Beach front or not - how do you know the true value

dave99 · #1 24-11-2007, 01:00 PM

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Seems that some people thing that beach front property is the best investment, but is it ?

How can anyone work out the extra value of beach front compared to near beach, or long walk to the beach.

It's only ever worth what someone will pay, but how do you know where the real value starts and the hype stops

- is it just a case of following the best marketing campaign, knowing that you can sell anything to someone if you try hard enough (and spend a lot on advertising).

You might thing it will be sell easier if you need to sell, but surley because of the price premium you are already restricting your "market".

Last time I looked, beaches were at sea level, and in a beach area that means sand, what is it they say about building on sand.

Of course it's technically possible to build on sand, and water, but it has to be an extra consideration both in terms of cost and potential risk.

Don't forget the foundation will be well below sea level for most "on Beach develpoments".

The Red Sea is not very tidal, but it does move a bit, and then there's the Ice Bergs that regularly pop up near Hurghada, but they don't half melt quick.

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propertastic · #2 24-11-2007, 08:25 PM

I don't think that you will ever find a fixed formula that says something like, for every 100m away from the beach you are, deduct 10% from the asking price.

In general though, property is a commodity like gold, oil, pork bellies or yen and thus is subject to the laws of supply and demand.

The thing to note, especially with relation to Hurghada, is that supply of beachfront is very limited already as the resorts have taken most of it already, whereas the amount of land to build upon inland is, to all intents and purposes, infinite.

Fast forward a decade and Hurghada will be massive if it goes the same way as the Spanish, Turkish, Moroccan etc. resorts, etc. and I can see that, at some point in time, there will be an oversupply in the market. Tourists are naturally going to want to be as close to the beach as possible - ideally directly on it. When this oversupply situation occurs, there will still be rental business for the beachfront properties, but those that are maybe 1km from the sea are going to be struggling.

I think it's natural to try and buy as cheaply as possible, but I think that it's false economy because of the supply and demand situation. Maybe beachfront in 'Greater Hurghada' is 30% more expensive than the equivalent apartment in downtown Hurghada. I think that this is probably justified.

You've given me the idea for a future blog entry - I would like to compare ratios of beachfront versus non-beachfront with established resorts such as the Costa del Sol and see how the ratios compare to get a feeling as to how prices can be expcted to grow in future. Now all I need is some free time to research it!

Peter Mitry · #3 24-11-2007, 10:33 PM

Where to locate your property is of course, and always will be, personal choice. However, from an investment standpoint, the majority of people given free choice and without the constraints of budget would choose front line beach. Add to this that in every location there is less front line availability than inland and you have every investors dream. A rare commodity in great demand. You only have to look at the established markets of Spain, Portugal and the South of France and see the almost exponential growth of these properties. If you have the right property in the right place with stunning irreplaceable views then it is resilient to recession or downturns in the market and will always attract buyers.

awahee123 · #4 25-11-2007, 02:29 PM

Yes without doubt beach property will always have a niche market.
Value who knows, maybe 50 percent more than an inland property.

Peter Mitry · #5 30-11-2007, 03:58 PM

If you look at the differences between El Kawser at around 400 GBP per m2 and Sahl Hasheesh you are talking more than double. However a beachfront project nearer the town without the resort facilities would probably be around 750 GBP per m2. Any other opinions on this?

propertastic · #6 30-11-2007, 04:42 PM

I would guess that prime beachfront actually in Hurghada would be more expensive than Sahl Hasheesh simply because of the rarity factor - there's a lot more beachfront available in Sahl Hasheesh than there is actually in Hurghada.

My guess is that the new development right next to the Intercontinental will come on the market at a shade under GBP1000/m2

Let's wait a few months and see which of us was closer to the mark!

SHO · #7 30-11-2007, 11:21 PM

My view is everyone wants to be as close to the beach as possible...as...thats what most of them are there for!!!!

...so you may as well capitalise on it while you can while everyone else moves further backwords..

I always thought it better to buy a studio beach front rather than a 1 bed 200m back!

awahee123 · #8 03-12-2007, 01:53 AM

I think you may be right SHO the beach side developments are already commanding upto 50 percent more than any inland developments.
I think we will see these figures further stretched in the near future.

wemyss1960 · #9 25-09-2008, 08:43 PM

Quote:

Originally Posted by propertastic

I would guess that prime beachfront actually in Hurghada would be more expensive than Sahl Hasheesh simply because of the rarity factor - there's a lot more beachfront available in Sahl Hasheesh than there is actually in Hurghada.

My guess is that the new development right next to the Intercontinental will come on the market at a shade under GBP1000/m2

Let's wait a few months and see which of us was closer to the mark!

this post was made 30th Nov 2007

well done Nick - prices start at 1250 euro

propertastic · #10 26-09-2008, 01:11 AM

Quote:

Originally Posted by wemyss1960

this post was made 30th Nov 2007

well done Nick - prices start at 1250 euro

Thanks for reminding me about that - I'd completely forgotten about it.

At the risk of blowing my trumpet, all of my predictions have come totally true to date about prices rises on the market (actually it has been rising slightly faster than I imagined to date).

I predicted that prices would rise by 100% from 1 Jan 2008 to 1 Jan 2010 and they are up around 30% on average so far.

So that means we have another 53.84615% increase on today's prices to look forward to over the next 16 months before the market flattens off if my calculations were correct.

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