OPP MAGAZINE OCTOBER by OPP Magazine

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CONTENTS This month

Contents Features 7 Show News. What can we look forward to at the second and third of OPP’s 2014 shows? 32 Design. Golf and holiday homes belong together like... Europe and Ryder Cup victory! 44 Residential Funds. All the proﬁts of property but without the hassle? 65 Western Europe Buyers’ Market: The buyers of Western Europe, what are they like?

Regulars 12 Top Ten News. 16 Big Issue. Traditional advertising is staging a come-back. What does it oﬀer? 26 Experts Advise. How do you sell to millennials, the generation without any money? 41 Legal news 58 Where were you? First hand reports from the property exhibitions in September 61 Where will you be? Previewing the biggest events and exhibitions of October

Data 49 Mortgages in Barbados. 50 Smart currency. The Philippines may be hard to spell but its economy is sound 52 Country report. When you add it all up, there’s very little not to like about South Korea

Business 23 Business brieﬁng, for better business 38 Technology column. New! What’s rocking the world of the early adopters? 78 Life in the day of, the home stager

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11 Column, editorial director John Howell

The OPP Team

HEAD OFFICE

ADVERTISING

15, Little Green, Richmond, TW9 1QH, UK ✆ +44 (0) 20 3540 2233 www.opp-connect.com

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EDITORIAL Editorial Director John Howell ✆ +44 (0) 20 3540 2225 ✆ +44 (0) 7715 174415  john.howell@opp-connect.com Editor, OPP Magazine Christopher Nye ✆ +44 (0) 20 3540 2217 ✆ +44 (0) 7711 183581  chris.nye@opp-connect.com Editor, OPP China Mina Mu ✆ +44 (0) 20 3540 2223  mina.mu@opp-connect.com

Commercial Director, London Paul Childs ✆ +44 (0) 20 3540 2225  paul.childs@opp-connect.com Commercial Director, Asia Paciﬁc Cedric De Souza ✆ +65 6679 7734  cedric.desouza@opp-connect.com Commercial Director, China Sophia Liu ✆ +86 13910 777 524  sophia.liu@opp-connect.com

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International Property Reporter Francine Carrel ✆ +44 (0) 20 3540 2221  francine.carrel@opp-connect.com

Marketing & Operations Executives Tatum Ward ✆ +44 (0) 20 3540 2226  tatum.ward@opp-connect.com

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EDITOR’S LETTER

What a load of... Agents get a bad rap, but who are the real bullshitters here? Editor Chris Nye has his suspicions... Editor, OPP Magazine Christopher Nye

The exaggerating agent is only kidding himself, not a whole industry

people pushing anything new isn’t it? Disruptive tech, social marketing, content creators, for example. Who believe that you don’t just buy a can of coke, but have a “relationship” with the Pepsi brand that can be translated into an “online conversation”. The people who claim that watching TV is “so 1970s” (that one from Tim Cook, CEO of Apple, last month), when the evidence is

Liars might be able to get people through the door, but then the truth is there for all to see that watching telly, on a TV set, in your living room, as it happens, with other people, is still the most popular form of entertainment. The people who say that high streets are dead (so 1890s!), printing is dead (so 1800s!) and that estate agents (so 1990s!) are about to be replaced by the ﬁnal iteration of property portals, some sort of droid in an inexpensive suit. Reckon it’ll happen? Me neither. But see our new tech column on page 38, because it might!

Our Big Issue is advertising (page 16). Is social media any good at selling houses or should we turn back to Don Draper? If traditional advertising is back in vogue, where should you be spending your advertising budget in 2015? Golf looked to be going places 10 years ago, yet even President Obama’s new-found love for it cannot hide how golf developments have struggled recently. Good news then, that most buyers of golf property don’t play golf, they just love the atmosphere. See page 32 for your first steps in developing a golf resort for surprisingly little outlay. Millennials – now that’s a bullshitters word! But the people who came of age around the year 2000 are a clearly definable cohort. Unfortunately they can chiefly be defined as “not having enough money to buy a home”, let alone a second home. Read our feature on page 26 for tips on how to find the ones with money, and sell to them. Being bang in the middle of a busy season of exhibitions (not least our own, see page 6 for news on OPPLive Beijing and London), check out our reviews of September’s shows on page 58 and previews of October’s from page 61. See you in London, November 27-28?

