Buyers from Southeast Asia are currently responsible for more than 40 percent of off-plan purchases in London, with Singaporeans responsible for a quarter of that figure. Many of these properties have been transacted at one of the numerous exhibitions which have taken place during the past couple of years.
Prices at these exhibitions are often what one agent described as being “full prices”, meaning units are offered without the discount that would be on offer to a British buyer. Developers understand that London is extremely popular with Singaporean property buyers, and as such feel no real need to offer discounts.
Some 18 months ago reports began to surface that property buyers from Southeast Asia, some of whom were from Singapore, were being misled by agents and developers. One agent, James Moss of Curzon Property Investments, was forthright in his claims. He said, “People are being ripped off because they are paying for properties that aren't actually in the best locations and are not getting the rental income they were told they were going to get by estate agents.”
Things don’t seem to have changed much since then.
Camilla Dell, Managing Partner of Black Brick Property Solutions, told PropertyGuru this week, “It is often the case that new build developments are sold on overseas road shows in the Far East before being offered on the London market. We caution investors against buying off-plan at weekend launches, especially in locations they are not familiar with. We have come across many disappointed buyers, who have bought off-plan, and then come to London, only to realise what they bought isn't what they thought it was.”
Part of the problem is location. London is a large city and those who are unfamiliar with its geography are the ones who are most likely to end up with something far less than they hoped.
Dell, who acts as a buyers’ agent in the UK capital, added, “Often developers will advertise a new development as prime Central London when the reality is very different. We have seen evidence of developers playing around with tube maps to make it look like their development is close to well-known landmarks.”
She added that some developers are offering big rental guarantees that look attractive, but in reality are masked within the asking price.”
Juliet Rawlings of Rawlings Property Consulting agreed that some rental promises are often totally unrealistic. She cited another issue with buying off-plan developments for rental returns.
“Developers tend to offer furnishing packs, so you end up with a block where the only thing a tenant can choose from is whether they like a green sofa or cream sofa. The developer is sometimes the furnisher supplier too and the quality is sometimes not great.”
Urging that potential buyers really do their homework about the location, she added, “A property in a ‘Grade C’ area may well not be worth what you paid for it, as those areas are not increasing in value. Council taxes in badly run boroughs can also be high, so when taken into account with increasing travel costs, tenants are not getting the cost savings they might have initially hoped for. You then end up with landlords getting worried and desperate, and Housing Benefit tenants move in and that immediately devalues the development."
*back into the abyss of death*
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