Chintan Mahidais, Marketing Director at new-development specialist NuBricks. For further information, visit www.nubricks.co.uk.
Why city-centre investment could be a safe option
Q. I am looking to invest a lump sum of 70k in overseas property but given the current climate I am at a loss as to where or what to invest in? Could you give me some ideas?
Katy Thomas, by email
A. Katy, you are right to be confused. With property markets around the world in flux, there is no clear benefit to investing in any one place. You have to decide whether the 70k is the total value of the property you would like to invest in or whether you are prepared to use the 70k as a deposit for gearing. For starters, at present holiday homes in Europe must be viewed as a long-term investment the strength of the euro is making the buying process comparatively more expensive.
My advice would be to invest in areas with potential for growth, which points to built-up areas such as cities and popular towns. City apartments are often a more manageable investment, with long- term lets and higher rents achievable. In these areas the market is more competitive so location, location, location is the key to success.
Location-wise there are a host of options from emerging city centres to established neighbourhoods. Look for areas where there is a growing population of young professionals usually driven by the arrival of multi-national companies or students. Eastern European cities, such as Sofia, Bucharest and Prague could be good bets. Emerging markets offer lower prices and more for your money but will inevitably offer a longer payback period as they are the cities of the future. Already capital cities such as Buenos Aires, Sao Paulo and Kuala Lumpur are on the property investment radar. If investing in more established western European cities such as Paris or Barcelona, at the present time you may get a bargain and a well-established rental market but you will need to ensure you have your mortgage in place because of the current lack of credit availability.
Buying into a hotel resort
Q. I've recently bought an apartment on a resort that is managed by a well-known five-star hotel chain but I'm worried that since people have stopped spending this investment is now a bad move. What can I do to improve the chances of it being a success?
Ray Griddle, by email
A. All is not lost, in fact it may prove to be a better investment than you think. In times of recession the luxury market for goods and services tends to still see movement as in general their consumers bottom line is less directly affected by an economic crisis.
The need to attract more clientele means businesses such as hotels are offering greater discounts. The benefit of buying a property on a resort run by an established hotel brand is that they have built up a global reputation which continually draws in business from a wide range of marketing sources.
If your property comes with a guaranteed rental yield, such as an apart-hotel, then you should receive the fixed rental income regardless of occupancy the hotel management company is responsible for filling rooms.
If you are not part of a fixed rental scheme, you might use an agent to let your property for you, but remember that they will take a hefty cut as fees. Alternatively, consider marketing your hotel room yourself online. Think about what search terms you would enter on Google if you were wanting to stay on the resort. Imagine you are a punter and ask yourself what would attract you to your property. You will need to either set up a basic website devoted to your property or to use a website that gets lots of hits on Google when people search for accommodation like yours one example is www.holidaylettings.co.uk.
Another option is to advertise locally through friends, family and work colleagues. Most peoples workplaces have an intranet on which you could promote your property. Also consider advertising for potential clients in local magazines. Finally, keep in touch with the hotel management at your resort and ask what marketing they will be doing in 2009 and what their expectations are.
This article was published in the March 2009 issue of A Place in the Sun magazine. To order a back issue call +44 (0) 20 3207 2920 or to subscribe click here.