Inflight Magazine of Brussels Airlines

What goes up…

The current global financial turmoil, coupled with the strong Euro, has got property investors on the hop. But, says Laura Henderson, there are ways for owners to avoid the worst of it

Searching for a ray of sunshine in today’s overcast property market is a big ask. The fallout from the sub-prime (read: high-risk) mortgage market in the US continues to pose problems, both within and beyond the realestate sector, with the prices of detached homes sliding at the fastest rate in more than 20 years. Leading New York investment bank Bear Stearns’ share crash and subsequent buy-out by JP Morgan Chase has sent further shock waves across international markets and a hike in Euro mortgage costs is increasingly likely in the coming months.

It’s during these lean times, explains property consultant Alan Curran, that property owners reveal their true colours, with three strong groups emerging: victims, survivors and predators. Victims, not surprisingly, apply the go-for-broke approach, overstretching themselves during the boom period either by spending equity they have tied up in real estate or by taking out hefty mortgages. Sit-tight survivors (the largest group), on the other hand, batten down the hatches until the market readjusts. Cash-rich predators see the down trend as an opportunity to snap up a few property bargains at knockdown prices.

Making good in the current climate, says Philip James of Assetz, isn’t entirely beyond the realms of possibility. “The second-homes market might be under pressure,” he says, “but, overall, a correction will turn out to be a good thing for the industry, bringing supply and demand more closely into balance, curbing over-development and flushing out low-quality investors. When the recovery does come, we’ll be all the better for the purge.”

At present, conditions are better suited to property buyers than sellers, with pockets of Europe, notably Spain, taking a real battering in the past year as sellers have slashed prices in order to offload their homes. Other markets, however, still have their bright spots, thanks largely to income trends and development restrictions.

Kevin Pearce, of Your Place Abroad, says: “Sales in Provence and Tuscany, for example, may be sluggish, but long-term demand remains strong because it’s fuelled by affluent baby boomers retiring to the sun. Fundamentals such as good transport links and a superior quality of life, which underpin a certain region’s popularity, also remain intact and will come into play once again when general market confidence returns.”

Buy-to-let power

Investors who have built up property portfolios over several years will more than likely be sitting on substantial equity, although in most instances capital gains won’t have materialised yet. A prudent approach is to optimise current rental income while trimming ongoing costs to maximise monthly cash flow, as is a switch to long-term lets, with an increase in rates where possible.

Getting your finances in place so you can take advantage of additional below-market-value (BMV) purchases is also worth considering, although current BMV investments should only be bought at a higher percentage discount than the previously accepted ‘fair value’ price reduction. “Playing hard-ball reflects the more uncertain current climate and less favourable financing options,” says Philip James. “After all, as a buyer you are accepting the transfer of risk as a result of taking on additional mortgage debt. Just like the lenders, you need to build in a greater margin of error to allow for unforeseen future voids or increases in funding costs.”

Rentability

Holiday homes that earn their keep are worth their weight in gold, but never more so than when the market cools. You might be smitten with that stone-built finca in rural Portugal, but paying clients may have different tastes. Take independent advice about the rental market from reliable local sources other than agents or developers, who may have their own agendas. Find out the going local rate and realistic occupancy levels during off-peak months.

“Property that relies on high-volume traffic from budget airlines is all well and good,” warns Curran, “but routes change and services can be axed. Don’t be too dependent on one source for prospective clients. Holiday rentals can cover your running costs with a little left over, but only if you adopt a businesslike approach.”

Location

Location has always been critical to a property’s saleability, but never more so than now. Recession-proof addresses per se tend to be frontline with good sea views, and it’s even better if the property has access to communal facilities or is close to draw-card amenities such as golf courses, lakes and marinas. If the region’s leisure provision is being upgraded, that also hints at a growing end-user market with more buyers expected to relocate to the area.

“Close proximity and preferential access to a signature golf course can add as much as 20% to a property’s value,” advises Mandy Boon of Home España. “The same applies to access. Investment-minded buyers may overlook an emerging area’s lack of access to transport, shops and leisure facilities when prices are rising, but they will instantly rule out properties without those facilities when they have the pick of the bunch.”

Property styles

While some destinations run the risk of flooding their markets with new-builds, one-of-a-kind, well-restored period residences will always keep their value and sell well, says Paul McMullen of Escapes 2. “Re-sale property usually costs a little more, but the advantage is you can start renting more or less straight away,” he explains. Those who have set their heart on off-plan, however, will prosper best where the developer is clearly offering excellent value for money, which means good location, price, space, specification, security and a peaceful environment.

“Until now, up-and-coming destinations have been buoyed by off-plan capital values rising between release and completion. But now conventional criteria, such as location and build quality, are coming to the fore. Initial price hikes are nice sweeteners, but long term, it’s value-added extras like off-road parking and high-spec construction that will sustain a property’s value.”

Recession-proof pointers

Look for the factors that help a property to hold its value

- Apply the ‘location, location, location’ mantra. Homes overlooking water, golf fairways or mountains will always be a cut above the rest, as will out-of-town locations within easy reach of cultural and leisure attractions.

- Those looking to offset their running costs through rentals will find more margin in established resorts. Recent EU research confirms that locations up to 40 minutes’ drive from the airport generate steady tourist traffic, with a three to four-month rental window not unrealistic.

- Rarity, individuality and privacy count for a lot, particularly in sought-after locations within easy reach of airports, ferry terminals and train stations.

