Category Archives for "UK property investment"

Post-Brexit London off-plan development sales are holding

Increasing your off-plan sales post-Brexit

For several years the UK housing market has been diverging into a two-tier affair. On the one hand, you have London property, and on the other, you have the rest of the United Kingdom. Post-Brexit, it looks very much like London off-plan developments are being polarised into two distinct sectors: domestic investment and foreign investment.

Here, I’ll discuss and distill some of the recent news that supports this view, and examine how property developers in London take advantage of this new dynamic.

The UK house prices: a two-tier market?

According to the Nationwide House Price Index, in the UK, regional and London house prices tracked each other between 1973 and 1996. Apart from a blip in the mid-1980s when London property prices broke higher temporarily, property values across the UK increased at the same rate.

But since 1996, when it became apparent that the UK would not join the Euro, London property prices have outperformed prices across the UK regions. From an index base of 100 in 1995, the London House Price Index has risen to more than 700, while the UK House Price Index has increased to a shade more than 400.

There are some factors for this massive outperformance. Primarily these reasons focus on the financial sector. As it became apparent that refusing to be a euro currency member would not damage London’s status as a financial centre, and contrary to expert forecasts at the time, investment into London property increased.

We see this dynamic repeating now, but with a much more polarised focus. London is – at least in the short term – a mecca for foreign investment into property.

Off-plan development sales slump… or is it?

Figures released by Molior London in mid-July showed that the number of off-plan properties sold in the second quarter of 2016 (ahead of the EU Referendum) fell from 6,974 to 4,600 from a year earlier. This was partly blamed on uncertainty ahead of the Brexit vote, but mostly on the continuing effects of the 2014 tax hike. On top of this, stamp duties were raised on higher value homes, and changes to the way that buy-to-let mortgages are taxed also had an effect.

Since Brexit, agents have reported a divergence of interest in London off-plan developments. It has been reported that as many as one in eight buyers of property under construction have pulled out of the deal. These are domestic, UK-based buyers. They’re nervous of what Brexit may mean to house prices in the London market.

Meanwhile, foreign buyers have flooded in. This was forecast in an excellent article by Brett Alegre-Wood, who anticipates that Brexit has the potential to create a once-in-a-lifetime opportunity for investors in off-plan property in London. In that article, Brett points out that:

• Demand for off-plan property in London from foreign investors is likely to increase
• Long-term demand from renters and homebuyers in London will remain strong
• Off-plan property in London represents excellent value to the investor

Mirroring these forecasts, London’s agents are reporting a huge uptick in foreign investor interest in off-plan developments in the capital. The pound’s collapse has put London property firmly in the bargain bucket as far as foreign investors are concerned. Some agents have reported a spike of 50% in enquiries for properties.

How to stop your London development from being mothballed

Some property developers have reacted with extreme caution towards the Brexit vote. Some have mothballed projects, while others have said that they will reduce the pace of building. This offers some developers an opportunity to make hay while the sun shines.

On 11^th August, the Royal Institute of Chartered Surveyors (RICS) reported a softening in house price growth and falling prices in London. But interestingly, in the same survey, it said that its sales and price expectations on a twelve-month view have risen. In other words, the current softening of the market looks more cyclical than systemic.

Developers who strategise for off-market off-plan sales to foreign investors probably won’t have to mothball any developments. They’ll benefit from:

• lower competition in the market;
• continuing demand for long-term rentals and from homebuyers; and
• expectations of a return to the growth path within twelve months.

Here at Castlereach, we’ve also seen enquiries for off-plan development property in London increase. As I’ve discussed recently, UK property investment is high on the list of our foreign investors. Now is the perfect time to get in touch and implement a bespoke off-market, off-plan sales strategy that taps into this rich vein of foreign demand. Don’t mothball, market!

Call me direct on +44 207 924 5680. Our foreign investors have specific investment needs which London property satisfies.

Live with passion and fun,

Brett

London Property developers: Increase sales and reduce costs

London property developers can reduce development sales costs

Many London property developers go to extraordinary lengths to recruit, train, and incentivise their own property sales people. Many entrust their off-plan sales with estate agents who talk the talk but stumble at the first hurdle.

London can be an exciting and profitable market for you; but if you hire the wrong people or work with the wrong agents, then selling your prime location London property could fall short of expectations.

