The new era of overseas property investment
In the past investing in property overseas was an arduous process, finding a suitable property was not the problem, it has always been the due diligence involved in an overseas purchase. Are you buying in the right location for Capital Growth? Will you be able to let your apartment or villa for long enough to cover your repayments on any finance used? What is happening to the local property market at present? Is there a long and complicated buying process? Will your apartment or villa be up to the standard promised by the developer? The questions can continue forever.
Investors are of course and rightly so, more tentative about investing overseas because of the reputation that some overseas developers have given the market when they, ran out of money or built a development that was subpar and then scarpered before the investor could so much as ask for their money back. But the thing that attracted investors to the overseas market in the first place is that chance of finding the property in a location that will provide you with capital growth and a large positive cash flow to line your pockets every month, with the added benefit of a free holiday.
Now we carry out a full due diligence test on all of our developments and our due diligence test on overseas property is second to none. However without any request from ourselves or our investors, we have just received one of the best partners for our due diligence tests that money could buy. The hotel operator!
When you purchase an investment property in an overseas development that is due to be run by a hotel operator, as soon as the agreement is made the developer is not now building to the standard of the investor, they are now building to the very high standard of a hotel operator and if they don’t, they risk losing the operator. Not only will the standard of your property be of the upmost quality but you now have somebody with a large web presence to promote your apartment for you, meaning that your apartment or villa is tenanted as often as possible and you are therefore provided with a handsome return. The hotel operators will of course also carry out very strict due diligence on the location to make sure that it is in a location where occupancy can be maximised and therefore your return can be maximised which will, in turn, add value to your investment.
We have 2 overseas developments that fit this bill exactly at present:
The developer of Dunas Beach Resort has recruited “Sol Melia” to run the resort upon completion. Sol Melia are the largest resort operator in the world and are constantly winning awards for their dominance in the market and the quality of their resorts. The build cost of this resort in relation to any others on island is double and they have already completed one resort on the island and the results speak for themselves.
The developer of our properties on the West Coast of Barbados has recruited Mango Bay Resorts to carry out the hotel operations on site. Mango Bay constantly receive fantastic reviews for their operations on Barbados and their average occupancy is 80% which, in our resort, would give investors a return of up to 23% per year! The developer also offers purchasers the chance to help with the design of their apartment on line throughout the construction period.
Ladies and Gentlemen this is the future of overseas property investment!
SIPP’s, The leaders debate and the £59 pension
After watching the leader’s debate last night, one thing stuck in my mind, it wasn’t any particular party policy (at the moment it seems they all have flaws somewhere) it was… the poor old lady that is currently having to live on £59 per week as her state pension!
The thing that I find the worst about this is that, we all know that by putting our pension in the hands of the government, we are never truly in control. I, like many others, like to be in control of my finances and this is where I would like to make the case for the Self Invested Personal Pension (SIPP) known.
Not only do I like to know how much of a pension I will have to live on come retirement age, but I would also like to be able to increase this amount which will either mean me retiring earlier than originally planned or living a more prosperous retirement period. The only way you can truly take control is by utilising the money in the form of a SIPP. There are fantastic benefits available for people putting money into a SIPP such as attracting tax relief at your tax rate; this means that if someone is taxed at 40% the government will add 40% to any contributions they make towards their SIPP!
Another advantage to a SIPP is the ability to borrow up to the value of 50% of your SIPP to increase your buying power this means; if an investor has a pension value of £100,000 they can then borrow a further £50,000 against this, giving a purchasing power of £150,000.
I believe that the only real way to have a secure and happy retirement is to use a SIPP to invest in property, be it in the UK or Overseas. The returns available in our Cape Verde Investment for example, show that if an investor had a pension value of around £84,000 they could increase this figure to around the £300,000 mark in 10 years, and still have an apartment providing a net profit per year of £12,000! This is based on pessimistic figures, assuming that growth isn’t as good as it has proven to be over the past few years.
We think now is a fantastic time to invest in any property with your SIPP, especially those in Cape Verde; which is a real emerging country currently receiving 15% growth per annum and tourism increases of around 27.5% pa expected to top 1,000,000 per year by 2015.
For more information on investing in property with the use of your pension including unlocking frozen pensions contact info@freshinvest.co.uk
Prices still rising in Cape Verde and we see no reason for it to stop.
Cape Verde property prices have been rising on average by 30% pa over the past 10 years and the occupancy of the only 5* hotel on Sal is currently around 95%.
If these trends were to continue you could put as little as £27,986 into a property on the fantastic Dunas Beach Resort now and on completion you would be able to recoup your £27,986 deposit + £19,579 on top as Cashback! Then to top it off a Net Profit of £8,117 pa from rentals!
