifying web of frustration and confusion that’s enough to stop you ever setting foot outside the UK again.
Buying off-plan is one solution, and a potentially lucrative one. “Off-plan” means buying a property before it is built, or at least fully constructed. You usually place an initial deposit with the developer of around 20 to 30 per cent of the gross price and pay the rest upon completion. There are numerous pluses. You benefit from discounted prices and the property’s capital appreciation between exchanging contracts and taking full ownership. You may have the benefit of being able to sell on the contract at a profit before it is built. And you’ll have all the problems of dealing with local authorities, workmen and regulations off your hands.
Get Moving
It also makes economic sense for developers. “If they’re building a new resort, developers don’t want everything to be for sale at once when the properties are ready,” says Stuart Atkinson, project manager at OffPlanPropertyExchange.com. “They want to get things moving early and gradually, and when they bring people in at completion they want the place to be occupied and in full swing already.”
As well as getting sales up and running in advance, selling units off-plan gives developers the security of having funds in place while they are building. To encourage initial investment, therefore, they may offer the off-plan properties at prices discounted by as much as twenty per cent.
Armchair Investing
Beware, though. In a marketplace in which customers can reap benefits while having minimal involvement in the project, it’s hardly surprising that there are a few unreliable developers out there. This is particularly true in the emerging property regions. Experts recommend sticking with the big established companies wherever possible, and taking the trouble to suss out the market properly.
“Off-plan can be very much armchair investing, and the fact that someone else has done the hard work is one of the great things about it,” says Atkinson. “A reputable developer should give you information on the economy and infrastructure of the area, but you have to be sharp and do your own research too. You only have to have a bit of nous, and you can make a lot of money,” he says.
It’s vital that you are aware of certain issues, though. If you are planning on renting something out for holidays, for instance, it’s good to make sure it is south facing.
Local Facilities
One of the attractions of off-plan buying, however, is the chance to be closely involved in the property’s cosmetic design, from interior furnishings to colours, fixtures and fittings.
Most off-plan property opportunities will be part of a larger resort development, and this can be at all ends of the market, from exclusive five star luxury to basic holiday apartments. In less developed markets, such as Caribbean regions, Eastern Europe or the Atlantic Cape Verde islands, the existence of the development itself should mean that the surrounding area is being redeveloped, and that local facilities and infrastructures will be reliable – as well as the property itself.
“In emerging markets, a completed, independent property may well not be up to the standards you would want,” says Greg Walters of OffPlanPropertyAbroad.
“Buying into a new resort with affiliations with hotel operators means that it won’t need overhauling, and because you can be involved throughout the process, it’ll be to the specifications you’ve stated.
“It’s an exciting way of buying property, and it’s a lot more stress-free than buying something completed, and potentially more lucrative.”
Emerging off-plan markets: Hot Spots
Dominican Republic: the Caribbean remains a great tourist destination for UK buyers, and the year-round good weather means year-round rental yields too. The Dominican Republic’s relatively new market offers better value than its more established neighbours such as Barbados.
Egypt: Some experts predict that Egypt will be the next big growth area in the Middle East, and with several major developers setting up operations there, the country could be a rival to Dubai and Abu Dhabi within a decade.
Cape Verde: Located off the west coast of Africa, the Cape Verde archipelago has been dubbed the “New Caribbean” on account of its glorious beaches, thriving local culture and fabulous climate. It has benefited from the opening of two international airports in recent years.
Bulgaria: The eastern European country has hundreds of miles of beautiful beaches enjoying Mediterranean temperatures along the Black Sea coast, as well as historical cities and impressive ski resorts.
Off-plan property with a difference: Cabin Fever
The off-plan property market established itself in the sunny holiday resorts of the Mediterranean, and has become highly popular as an entry into emerging market regions. However it also provides an opportunity to buy into new developments at the more unusual end of luxury western property markets.
One such example is the Village Le Studio development in Quebec, Canada, a series of ultra-high end log cabins being built around a private lake in the Laurentian Mountains, each in at least an acre of land.
Village Le Studio gained its name from the fact that the site was previously occupied by a world-renowned recording studio and its grounds, where artists including Sting, The Police and Celine Dion all made albums – the Bee Gees even recorded Night Fever here. The building housing the studio itself is being transformed into a luxurious spa designed to cater to the world’s jet set, with treatments based around minerals derived from the Dead Sea.
The most important things are the houses, however. If the words “log cabin” conjure up visions of rickety wooden shacks occupied by frontiersmen, think again. Village Le Studio’s properties are luxurious homes, ultra-insulated, eco-friendly and filled with all mod cons. The location, meanwhile, puts owners within 40-minutes drive of Montreal and in the immediate vicinity of spectacular skiing and snow sports for the winter, and golf, fishing and hiking for the summer. Canada’s real estate market is relatively strong, and with unemployment currently at a 33-year low, the country is so far avoiding being dragged into America’s economic turmoil.
The Canadian dollar remains just ahead of the US dollar, and with Sterling outweighing it by almost two to one, luxury properties are at a serious premium for UK buyers. The top priced houses at Village Le Studio cost CAN$1.9m, or around £950,000.
Britain can’t really provide much of an equivalent to a spectacular, concierge-attended cabin in one of the most stunning wildernesses in the world, but places of similar luxury in this country go for several million pounds.
For information on the Village le Studio development, call Paul Harrison of Emerging Real Estate on 0845 601 7293, email [email protected] or visit www.villagelestudio.com