Here I’ll look at some of the hurdles you face as a property developer in London. Working with Castlereach, London property developers could cut costs, reduce your stress levels, and give your sales the boost you’re looking for.

Working with estate agents – reality check

While not all estate agents are the same, many London property developers and elsewhere find the results they get simply don’t match up to expectation or promises made. The agents generally match home buyers with home sellers. New development sales are different. You’re selling a dream. A lifestyle goal. A vision. Most challenging of all, it’s not even built yet.

Many estate agents, especially when the market has been as hot as it has over the last few years, get lazy. A homebuyer walks into the office or makes contact by email or phone. The buyer views the property, agrees to buy, and the estate agent walks away with their commission.

That’s not selling, that’s facilitating.

Our property consultants talk to investors every day. We know where the natural buyers are for your prime location property in London. We know how much each investor has to spend, what their objectives are, and when they want to make their move. Knowing the buyer inside out is a big advantage when selling.

Running your own property sales team

Most significant London property developers have some sales resources in house – onboarding, recruiting and training an in-house sales team should be a far more productive route to selling off-plan in prime location London. They’ll inspire buyers or property investors with your vision. They help others to see how, as property developers, London is a key market for you, and you know your market inside out. If they’re experienced, your in-house sales team will have buyers eating from the palm of their hands. Therein lies the rub.

The chances are you’ll have to spend some time, money and effort educating and training your team. Time, money and effort that you could use elsewhere. They need to be coached to utilise strategies and processes that put them in a unique position – being your representative, but being the buyer’s advocate, their biggest supporter and champion. On every single property transaction, you’ll find some of this training has to take place by shadowing – you’re paying two agents to make one sale. Will the starter learn? Will they work out?

If you find a good salesperson, treat them well. If you get a great salesperson, wrap them in cotton wool and hold on to them tightly – or you might find you’ve paid all that money for training a star salesperson who goes to your main competitor.

Our property consultants have years of experience. They are seen as effective middlemen by both sides of the equation and for good reason. It’s because they are. They keep abreast of property news, property guides, and international property investors’ needs.

Our consultants advise property investors about your prime location property based on our own research and the merits of your development and you as a property developer in London. That’s a powerful combination of investment positives.

Work with Castlereach and increase property sales

When you work with Castlereach, London property developer in house teams don’t get slowed down, having their time burnt with endless negotiations on a property-by-property basis. We’ll put together a deal that works for you, your development and our investors. Importantly, the whole of our process is totally off-market so it won’t affect your other sales efforts. It’s a win/win/win.

We’ll be involved throughout, making sure that investors’ expectations are managed in line with your delivery capabilities. We progress each sale through to completion and take away a lot of the stress involved for developers. That’s just one of the reasons we’ve worked with more than 100 developers across the UK and sourced around £1 billion of new build and off-plan property for property investors at home and abroad. It’s a track record we’re right to be proud of, and one that property developers (London and elsewhere) add to with every collaboration.

Working with our team saves you the two most precious things in any London property developers’ business – time and money, as well as all the effort you would have spent on an extended in-house sales force. We buy off plan and new build property in volume with an approach that supports your existing sales and marketing strategies. You’ll generate momentum and be able to adopt different pricing strategies as your units sell as our investors step into secure your scheme and reduce your financing costs in London.

To create added value to your existing marketing efforts, call us today on +44 207 923 5680. We have investors ready to make a difference to your scheme and take your sales to the next level.

Live with Passion and Fun,

Brett Alegre-Wood

London Off-Plan developments, 5 strategies to make selling a breeze

Create competitive advantage when selling new build property in London

Some say selling off-plan developments in London might be a little more difficult than it used to be. We see plenty of reasons why off-plan property London will still sell post-Brexit. In fact, there are thousands of reasons why off plan property is still selling so well. Shortage of housing stock, planning consent issues, exchange rate fluctuations… Whatever the market conditions, there is always an opportunity. You just need to know where to find it and ensure that you maximise potential sales volumes and prices by deploying the right strategies.

Here I explore five ways in which you can give your sales an edge and ensure buyers follow through on their promises.

1.    Select a partner with a proven off-plan sales track record

Many savvy investors don’t like to work through a developer’s sales agents when they want to buy new build property in London. They see the sales relationship as too close. They’re worried there’s a potential conflict of interest and that won’t get them the best price. On the other hand, local estate agents are unlikely to have the international reach (particularly valuable with the value created by the fall of the pound after the EU Referendum vote) you need to power your sales.