Obviously this is the best case scenario but the figures speak for themselves.
Why would these trends continue?
Cape Verde is an archipelago of islands off of the North West coast of Africa it has:
- Year Round Sun (yes 360 days!)
- 107% rise in tourism over the past 5 years.
- No hurricanes.
- Temperatures of 22-30 degrees.
- 1 hour time difference from GMT.
- 5 hour flight from the UK.
- “EU special status” – granted $1.5 billion for infrastructure and tourism upgrades.
- A mostly Christian society.
Why Sal?
- Sal accounts for 69% of Cape Verde’s total rental market.
- It is the home of the new international airport with fantastic connections to the UK flights from Gatwick, Manchester and Birmingham.
- 2 “Ernie Els” golf courses are currently being developed on the island.
- Pristine white beaches.
- Beautiful clear sea.
Why Dunas Beach Resort?
- Dunas Beach Resort is a development of 1135 properties ranging from studios up to 5 bed villas.
- This is a European quality 5* resort with an astronomical build cost of €1,400 psqm (double that of the comparables used in our figures.)
- All properties are eligible for entry into a “self invested personal pension.”
- The resort operator is the fantastic Sol Melia group. Sol Melia are the biggest resort operators in the world and have a turnover of €100 million per month! With 150,000 hits on their reservation systems per day.
- The constructors of the resort are the San Jose constructors; they are the largest construction group in Europe with a turnover of €1.35 billion pa.
- Savills red book valuation on “bare land value” of €46 million.
- Being located on the South West coast of Sal, Dunas Beach Resort is in the best position to capitalize on this islands emergence.
- Completion mortgages readily available from many large banks.
- A cash flow positive developer (most developers handle a €60,000,000 negative cash flow throughout construction.) Phenomenally good performance through pre-sales has put them in this position of strength.
- The developer has an unused facility of €9,000,000 with Banif bank.
As you may well know we try our hardest to offer investments, where the risks are minimized as much as possible. Of course you could lower your risks even further by investing in a country that is already fully developed but at the same time you better also stretch your budget because this will not come cheap!
The best way to invest will be to choose the country that is yet to emerge, whilst ensuring that all risks have been covered and the country is infact emerging… This is exactly what we have done for you.
For more information on Dunas Beach Resort Request the latest brochure here
Dunas Beach Resort, What our investors say…
For months we have been talking about how great an opportunity Dunas Beach Resort is, it has obviously worked as we were overwhelmed by the amount of interest we have had in this overseas investment opportunity.
We thought prospective investors may like to hear what previous buyers had to say about this investment.
Mrs Carole Winters – Shrewsbury.
“In 2009 we approached Fresh Invest initially looking for a holiday home, we had a budget in mind but were aware that we were stretching ourselves, however we knew that if we did not buy now then we may never have!
Over the next month or so i had various conversations with Dan regarding various properties in various locations. In the end we settled on Cape Verde and Dunas Beach Resort. We loved the idea that we could invest in a good size 1 bed apartment with just £32,000. We were also very interested in the equity release scheme which mean’t that we used £30,000 worth of equity in our home and topped up the £2,000 ourselves!
Seeing as we had set aside money to buy the flat, to know that we could use equity in our house was a massive relief to us.
Dan gave us a financial breakdown on the apartment based on comparables in other developments showing that we should look to make at least £6,000 per year after all costs including mortgage payments. He also showed us what we could mortgage the property for on completion, at the moment it looks as if we should actually be able to pull out all of our deposit on completion!
We have decided to enter into the hotel agreement meaning that Sol Melia will take care of all rentals ensuring we get the best rates for our apartment. We also get 5 weeks use of the apartment for free.
Since then we have found out that Dunas Beach has been upgraded to a 5* resort which was great news.
I have to admit the investment was a little daunting in the first instance but once we got our heads around it the process started to make sense.
Now we are looking forward to a lovely apartment that has cost us £32,000 that we didn’t even know we had and receiving 5 weeks use and £6,000 per year! thanks Fresh Invest!”
….Just one investor that took advantage of the various money saving options on Dunas Beach Resort!
Cape Verde Looks to the Future
Known by many as “The European Caribbean”, Cape Verde is showing signs that it could be Europe’s saviour when it comes to affordable holidays with year round sun or overseas property investment.
With the credit crisis hitting most, holidaymakers are looking closer to home. Spain and the Canary Islands have both seen increases in tourism as well as many locations in the UK. However, if you really want year round sun in a secure location Cape Verde has to be at the top of the list!
Now Cape Verde is looking to boost tourism by implementing a Tourism Strategy Plan which will aim to increase tourism by 500,000 visitors by 2013.
