Dear IPA Friend,
Following a press release promoting a development in Al Ain, the UAE's fourth largest city, I have been having a dig around and talking to contacts over there. And this is somewhere that may well be worth a look. There's something of a boom taking place with lots of new foreign companies coming in along with all sorts of expats. Speaking to one or two agents there, they are saying that rents have risen by some 30 to 40 per cent over the year. Even allowing for the anecdotal nature of such reports, it's a figure that makes me want to know more. It's also said that expats working in Abu Dhabi and Dubai are buying in here as it's still relatively affordable and are then doing the long commute for work. There is a shortage of new supply which is part of the attraction, although that is now changing fast.
My personal experience of investing in Berlin is positive but I'd be interested in fellow members' experiences too; for anon reporting of course. I have just received this email, "Dear Iain, You might be interested in hearing about our experience in investing in the former Eastern sector of Berlin. We have recently bought an apartment which seemed to have everything going for it. Nice quiet location. Newly refurbished. Spacious. Garden. Close to a station (5 minutes) Halfway between city centre and new airport etc etc. But in five months looking for a tenant we have had just three viewings and no tenant. Meanwhile we have had high outgoings. Does this mean Berlin is oversupplied with buy to let apartments? Is it overhyped? Or have we just been unlucky?" Personally, I think the latter - but I'd be interested in further on-the-ground reports.
Talking of on-the-ground reports, many of you have asked to see the America Property Alerts' report on Florida from a fellow IPA member. It is as follows. Apologies if you are an APA member and have seen it already. Skip the next seven paragraphs and then read on.
I bought my villa in Florida three and a half years ago. I left a 10 per cent deposit on a 4 bed villa, along with many thousands of other Brits. It took three years to build. During this time and doing a lot of due diligence, I realised there was a massive oversupply in villas especially in the four bed sector. I managed to get my deposit transferred on to a five bed villa and completed in June of this year.
The villas in Florida come 'turnkey' so when you take possession they are already furnished (furniture that you have chosen from a wide selection). However, being in sales virtually all of my life, I was aware that the rep from the furniture company was attempting to guide me into furniture that I didn't want. (furniture that I believed was possibly old stock and items that they wanted rid of). I made my own decisions and chose only about 70 per cent of what they were offering and I then put the rest to it myself, as I realised to have any chance of success in a market that was in oversupply I had to be different or better.
However, a lot of villa owners took the whole package and consequently a lot of villas look the same. Many villa owners have never added any additional extras to their villas and are tied in a price war with thousands of others, competing for the same business. I believe success can be achieved by giving the guests what THEY want and not want the villa owner thinks they should have.
But, unfortunately, you have to get it right at the beginning, because once all the bills start coming in, and it is very very expensive, a lot of people don't have the funds to make changes , they have to drop the price of their villas, with some people only charging £250.00 per week, and they will never be able to make money. A 75 per cent mortgage and all bills for a villa in Florida will cost to keep about 22,000 to 25,000 a year (sterling).
The turnkey package provided by the builders isn't enough to cater for the demands of the Florida holiday makers. We live in a world where people want internet, computers , wifi, games room , first class décor and only providing these can you even come close to breaking even or making a profit. And these items are not included. An additional £10,000 or more needs to be spent to get the home to a level where you can charge more rent for a better product. Unless you can charge more rent than the norm you will not be able to make it pay.
I have only 13 nights empty for the first four months of next year, and then I have an additional 11 weeks booked for later in the year. I will not compromise on quality, neither will I rent my villa out for less than what I think its worth. Many many people are stuggling - they didn't do their due diligence and probably listened too much to the many management companies that promise them a certain about of weeks bookings and fail to deliver. And, unfortunately, the property prices are falling rapidly, people are having to bail out because they cannot make it pay, and it's a terrible shame.
I am happy with my villa. However, I wouldn't recommend anyone buying a villa in Florida if they have to rent it out to pay for itself. The chances are you won't be able to do it, and there are many more places in the world to invest, where you can get a higher return.
However, if Florida is your thing then I would suggest a 5 or even 6 bed home, as there are less of them, and these are far easier to rent out. And it isn't necessarily that people with big families rent out the 5 or 6 beds, I have only had full occupancy once. Guests want more space, more living space, they want to feel that they have plenty of room, and sometimes there is 1000 sq ft or more space in a 5 bed compared to a 4 bed. But if you have pots of money and aren't reliant on the letting of it, now is the time to buy as there are many desperate sellers.
Peter at the International Law Partnership has just drawn my attention to a scam that has been taking place in Croatia. The police in Zagreb have arrested 22 people, including three lawyers and seven civil servants, with regards to taking bribes in the capital's land registry office. It's all part of the country's attempts to make itself squeaky clean in readiness to join the European Union in the next few years. Basically, officials are accused of taking bribes of up to 5,000 euros from clients to formally register their properties. It looks as though the authorities are cracking down on low-ranking officials who are taking backhanders for pushing through papers quicker for some than others. But, again, a good reminder of the importance of getting good independent legal advice as corruption is potentially everywhere!
Every so often, I run a member to member ad and no-one ever replies - which is about as emphatic a thumbs down as you can get. But I keep giving it another go every so often. And so I am today. It's an ad from a member with a property in France. "I have had a bungalow built in France in the Dordogne in Bourdeilles near Brantome, a lovely area. I see the Irish are now building in Brantome which is called the Venice of the Dordogne and is beautiful. I built because three years ago I couldn't find anything to buy at the price I could afford. I am now selling my new 101m2 habitable 3 bed bungalow with study integral 22m2 garage/utilty all guaranteed for 2 years with 10 years on the building as I am building elsewhere (on a golf course in SA). It's on a lovely plot 2800m2 with lovely old houses nearby and views country walks cycling etc. a few minutes walk into the beautiful little town of Bourdeilles and only 20 mins drive to Perigueux the main town in the Dordogne. If you have anyone interested, it's a bargain I think at E165000.00."
Iain Maitland
Editor, International Property Alerts
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