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he other week I got into a brief spat on a website comments section over an article which claimed that estate agents are the lyingest bunch of bullshysters you’ll ever meet, communicating “in a dialect renowned for its strangulated syntax, peculiar vocabulary and breathtaking insouciance, dancing on a rhetorical knife-edge between salesmanship and fraudulence…” I know, you’ve heard it all before. I defended agents’ use of language. If Cubitt & West, for example, believe they have become the best agent in Caterham “by always out-passioning other agents to help our customers achieve their dream move,” then why not (a) say so and (b) invent a new word to express their surfeit of passion? Shakespeare made up words all the time. But let’s just say, I was in a minority supporting agents. What bothers me about these lazy and clichéd complaints about agents is that a house is a pretty solid object. Liars might get people through the door, but once you’re actually in the perspex lean-to that you described as a conservatory, the truth is there for all to see. So who are the real bullshitters? At the very real risk of sounding like an old fogey, it’s generally the

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SHOW NEWS OPPLive China 2014

Your chance to sell in China OPPLive China: 23-24 October The Venue They said we would never repeat the glamour and drama of our last show venue in Asia, the Marina Bay Sands overlooking Singapore Bay. And they were right! (Although we are back there in April.) However, the China World Hotel in Beijing is pretty special too. It is slap bang in the middle of Beijing’s Central Business District and attached to the China World Mall. It has a modern exterior and an opulent Ming and Qing era interior. We have discounted room rates for delegates to OPPLive China.

The team in China

MINA

JOHN

SOPHIA

XAVIER

PAUL

Mina Mu, OPP China Executive. Normally based in London, Mina has already been in Beijing for ﬁve weeks ensuring the show will go smoothly. Contact her for any questions or issues. Mina.mu@opp-connect.com John Howell, OPP Editorial Director. As usual, John is running the ‘knowledge’ part of OPPLive China, the seminar and speaking programme. John.howell@opp-connect.com Sophia Liu, OPP Commercial Director, China. Sophia has in-depth experience of connecting China’s agents and buyers with global developers and properties. Sophia.liu@opp-connect.com Xavier Wiggins, Founder and Chairman. Xav founded OPP in 2004 with a mission to unite and raise the professionalism of global estate agency. Xavier.wiggins@opp-connect.com Paul Childs, OPP Commercial Director, London. Paul will be in Beijing to talk about setting up global distribution channels for properties and to meet potential clients. Paul.childs@opp-connect.com

Speakers

Exhibitor highlights

We won’t allow our exhibitors to travel half way round the world without having every chance to meet the people they need to in order to make money. Look out for details of the drink receptions, meeting bureaus and informal gettogethers when you receive your delegate or visitor packs.

North Dakota Developments is showing its brand new project Transhudson Hotel in Beijing, with some specially commissioned 3D models. They will also be unveiling snappy new branding and introducinga special team in China. See them on stand 60-62. ZHAIZI, part of the Wagman Group with offices in Berlin and Madrid, has sales of more than €400 million and will be advising clients on how to buy real estate and how to acquire visas. They have multilingual staff and also bring Cezar Garzon, a specialist in Spanish law, to offer detailed advise and to speak on panels. Check the show guide for more excellent exhibitors.

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Sometimes a speaking programme can feel like its been tagged on to an exhibition. Not in China though, where there is such a thirst for knowledge and a need to overcome the cultural barriers between East and West that it is a centrepiece of our show. Sessions include overcoming cultural barriers; immigration and opportunities in the UK, Spain, Portugal, Canada, Australia and the US; how to create and leverage eﬀective partnerships. All speeches will be in Chinese or English and simultaneously translated. Make sure you catch the seminars relevant to you – and try to go along to something you don’t know about!