Partnering with an organisation with a strong database of high net worth clients – both domestic and international – is a huge step to achieving those vital early-stage sales of new builds. Despite what the doomongers were saying, London is still a destination for investment; you simply need a partner who can introduce those investors to you.

2.    Get the best research available and Off-Plan developments in London will sell

A three or four-page glossy brochure may be enough for a homebuyer, but property investors need more. The more comprehensive their research, the more inviting your new builds in London will be. The easier and faster you can make that research available to them, the faster your sales. Your preferred partner should be working hard to provide property investment research to their clients and investor base. Check out their previous materials and see if they stack up. Would you have considered buying one of their previous developments if you had the money?  This will be part of the reason you chose them.

3.    Pay attention to the fine print, property investors do

High net worth investors will have contracts examined forensically. They’ll be looking to make sure that the opportunity is all above board and they are playing on the level field. Make sure you have necessary warranties in place, and that you’re not seen to be attempting ‘underhand’ tactics through the contract’s fine print.

4.    Make it clear what is included in the new build London investments

Property investors don’t like the ‘what you see is what you get’ developers. They want to know they are getting a quality product that will appeal to onward buyers or renters. If your model home or example illustrations are adorned with all the mod-cons, investors will expect the same. Make your offering documents as detailed as possible, so that there is no room for complaint or confusion.

Again, your off plan sales partner should be able to provide some guidance if needed, and liaise directly with clients to remove any misperceptions.

5.    Always be there for the snagging inspection

Investors will want to snag an off-plan property the easy way. Help them by being present during the snagging inspection, explaining what can and can’t be changed. Working with the investor at this stage will ensure that the next time they are offered off-plan developments in London from your company they’ll already be a favourable buyer.

Off Plan Development Sales – In summary

By working closely with an investor, you’ll ensure your sales go smoothly. Many developers don’t put a value the amount of time it takes to progress a sale from initial discussions through to completion. This can be time-consuming and distract from other marketing efforts. Costs increase, opportunities might be missed, and you might have underestimated the resources needed to retain your investors.

By teaming up with a reputable partner – one with an extensive investor client base and suitable experience in the market for off-plan developments London – the pressure on your sales team is reduced. They can focus on their channels and converting customers visiting the site office or making enquiries. You’ll benefit from early-stage, off-market sales which will not disrupt other marketing initiatives.

To find out more, call the Castlereach team today on +44 207 923 5680. We have investors ready to make a difference to your sales.

Any questions? I do hope so…

Live with Passion,

Brett Alegre-Wood

Why off-plan property London still sells post-Brexit

Analysing property investment news and the facts as we know them

Depending on what press you read, property in new developments and off-plan property London sales are either in for a slowdown or a crash in sales and values post-Brexit. Apparently, some new property developments and off plan properties have been put on ice indefinitely. Others rushed to completion.

Here I look at the latest contradictory news that leads us to believe a ‘steady-as-she-goes’ approach will be the best course of action in the coming months and years.

Headline: “Sales slump that will crush off-plan property in London”

“Housing sales forecast to fall sharply this summer after Brexit vote” chimes a headline from the Guardian newspaper. Citing a Royal Institution of Chartered Surveyors (RICS) survey conducted in June, the newspaper says inquiries and sales fell for the third month running. However, the survey also showed that the supply of properties also fell.

The survey may have revealed the most bearish confidence reading since 1998, with a quarter more RICS members expecting a drop in sales than a rise – but we shouldn’t forget that the survey took place at the height of Brexit fears and approaching the traditional summer lull.

Sentiment among property sales agents of new property developments and their end buyers has also been swayed to the negative side by the effects of recent stamp duty rises. Investors rushing to get deals done before the stamp duty increase meant a slowdown in sales was already on the cards.

Soft landing for property prices

Many expert economists predicted a collapse in property prices after Brexit. In its reporting of the same RICS survey, the Daily Express produced the headline “House prices post-Brexit: ‘More of a soft landing than a crash’”.

It emphasised that RICS members see a softening of prices, but certainly, don’t expect a collapse. Prices in London are the only ones in decline at the moment – that might be a short-term drag on off-plan property in London – but elsewhere they’re still rising.

