Hi

There is so much of off-plan and new build flats on the market in UK today, all selling at roughly 15% discount, and so many 'reputable' property investment companies are offering them to their clients as solid investments.

However, I can't really comprehend how can they be a good investment, for following reasons:

1. It is hard to get real comparable and judge the resale value. What is the point of valuation figure if you can't sell them at that price? At the best, this kind of investment could be worthwhile only as a long term investment.

2. Rental income. Because all of the flats will came out on rental market at the same time, it will be difficult to get decent rent for them. You will need to rent them cheap to avoid vacancy and it is unlikely that the rent will be able to cover your mortgage payments.

What do you think?

Are there any positive sides to buying off-plans or new build?

What is the best way to find the realistic value for them, the value that you can actually resale them for?

Thanks.

kk

Avoid like the plague - at recent auctions off plan/new build flats in city centres such as Manchester, Liverpool, Leeds, Nottingham etc. have been going for half their original selling price, if they even got a bid !.

I'm aware that north is very bad in this regard.

Do you know if the situation is any different in other part of UK, particularly in London its self?

How much impact will good location have?

Thanks.

I sorry to say the UK is awash with off plan properties and bank properties at knock down prices, if you have the cash to hold on for a few years, its ok, meaning if you got the cash in your pocket and not into the stock market or investment in other countries.
buying off lan for profit is madness at best, loaning money to buy property in the UK right now for investment is crazy as a investment, but for a home to live will it may be a good time.

I agree with the post above, I would go for Overseas prperty investment the whole way, the English market is far too volatile at the moment.

On the other side though, you do need to get some good advice on where (other than personal preference) and who to go to developer/agent wise. The forum is certainly a good pklace to start!

kk1974, your common sense sums it up really.
However, the north is far from blown apart. A new build in York will be a safer buy than a new build in Manchester. Think supply and demand.
There are very good bargains to be had, but my advice is buy in SMALL apartment blocks of less than 20 units if you can - that way demand should outstrip supply.

It's utterly ridiculous to generalise about the domestic or the overseas markets. It all comes down to location - irrespective of country.

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Michele Andrew
Editor of Square Foot Magazine

Thank you Michele. I agree with your view on generalising about markets. I'm asking because so many 'reputable' companies are trying to flog such deals, and i didn't came across anyone who would convince me about the advantages of these deals over established properties.

I would be interested to know, in your opinion, what would be positive sides to buying off-plans or new build versus already established property with the history of rental income?

And, what is the best way to find the realistic value for these newbuilds, the value that you can actually resale them for?

Thanks.

Positive sides to buying off plan. Hmmm. I've been asked to give my opinion on some cut price resale units in a newish development in Leeds on Monday. Cut price because one of the apartment block investors wants out. That'll be interesting to compare "under market value" of new build resale with "under market value" of off plan.

As you ask, what indeed is resale value? To my mind, the only resale value worth considering is one that gives you a yield comparable to that offered by a bank.

Personally, I rate traditional stock far above new build. We Brits love traditional Victorian terraces. We love a bit of garden or open space to sit out in. Many of us like an original feature and a bit of character.

How much new build inspires me? Well, ok some of the really high-end units, but they are aimed at owner occupiers. Most investors are pushed towards faceless 2-bed units with thin walls and cramped layouts. I always think that the "would I live here myself?" rule should come into play before investing.

I think you are wise to stay sceptical. Scepticism probably doesn't make millionaires but we all know the adage about a fool and his money.

Who knows, maybe I'll come back on Monday full of the joys of Leeds city living but I doubt it!
Michele

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Michele Andrew
Editor of Square Foot Magazine

Thanks Michelle, you answered exactly what I'm thinking. I'm really trying hard to sell the whole idea to my self, but I just cant find an angle to make it worthwhile even considering.

I invested in Newquay Cornwall some 16 months ago in an off plan holiday property studio, Rocklands. (no discount offered). Im looking to flip having been given a evaluation price for the property as the final stage is being completed for September(ish) 2008. The price increase is 28%, i had an initial 5% deposit pay out. My quesion is if after 2 months theres been no interest,should i chase the agent to lower the price or sit and wait as the credit crunch unveals itself. Holiday letting against conventional residential letting buy to let property. Is there a difference in market.