A social event

SHOW NEWS OPPLive London 2014

London Calling OPPLive London: 27-28 November The Venue. Our 2014 venue may not have the Wow factor of 2013’s Westminster Central Hall and Natural History Museum, but it more than makes up for that in sheer usability. The 5-star Novotel London West is our hotel, conference and gala dinner venue, allowing maximum time for networking and schmoozing. For those new to London, Hammersmith is in the central western side, easy walking distance to the Thames and Chelsea, a couple of tube stops from the West End. It is a rapidly developing business district, already home to Coca-Cola, Disney, Sony Ericsson, UA Airways and many more. It is also easy to teach from both Heathrow and Gatwick airports.

Gala Dinner

For 2014 the OPP Gala Dinner and Awards for Excellence are being slickly produced to give all due prominence to our award winners (but without any hanging about!). Along with the gorgeous 5-star dinner with complimentary drinks, music and dancing, the OPP Awards are known as the gold standard of the global property developments, so this is your unique chance to not only see who are the leading lights of the industry, but to get to know them. We reckon that if you’re competitors at the starter course you’ll be allies and partners by dessert. Call +44(0) 203 540 2224.

Competitors at the starter course, you’ll be allies and partners by dessert!

Speakers

Who could resist a few days in London? OPPLive London has pulled in some of the most exciting and dynamic leaders in the global property industry. The seminar programme for 2014 covers most of the areas you know you need to be expert in to run a property business today, and a few things you probably didn’t know. Everything from setting up in new areas, sourcing new product and running your business to maximum eﬃciency. The most cutting-edge parts of the industry will be explained – augmented reality, integrated marketing, sustainability – but we won’t ignore the traditional skills of the OPP as we explain how to tailor your message to new markets.

homes homes homes!

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ANGELGATE

EAST LEDANG

LAKE CHARLES

PRINCE HENRY

TRANSHUDSON HP

Angelgate from Pinnacle is a departure from their usual student accommodation into buy-to-let, though still in their Manchester heartland. As beﬁts England’s coolest city, it is a seriously modern design and ethos. East Ledang, from UEM Sunrise, boasts a range of contemporary luxury resort homes within a tropical lanscaped, secure development in Malaysia. Canals and lush gardens surround the villas. Lake Charles is the newest project from Feltrim International. The development will be chock full of amenities, including a bowling alley, movie theatre and waterslide-surrounded pool area. Prince Henry @ LIttle Bay by Choice Properties Asia pte ltd is a luxury development in the eastern suburbs of Sydney. Proximity to a golf course and secluded beach, plus three universities, bodes well for overseas interest Transhudson Hotel Parshall, from North Dakota Developments, will cater to the workers brought into the state by an oil boom. The developer promises high rental returns on its 408 identical suites.

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OPINION John Howell

Cultural conundrums Most of us find it more difficult to deal with ‘foreigners’, yet seldom has it been more important

Don’t go into new cultures blind – learn your stuff

hy? We usually speak different languages, creating all sorts of opportunities for misunderstandings. We are often in different time zones, limiting the chances to speak at length during regular office hours. We frequently have different cultural expectations about everything from speed of delivery to customer care. But what can we do to make

We jet into new countries and expect to do business – right now and our way. This fails

john.howell@opp-connect.com

new generation of young and internationally experienced entrepreneurs but they will still be important in your ongoing relationship with their company. Just as importantly, while you might get a contract without knowing any of these things or trying to ﬁt into the Chinese way, you are far more likely to keep it if you embrace them. Ask anyone who has been doing business in China: you learn every day and the more you learn the easier it gets to do good business. Make sure you pass on that knowledge to your team… and make sure they use it. Now, these examples relate to China, but the principles apply equally elsewhere. Whether you want to do business in Japan, Spain, Brazil, the UK, the US or anywhere else, a little bit of time preparing and learning the ropes will make your venture much more likely to succeed – and a lot less stressful.