Between the year 2000 and 2008 the total holidaymakers visiting Cape Verde rose by 11.4%!
This plan has been given the green light by ministers and looks set to boost tourism sector employment by as much as 60%!
This will obviously have a knock on effect for holiday apartments and villas, many average builders have fallen by the way side leaving some select developers to take up the baton. None more so than The Resort Group and it’s Dunas Beach Resort, the first developer in Cape Verde to sign up with a 5* developer. Sol Melia is the largest resort hotel group on the planet and their 5* hotels are widely recognised as some of the best in the world.
The best part is that you can purchase an apartment on this select development from just £72,326.
Deposits needed are just 35% so just £27,986 gets you an apartment in a 5* resort in Cape Verde; due to be the best hotel resort on the island! Check out Dunas Beach Resort Now!
Brazil property… positioned for growth?
When you are looking for an overseas property investment, what are the key points that need addressing before you commit to a viewing, reservation or a purchase?
Capital growth, secure economy, stunning scenery, fantastic prices, rising tourism figures, beautiful climate… How about oil reserves and major sporting events? …Ok those last two may not be as appealing, but trust me they are going to drastically effect the value of your investment property.
An example of a major sporting event’s implications on local property values would be South Africa which is due to host the 2010 World Cup. In 2005 property values in South Africa rose by a staggering 35%, with news of the country’s successful bid from 2004. It isn’t only South Africa seeing their property prices increasing either. Cape Verde just off the coast is seeing similar price increases; this would probably be pinned down to it being a great stop off for anyone travelling to world cup games from western countries. Click for our Cape Verde property.
Belo Horizonte, Brasília, Cuiabá, Curitiba, Fortaleza, Manaus, Natal, Porto Alegre, Recife, Rio de Janeiro, Salvador, São Paulo. These are all “host cities” therefore these are going to be the cities that see the most direct benefit that this prestigious event will bring with it. But it will definitely not stop there, I am sure that all of Brazil is going to see the benefits of the 9.8 billion reias the government has set aside for tourism development of which 63.3% is allocated to infrastructure upgrades.
Brazil’s huge newly discovered oil reserves are sure to act as a magnet for Foreign Direct Investments. With oil reserves around the world dwindling and demand not letting up we are seeing another rise in prices at present. Brazil has positioned itself in a position where it is not overly reliable on oil; therefore it is now in a fantastic position to exploit its reserves.
So you can see where the growth of your investment property is going to come from. Other points I think you have to take into consideration though are: The fact that Brazil is only a 7 hour flight from Europe, it has increasing employment and a massive shortage of first-time homes somewhere between 8-10 million!
Oh Wait! Don’t forget that Brazil is also due to host the Olympic Games in 2016!
Check out our Brazil property
Hotel Managed Resorts – The key to overseas property investment.
We all have heard the horror stories that some overseas property investors have experienced.
Developers going bust, part finished developments, shoddy workmanship, differing specifications…the list goes on.
So how do you negate these risks?
In my opinion the answer is by buying on a hotel managed development.
We offer a number of overseas property investments that will be managed by successful hoteliers on completion and have been overwhelmed by the stringent regulations that these hotel companies put in place prior to completion.
For most overseas developers, the pinnacle of success is being able to sign up a world renowned hotel operator to take over the day to day running of your development.
Many developers try and fail, taken back by the sheer level of attention to detail the hotel operators need developers to adhere to.
On average a hotel operated development would need:
- Higher specification
- Much more amenities i.e. public space, leisure facilities
- Higher standard of customer service
- Bigger room sizes
- Larger patio’s or balconies
- Better site locations
- Regimented time scales regards completion
Many investors are put off investing overseas by the unknown, lacking the know how to conduct the desired level of due diligence on their chosen development.
If a developer signs up with a 5* hotel operator the finishing must be exactly that….5*!
If investors have any reluctance in investing in an opportunity where a hotel operator is included, take a look at their other hotels, this is the standard that they must maintain.
For instance, the hotel operator in talks with The Resort Group on Dunas Beach Resort is called Sol Melia. Sol Melia is the largest hotel resort operator in the world with over 120,000 hits on their reservation systems per day!
Dunas Beach will be part of their Melia package meaning 5* plus, so for an understanding of the finish needed take a look at their other hotels in the Melia package.
It may be in the best interest of a developer to cut corners and save money but I can assure you that there is no way that a 5* hotel operator would accept this.
Also bear in mind that all of the developers we use retain an interest in the commercial elements of each site they build, so making the very best development possible is the only way to drive people to the development there by making money on the commercial sales.
Many investors may know all of these points but I think they are worth focusing on to alleviate some scepticism that goes with a lot of overseas developments.
