Words: Ashley Rigg
Published: 2nd February 2010
14 characteristics of the post-crisis overseas property investor
This is an excellent post from Latin American property portal
Reveal Real Estate . The argument put forward is an over-simplification as there are
different buyer segments with different needs in our market; but it is an excellent summary of how the industry has changed since 2007. What do you think? Is this the "new normal"?
Well, 2009 has been an interesting year. The big headline was, of course, the global financial crisis and its aftershocks. Now, as we enter 2010, a sense of stability and predictability, a ‘new normal’, is returning to the international real estate sector.
One of the most telling aspects of the new normal is the retreat of the speculator buying for quick re-sale profit. The speculator has been replaced by a new type of international real estate investor - a ‘post crisis’ investor - with a different mindset and goals.
14 characteristics of the post crisis international real estate investor
- More informed and will demand better service from the industry
- Will not make decisions based on thin slices of information but will demand openness and transparency
- Skeptical of promises made by developers on their websites and brochures
- Wary of pre-construction properties, preferring to purchase completed real estate with amenities they can enjoy right now.
- Will want to understanding the financial health of the community before they invest
- Will expect substantial discounts on the market highs of 2007
- Will haggle, even when it comes to high-end properties
- Will be drawn to real estate that is a bit low key
- Interested in properties that generate revenue in the short term.
- Motivated by lifestyle factors (not just financial gain)
- Focused on regions with a low cost of living, good health care and safe streets
- Will avoid areas with over-supply risk and copy-cat developments
- Will seek safe haven investments and tax friendly environments
- Interested in contributions to larger concerns such as environmental preservation, the local community and sustainable approaches to building, water, and energy
With change comes opportunity
In order to succeed in 2010, developers will need to innovate their products and their marketing to embrace the mindset of the post crisis real estate investor. Those that do will earn their way out of trouble. Those that don’t will suffer.
Tourism and retirement as a business model for international real estate in Central America is not broken, it has just shifted. Yes the over-leveraging of the North American and European consumer has come to a halt and the debt in finances will have lingering consequences.
But as retirees and investors take stock of their situations and consider their options, many will still be looking for a more affordable life overseas and safe, tax-friendly places to plant their money.
We’re looking forward to a healthier, more sustainable market for international real estate in Central America. One that is more open and transparent and less reliant on the rampant speculation of the past ……but it may take all of 2010 to get there.
Original article courtesy of Reveal Real Estate
User Comments
Super article, expresses exactly what I'm telling in my own words about the actual market and the type of clients. Lately clients will come to see me and bring a large list of homework they have done, with all de requiries as pointed in the article.
Fred van Krimpen,
ELITE Inmobiliaria
Shift in real estate purchases in Koh Samui is certainly exactly like the author of this article suggests.
We have been selling completed units, either resale or properties with under four to six months away from completion. Our most recent sale was a 3 bedroom property, with sea views for 10.4m Baht, although this was off plan, the developer was selling his last of 7 plots, with infrastructure and roads already completed. The purchasers took a 500,000 Baht discount off the listed price.
In Koh Samui, we are experiencing a pick up in activity at the lower end, with buyers looking for properties that give them good rental returns, driven by keen prices and giveaways such as furniture packages,
We right now have a few 20 - 30m Baht properties where owners are willing to consider price reductions to clinch a sale.
It is definitely a good buyers market here although on the supply side. the availability of good properties could soon dry up due to minimal build and whole project delays as developers wait for better times.
John Smalls
Samui Real Estate Locators
Independent and Professional
http://www.samui-real-estate-locators.com
John Smalls,
Samui Real Estate Locators Co. Ltd