John Howell will be talking about business culture at OPPLive China in Beijing: 23-24 October 2014

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it better? How can we defuse problems that arise? How to make them unlikely to occur again? As our unloved former prime minister, Tony Blair, once said: “its education, education, education”. In fact, governments and multinational companies have long understood the need for their expat staﬀ to speak the local language and understand the local culture before arriving in post. They spend a lot of money making sure this

happens. Even then, they are often far from successful. Yet, in our industry, we seem unwilling to put either time or money into this process. We jet into new countries and expect to do business – right now and our way. Nowhere is this more obvious than in China and Southeast Asia. All around the world, real estate companies are looking at their millions of new millionaires with lustful eyes. They want a share of the action. So they spend money on fancy videos and translating brochures, on trips and trade shows – but not on giving their staﬀ the basic cultural knowledge. As a result, most of their attempts either fail or, at least, fail to reach their full potential. Examples of a lack of cultural understanding: not realizing that in China there is a mosaic of cultures – that what works in Shanghai will not be best practice in Guangxi; failure to respect seniority, loyalty, face and guanxi; not showing politeness and patience; dressing and behaving inappropriately; not using the most appealing colours and shapes in your materials. If none of this means anything to you, you need some training! Such considerations (perhaps) apply less to dealings with the

John Howell OPP Editorial Director

GLOBAL NEWS

Top Ten News Stories Our pick of the news this month at OPP Connect

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Whoâ&#x20AC;&#x2122;s going Stateside? Why are they buying?

OCTOBER 2014

Sri Lanka

Norway

Scotland stays – good news for agents

Overseas buyers dominate Colombo

World’s most overvalued property market

Britain held its breath as Scotland decided whether to leave the UK in September. Zoopla predicted falling house prices if the ‘Yes’ camp prevailed. Rightmove said the residual UK could see a slowdown. But Scotland stayed, and now estate agents are expecting a ﬂurry of activity as buyers who’d been putting oﬀ their decision make their move.

The biggest star of Indian Ocean property right now is Sri Lanka, recovering from civil war to be a tourist hub and investment hotspot. Locals may be priced out of Colombo, says JLL India, but foreigners are buying. Most prime apartments in the city are being purchased by overseas buyers, nonresidents and wealthy locals, the agent said.

The Bank of International Settlements has analysed 55 of the world’s property markets and decided which are the ﬁve most overvalued. Norway topped the list, followed by Australia and the UK. Overvalued property markets increase the risk of future declines, especially where wages aren’t growing strongly.

France

Kenya

Russia

Foreign investors lead investment market

Dubai developer wants to break into Africa

Moscow’s foreign property sales collapse

Overseas buyers, led by Americans, captured 51% of the property investment sector in France, becoming the majority for the ﬁrst time since the global market crash, says Savills. Investment volume was more than one-third higher than in the ﬁrst half of 2014, with transactions of over €100m making up over 75% of total investments in H1 2014.

Top Dubai developer DAMAC has appointed Taylor Scott International as its preferred broker in Kenya, and it will be promoting its properties at the 20th Kenya Homes Expo from 30 October to 2 November. DAMAC hopes the move will boost sales in emerging African markets and especially Kenya. Taylor Scott also aims to open oﬃces in Uganda and Ghana.

Sales of Moscow property to non-Russians fell to just 2% of transactions in the ﬁrst half of 2014, with luxury property down 80%, according to a report from Kalinka Group. Prices are around a third lower since the Ukraine crisis began. But agents report continued activity overseas and a search for new destinations despite restrictions.

Dubai

Mexico

Texas attracts South American buyers

Indians top investors in Dubai property

Sales double in two years in San Miguel

International property buyers invested more than US$11billlion in Texas real estate in the year to March 2014, a ﬁve-year high – mainly from Mexico, South America and the Caribbean. Overall, Texas accounted for 12% of all international property sales in the US, and rising each year, according to data from the Texas Association of Realtors.

Indians are the biggest overseas investors in Dubai property, according to the Dubai Land Department (DLD). The ﬁrst half of this year saw Indian investors spend more than Dh10.5bn (US$2.85bn), out of a total of Dh37.5bn – a signiﬁcant rise from H1 2013, when they put Dh8bn into the emirate’s property market. Brits and Pakistanis are also keen.

Property sales in San Miguel de Allende, Mexico, voted the world’s best city, have doubled in the past two years on the back of rising demand from international buyers. Levels of foreign investment in San Miguel are at their highest since the global market crash, say market experts. Luxury gated communities are proving popular with foreign buyers.

