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It pays to be fussy
March 16, 2012Article by Ray Withers
Whilst none of us can say for sure that it’s the end of the recession here in the UK, as we approach the end of the first quarter of 2012, I am very glad to see that not only are enquiry levels up on this time last year but sales are too.
In fact, it’s shaping up to be one of the best quarters the Property Frontiers team have experienced this side of the dreaded “R” word. It’s pleasing to see that optimism about earnings and the US economy drove the Dow Jones to a post-crisis high above 13,000 and the FTSE 100 flirted above the benchmark 6,000 level. So could this be the turning point we have been longing for? I certainly hope so!
From the volume of sales emails, adverts and phone calls I receive personally, there seem to be no shortage of investment opportunities out there but whilst it’s wonderful to have so much choice, the problem is sifting through the trash to find the treasure – the main reason I co-founded Property Frontiers in the first place.
This is where it pays to be fussy. Our sourcing team here at Property Frontiers reject over 95% of the projects presented to us; of those that do interest us, less than 0.3% actually make it through basic due diligence (planning permissions, proof of title and country / market fundamentals). You would have thought that the only positive from the economic downturn would be to weed out the weaker projects and cowboy operators but it seems that there is still a lot of riff-raff out there. Even we, with 50 years of combined experience in the marketplace, still find it challenging to siphon through and find the right opportunities.
So what can investors do to make sure they get the best?
Well, there are some overseas property trade bodies in existence such as the Association of International Property Professionals (AIPP) of which I am a founder and board member, which is trying to bring some form of professionalism and self-regulation to the industry. Members, including Property Frontiers, must comply with a code of ethics, so it’s worth watching out for the logo.
I would also encourage investors to look at the track record of an agent or developer. Have their previous projects been successful? Do they have lots of happy clients? Have you ‘Googled’ them? Are they property market specialists? This is one area which sets us apart and where I think we lead the market. We have always been know as pioneers in the industry, fully embracing opportunities in emerging property markets such as China and Mongolia or identifying new, lucrative asset classes such as student accommodation in the UK whilst conducting research and due dilligence to minimise investment risk. As with any investment, I can’t say we have got it right 100% of the time, but as a testament to our approach and ethics, over half our clients are repeat investors.
Timing is also crucial for an investment to be successful. Following the “Sage of Omaha”‘s wise words, it’s imperative to buy at the right time, often at the bottom of a property cycle and not just when everyone else is. By that time you’ll have missed the boat. For example, we believe that now is the right time to buy in the US. As I explained to the Daily Telegraph earlier this week, property prices are back where they were around the turn of the millennium with prices in some states up to 70% below their 2006 peak, making it a great time to buy.
As we head towards Q2, our hunt for the best international investment opportunities will most definitely continue, and while we’re confident in our approach we’d be delighted to hear your thoughts. Do you think we’ve missed a trick? Overlooked a certain market? Could our products or service be improved?