Off-plan property London prices might dip or remain static for up to 12 months, the survey said, but within five years they are expected to be an average of 14% higher than they are today. That type of forecast leaves a lot of potential for profit for investors in new build property developments – especially for investors looking for capital growth over the longer term and yield in the shorter term. There’s a shortage of housing stock in London remember.

The country needs more homes

We also saw a report from the BBC asking, “How can the UK build more homes post-Brexit?” highlighting the call by the National Housing Federation CEO, David Orr, for “pragmatism and flexibility” in government housing policy. It says that social housing building should increase in response to the fall in private housebuilding.

It puts the spotlight on factors that cannot be ignored by the new property development industry: there is simply not enough supply to cope with demand.

The balanced view for new property developments

Brexit was a shock. It’s causing some uncertainty. Uncertainty leads to fear. But like Warren Buffett says, “Be fearful when others are greedy, and greedy when others are fearful.” There is undeniable underlying demand for homes in the UK.

It’s estimated that we’re building as many as 220,000 too few new homes every year. This dynamic hasn’t been missed by our bank of wealthy foreign investors. For these, UK property investment is high on the list of their investment targets − off-plan property London included.

The slowdown in sales has been caused by three factors colliding at once:

• The stamp duty rise in April and the rush to completion sales that pushed sales numbers through the roof.
• The traditional summer lull in sales.
• The initial uncertainty caused by the Brexit vote.

We’re already seeing signs that the effect of these factors are fading,  fast. The FTSE 100 has pushed way beyond its pre-vote level. The pound has stabilised at a level that creates exceptional value for foreign buyers. There’s a new leader of the government and a Brexit plan is being formulated and communicated.

In the medium to long term, the Brexit shock will be seen as a blip – no more, no less. If you’ve got new property developments underway or in the pipeline, the interest from our investors is saying that you will probably do best by steering a steady course as you navigate through the Brexit fallout.

Where others are fearful, we’re pragmatic. Where others are greedy, we’re analytical. If other developers do pull back, that’s more demand for your off-plan sales.

Call us today on +44 207 923 5680 to discover how you can reach out to our bank of foreign and UK based property investors.

Live with Passion,

Brett Alegre-Wood

UK property investment high on the list of foreign investors

Investment interest in UK property is spreading out from London

International investors are an increasingly important piece of the UK property investment jigsaw. Not only in London but also in other major UK cities. In fact, news released in the last few days underscores the high regard in which international investors hold the UK for property investment. This doesn’t surprise us at Castlereach, where international investors make up a large part of our investor client base.

UK property investment – a safe haven for Chinese investors

As the Chinese economy is slowing, wealthy investors in China and Hong Kong are looking to foreign shores to invest more safely.

As reported in the South China Morning Post, wealthy investors from Hong Kong view the UK as one of the three top markets in the world for property investment, and in particular are targeting London, which has benefitted from ten years of property price growth that has outstripped the rest of the UK. In and around London, the property market is benefitting from a number factors, including strong population growth and the improving transport links into the city (for example, Crossrail is having a hugely positive effect on outlying commuter towns).

The government backed Northern Powerhouse scheme, and High Speed 2 are helping to spread this positivity surrounding UK property investment to regional cities including, Birmingham, Manchester, and Liverpool.

Middle East investors looking to the UK

Research led by YouGov has discovered that nearly two-thirds of the wealthiest investors from the UAE are expecting to buy property abroad this year, with London ranked as the joint top location with New York.

While a possible Brexit is a potential worry for foreign investors into the UK, with concerns over economic growth high on the investor’s agenda, a weakening pound is making UK property comparatively cheaper – it’s a two-edged sword that is overall positive for our bank of investors in the Far East and Middle East looking to benefit from the UK’s strong property investment fundamentals.

How we help property developers reach their targets quickly and more profitably

A property developer that works with us has the immediate benefit of an international reach, with marketing to target investors who are actively seeking UK property investment opportunities. We’ll handle tricky negotiations, too, saving the developer both time and money. The developer doesn’t have to take a crash course in the culture of the foreign investor, either: we’re well adjusted to our foreign investors’ cultural customs.

If you’d like to discuss a bespoke off-market strategy to reach a rapidly growing foreign investor bank with specific investment needs, give the team a call on +44 207 923 5680.

Live with Passion,

Brett Alegre-Wood