On our recent trip to Hong Kong we were amazed by the frequency with which we would see signs marketing London property. New-build schemes plastered across the sides of buses, on billboards, in newspapers; it was unrelenting. Naturally, as international buying agents, we have heard stories; however, you have to see it to believe it. Now we understand why UK agents claim that up to 80% of stock in some schemes is sold in the East.
Every weekend Chinese and UK developers launch off-plan properties for sale in the UK. Hundreds of would be investors visit lavish functions held in 5 star hotels or state-of-the-art showrooms and are greeted by enthusiastic selling agents who sell out of stock within hours.
It was apparent that many over-seas investors never visit the properties they buy and rely solely on selling agents to guide them. Buyers often don’t have their own representation and are largely unaware of the services and added value that a buying agent can offer.
When meeting one of our clients we couldn’t help but bring this up. He usually buys period buildings through us, so we were surprised to hear that recently he almost bought something off-plan but at the last minute decided not to. He then went to Google Maps and had a look at the site. He was surprised to see that it was a “barren wasteland” with nothing around it.
As a London property-buying agent, we take for granted our intimate knowledge of London. When we see a development, we often know immediately whether it is suitable for our clients or whether it is a “barren wasteland”. However, as an over-seas investor, many of whom have never been to London, why would you think to question the glossy CGI images that are put before you?
Unfortunately, it’s not always that simple. Yes, the development itself looks sleek and sexy in the CGI images, but what is going on around it? What is happening in the wider area? Are there other, better developments? If so, will they all finish at the same time, saturating the lettings market? These are all important questions. However, without good knowledge of the London market, or an awful lot of time, it’s not easy to find the answers.
Even when a buyer has committed to a specific development, there are numerous other decisions to face; which lawyer, tax advisor, accountant? How to furnish, who will let it, how will it be managed if for personal use? What are the legal obligations regarding utilities, insurance, fire precautions? How to handle on-going maintenance? The list goes on. Naturally, more variables mean more problems.
We eradicate all those problems for the small group of Hong Kong investors for whom we act as buying agents and on-going asset managers. We found that our clients form a small minority of investors who use buying agents, visit properties personally and invest in traditional period homes rather than new developments.
New developments do not always appreciate in value as consistently as period properties do. It is understandable that buyers who are thousands of miles away will not always visit the assets they purchase and that it is sometimes more simple to acquire units in new developments, packaged for ease.
This however is not necessarily the most profitable way to invest in the UK property market.
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