APRIL 2010 | www.opp.org.uk
WORDS | Alex Evans
BMV Investor focus | 47
Buyer’s market
Domestic buyers are competing with foreign investors for the best deals in the most active BMV destinations – but who is winning, and what are they buying? OPP fi nds out
The BMV market has created a new type of investor for a new market, and sellers have
had to adapt their approach and product to engage them. After a stand- off between buyers and anyone selling overseas homes last year, deals started to happen at the end of 2009. Sales of foreclosed and short-sale
property in the US rose from 32% of total sales in December 2009 to 38% in January 2010 following a lull in the market since May last year, according to NAR’s Realtors Confi dence Index for January. In the UK, a drop in repossession sales also occurred in the third quarter of 2009 but these sales have slowly begun to climb again and reached 13,500 for the fi nal quarter of the year, according to data from the Council of Mortgage Lenders. Investors know what they’re
looking for, and are prepared to commit quickly to get the right deal, as fear of another downturn has become concern that the recovery will push up prices too quickly. “The
economic catastrophe has knocked people’s perception and it’s tough to see an upward curve from within a downward spiral,” says Peter Parfait of TheIdeasFactory.com. “Investors are currently only really comfortable with quick profi ts. They’re looking at 3-5 years plays, rather than 10 to 20.” Like the old split between lifestyle
buyers and investors, there are now those looking for bargains to live in and use and a smaller number of serious investors focusing purely on income and profi t. “Those that are buying for investment are even more pure investors than before,” says Luis da Silva, director of InvestCV. “They don’t get sidetracked by soft factors such as the exact location of the property; they are just looking at the hard and fast numbers. No one believes capital appreciation exists anymore, and a much lower number of companies are advertising potential growth. “There is a focus on rental income
and people have moved to ongoing revenue generation. In a relatively
Those that are buying for investment are even more pure investors than before. They don’t get sidetracked by soft factors such as the exact location of the property; they are just looking at the hard and fast numbers. No one believes capital appreciation exists anymore.
Luis da Silva, InvestCV
stable market like the UK you can predict the average rental yield but it’s much harder to predict in a holiday rental market where the shoulder tourist seasons have disappeared.” In the US, buyers are less concerned
about the viability of developers, according to Carla Rayman of Floridian agent Prudential Palms Realty; but panic has been replaced with an unrealistic expectation on discount. “Prices are anywhere between 30% and 50% less than they were between 2006 and 2008 and today’s values are where they need to be,” she says. “But foreign buyers often think they should be getting another 40% discount and sellers aren’t willing to come down any more than 10%. People are putting off ers on as many as six properties
and having them all turned down; so they’re realising that if they want to buy it should be now.”
Focused activity
As it has become harder to fi nd quality product at the right price, investors have narrowed their search and are moving away from the speculative markets, according to da Silva. “Swedes used to buy mainly in about ten diff erent countries but have now narrowed their scope to a more limited number, focusing on traditional low- price markets like Spain,” he observes. “Italians have completely left the investment market; German activity is actually picking up in certain markets in Asia, but reducing in Southern Europe; the Dutch are still reasonably
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