APRIL 2010 | www.opp.org.uk
We have seen a lot of interest from funds, the latest being from Greece looking to buy in the London market. London is a ‘country’ in its own right in terms of property and the weakness of Sterling is attracting overseas investors.
Dominic Farrell, Distressed Assets
OPPLive were UK Asians.” With discounts on individual units
on a par with many bulk deals, da Silva says multiple unit purchases are less common. “It’s mostly one or two-unit deals because most investors are looking at circumscribing their risk by not over-exposing themselves to one developer or development, and they aren’t seeing an exit strategy for bulk deals,” he says. “What we are seeing more of is like-minded individuals coming together and pooling their money through an investment vehicle, buying holiday properties and some fractional homes.”
Where is the money coming from?
With mortgages still a dirty word, particularly in markets like Spain, the investors with cash have been most active. “Without a shadow of doubt there are more cash buyers in the market,” observes Dawkins. “We have found that they will literally spend 3-4 full days viewing property that we source for them and will end up purchasing 90% of the time.” Cash buyers may be getting the
best deals, but there are plenty of investors and funds looking for mortgages. Darren Carter, managing director of Goldberg & Partners, observes that better fi nance deals are emerging in Spain, even 90-100% LTV, but the mortgage market is perhaps too dynamic. “It feels like banks will off er one LTV one week and a diff erent one next week once they’ve got their quota for the month,” he says. In the UK, Farrell says banks will
lend on selling price as long as the professional valuation stacks up, but not everyone is investing in valuations. “I know for a fact that developers in Marbella are not investing in new valuations,” says Dawkins; but a disparity in valuations is costing sales
BMV Investor focus | 49
Is it easier to
source fi nance for BMV deals these days?
A lot of IFAs claim to have access to fi nance products but we’ve not found anything in the UK that’s particularly attractive. Off ers change from one month to the next and there’s no one bank with a specifi c penchant for BMV fi nance. Portuguese banks will off er 100% fi nance if the sale price is 85% of its market value. In the US, non-status mortgages are harder to come by and there’s been a huge move to cash purchases. Developer fi nance is more common, particularly from developers with a broad asset base who can act more like a bank. We’re seeing more of this from developers in Southern Europe but only from those companies who have reduced the amount of debt on their own developments or where they have specifi c agreements with a bank and off er subsidised deposits. In the UK, medium-term bridging fi nance from private individuals is available, but less common than a few years ago to have syndicated investments. Now it’s more common to see private equity from a bank or high net worth individual or family trust helping to rescue a developer.
Luis da Silva, Director, InvestCV
in Spain. “BMV was only any good if you had people selling at less than the banks were valuing and you were legally able to obtain funding on the higher valuation,” says Inez Rix, owner of Direct Auctions in Marbella. “In Spain this isn’t legal as the Bank of Spain ensure their normal lending criteria is adhered to. In order to achieve a percentage of borrowing against the higher bank valuation, one now has to obtain a doctored purchase contract.”
Targeting investors
Most agents specialising in BMV agree that mainstream media is ineff ective when it comes to fi nding investors, with most relying on their own database or partner network. “Print advertising doesn’t work
at all, and just tends to lead to other companies bombarding us with their deals,” says da Silva. “Generally we’ve seen the effi ciency of events and the ability to close business at them shrink – they’ve become more education and networking events. It’s distribution networks and packaging of an off ering that makes a diff erence now.” Email marketing is perhaps the
most popular approach, whether it’s migrating databases with sales partners or more bespoke approaches to existing clients. However, by keeping BMV out of the mainstream it has become perceived as a serious product for a serious buyer at best – and a ‘smoke and mirrors’ market at worst. Over in the US, Condo Vultures
has benefi ted greatly from its higher
profi le. “We’re the only brokerage in Florida who quantifi es the market with research and we’ve gained a lot of attention through the press,” says Huertas. We have a newsletter that goes out to our database but apart from that we don’t really reach out to buyers, they tend to come to us.” Networks are the route of choice
for most below market value players, however. “The best ways we’ve attracted
buyers have been by developing our database through our international networking and through our media partners,” says Rayman. There is still a lot of distressed stock
out there, and there is growing interest from both domestic and international investors, but networks are still the best way to fi nd them.
What
proportion of US distressed sales are coming from international investors?
In Florida, inter- national buyers account for a much larger percentage of distressed sales than American buyers, around 70% of the total, and they’re creating a mini-boom. The buyers are mostly from Latin American countries such as Venezue- la, Argentina and Colombia. Thanks to the weak dollar and 60% price falls, they can sometimes buy property cheaper than in their home countries. But we also have a lot of Italians and Canadians buying. Serious investors are most prominent, and bulk sales of more than ten properties are com- mon. Lower prices mean property is fi nally aff ordable and they hope in three to fi ve years the market will have stabilised and they can sell at a profi t. But there are also those who just want a safe place to put their money for the time being. Even if the rental yield is just 5%, that’s more than you would get in a Swiss bank account right now.
Jenny Huertas, International Sales Director, CondoVultures
Are you
seeing more international investors and what are they buying?
We have no- ticed that sales to international clients in the country are up on the same period as last year. This up turn is also notable in the national market. Whilst we do have a small percentage of clients who are buying with capi- tal, in general people are looking to obtain the highest percentage mort- gage possible, which is what we are off ering. The most popular location for the international market as always is the coast, specifi cally the Costa Blanca South, with 60% of the sales for the fi rst two months of the year being made there due to the good deals to be had in the area. There is no specifi c property type that is selling well, people are looking to get as much as they can for their money. Whereas in the fi rst two months of last year you could only buy a 2 bed apartment for 80,000€ this year there are bungalows, townhouses and quads available for the same price. Around 90% of the properties that we have sold this year have been holiday homes.
Alfredo Milla, Commercial Director, CAM Mediterranean
INDUSTRY
PEOPLE
DESTINATION
BUSINESS
DEVELOPER
MARKETING
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68