- Larger stand-alone properties with a good bed-to-bath ratio tend to hold their value better than new-build apartments, which suffer the most from over-supply in boom times.

- Tasteful, low-key décor sells best in a sluggish market. Always keep in mind what will have the broadest appeal to buyers when choosing interior themes and colours. That way, buyers won’t instantly think of how much they’ll need to spend to whip the place into shape.

FR Ce qui monte…

Chercher aujourd’hui une éclaircie dans les prévisions touchant aux marchés immobiliers, c’est ‘beaucoup demander’. Toutefois bien performer dans le climat actuel, selon Philip James d’Assetz, ne relève pas de la mission impossible : “Le marché des secondes résidences est sans doute sous pression, mais en définitive, une correction finira par avoir des effets positifs, en créant un meilleur équilibre entre l’offre et la demande, en freinant le sur-développement et en éliminant les investisseurs de moindre qualité”.

A l’heure actuelle, les conditions sont plus favorables aux acheteurs qu’aux vendeurs, avec des situations divergentes en Europe. L’Espagne, notamment, a dû contenir un réel assaut ces dernières années, car les vendeurs ont fait des coupes drastiques dans les prix afin de trouver des repreneurs pour leurs biens. D’autres marchés valorisent cependant encore leurs niches, ajoute Kevin Pearce de Home Abroad : “Les ventes en Provence et en Toscane, par exemple, stagnent légèrement mais à long terme, la demande reste forte. Des éléments essentiels comme de bonnes connexions et une qualité de vie élevée entreront à nouveau en jeu lorsque la confiance générale du marché reviendra”.

Répétez inlassablement le mantra “le lieu, le lieu, le lieu”. Les maisons qui surplombent la mer, un parcours de golf ou des montagnes bénéficieront toujours d’une conjecture favorable, tout comme les propriétés à l’extérieur de la ville, avec de bonnes liaisons vers les centres culturels et de loisirs.

Ceux qui veulent alléger leurs frais de maintenance en optant pour les locations trouveront plus de latitude dans les stations balnéaires établies. Une étude récente menée dans l’UE confirme que les locations situées à 40 minutes de route maximum de l’aéroport génèrent un flux touristique régulier, avec une fenêtre locative réaliste de trois à quatre mois.

Les critères qui l’emportent dans les locations recherchées sont en priorité la rareté, le caractère individuel et privatif. A côté de cela, les plus grandes propriétés individuelles avec un bon ratio entre le nombre de chambres et de salles de bain, ont tendance à mieux maintenir leur valeur que les nouvelles constructions à appartements.

Les maisons de goût, au style dépouillé, sont celles qui se vendent le mieux dans un marché immobilier au ralenti. Gardez toujours à l’esprit que vous devez attirer une large gamme d’acheteurs lorsque vous choisissez le style de décoration ou la palette de couleurs de votre intérieur. Ainsi les acheteurs potentiels ne seront pas tout de suite effrayés par les budgets nécessaires pour remettre le bien en état.

NL Het tij zal keren …

Een straaltje zon in de huidige overtrokken vastgoedmarkt is tegenwoordig veel gevraagd. Toch is het volgens Philip James van Assetz niet onmogelijk succesvol te zijn in het huidige klimaat: “De markt voor buitenverblijven staat misschien onder druk, maar globaal gezien zal een correctie ons goed doen. Vraag en aanbod zullen een beter evenwicht vinden, de overontwikkeling wordt ingetoomd en investeerders in slechte kwaliteit zullen de aftocht moeten blazen.”

Op dit moment zijn de omstandigheden gunstiger voor vastgoedkopers dan -verkopers. Gebieden in Europa, en dan vooral Spanje, kregen vorig jaar een flinke rammeling toen verkopers in hun prijzen hakten om van woning te kunnen veranderen. Toch zijn er nog andere markten die nog steeds beloftevol zijn, voegt Kevin Pearce van At Home Abroad eraan toe: “Hoewel de verkoop in bijvoorbeeld de Provence en Toscane traag verloopt, blijft de vraag op lange termijn sterk. Fundamentele criteria zoals transportverbindingen en een hoge levenskwaliteit zullen weer een grote rol gaan spelen wanneer het algemene vertrouwen in de markt is hersteld.”

Blijf de mantra ‘liging, ligging, ligging’ herhalen. Huizen die uitkijken over water, golfterreinen of bergen blijven boven de rest uitsteken, net zoals plaatsen buiten de stad die dicht bij toeristische trekpleisters liggen.

Zij die hun uitgaven willen compenseren via verhuringen zullen meer ‘marge’ vinden in gevestigde vakantieoorden. Recent EU-onderzoek bevestigt dat liggingen binnen 40 minuten rijden van de luchthaven stevig ‘toeristenverkeer’ oplevert, met een realistisch verhuurkader van drie tot vier maanden.

Zeldzaamheid, individualiteit en privacy wegen zwaar door, vooral in populaire, gevestigde bestemmingen, terwijl grotere, vrijstaande eigendommen met een goede bed-badratio de neiging hebben hun waarde beter te handhaven dan nieuwbouwappartementen.

Een smaakvolle, ingetogen inrichting verkoopt het best in een trage markt. Denk aan een ruim publiek wanneer je interieurthema’s en kleurenpaletten uitkiest. Zo denken kopers niet meteen aan de torenhoge kosten om de woning in orde te brengen.

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