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BIG ISSUE Advertising Words | Christopher Nye

Advertising Reboot?

After a few years as poor relation to soft-sell social media, traditional advertising media are fighting back hard. What really works?

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e have been encouraged in recent years to believe that traditional advertising is not only useless, but incredibly bad manners. How dare you interrupt our favourite TV show, or magazine feature, to push your product? Isn’t it so much better to develop a relationship between your brand and your customers via social media? The idea took root that instead of paying lots of money for an advertising campaign in a magazine or on TV, which you would never be entirely sure was effective, you would push your efforts into promoting your property development or estate agency free-of-charge via social media. By loving your customer, giving them

free content, sending out amusing tweets or inspirational Pinterests you will get your customers to “like” you, “follow” you, share your message to their own friends and

Social media is for communication between people. Brands are the third wheel here. followers. “Your content strategy should be about activating and engaging your digital community in ways that traditional advertising never could,” as the self-styled

Millennial Marketing Guy Jeff Fromm says.

Anti-social media? Many still believe in that, but there is also beginning a backlash against social media. As the Marketing Week Columnist Mark Ritson says: “Social Media, as the name says, is a medium for communication between people. Brands are the third wheel here.” Those who believe that social media branding is overblown could also point to the infamous President Cheese tweet. This came from a feature in Business Insider about the digital agency creating tweets for President Cheese. The campaign behind the tweet was planned, the tweet composed, discussed,

OCTOBER 2014 your bottom line.” Bob Hoffman, the Adcontrarian blogger, calls this “The Golden Age of Bullshit”. Another advertising guru Jonathan Wichmann says: “Confronted with the need to show results that justify increasing your advertising budget on Facebook the thing is… you cannot justify it! Overall, social is an inferior marketing channel compared to TV, print and email.” So, maybe it’s time to rethink traditional advertising.

TV advertising?

Clockwise from top left: “Britain moves with Rightmove”; PrimeLocation, “Find the home you deserve,” featuring John Hurt; Zillow, “You’re not just looking for a house...”; Annie Liebovitz’s upmarket photography for Corcoran

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specially photographed and finally approved. After 45 days planning the tweet finally was tweeted: “Sharing a Camembert with friends? (How generous!) Get the best flavor by serving at room temperature. #artofcheese”. This was posted to President Cheese’s 100 followers. Yes, one hundred. It got no retweets (until the sorry tale came out to universal derision). The fightback against the idea of social media being a powerful advertising tool has gathered pace. Mark Duffy, owner of the advertising blog Copyrant says: “Twitter is a personal platform. And brands are not people… Social media managers get their grubby hands all over the news and up in your feed because they’re trying to improve “engagement” – the more likes and shares or retweets and faves, they are told, the better the free (free!) advertising – because that’s what every update is: free advertising. And guess what? Every single one of the brand-tweeters who Like-grubs for a living is doing social media 100% wrong…. [tweets] do f***-all for

Prime Location’s TV (and cinema and online) advert features a lowlevel camera panning through the rooms of a lovely home, lingering on children’s toys, a Labrador snoozing by the fire, then out to a balcony overlooking a beach. A John Hurt voiceover says that “Your dream home, paid for by graft, sweat and sacrifice… This is your reward.” It’s a beautiful ad, telling a story, striking a chord, costing tens of thousands to produce and millions more to show. But did anyone watch it? The claims against TV advertising are many and powerful. People don’t watch TV any more, or at least not the younger, busy, aspirational people with money. They watch

online and block the ads, or on demand and fast forward through adverts. However Thinkbox, who advise on TV advertising, point out that compared to other advertising media: TV creates the most profit, pound for pound, dollar for dollar TV has unbeatable scale and reach TV is watched more today even than a decade ago TV is the most talked about medium online or offline All TV ads create response TV is the new point of sale medium TV is the dominant youth medium TV is THE emotional medium, and emotional campaigns are more effective TV is the catalyst for other media TV makes brands famous We put these questions to Thinkbox: But aren’t people watching less TV? “In 2013, the average TV viewer in the UK watched a total of just over three hours, 55 minutes of TV a day. The overwhelming majority of this – some 98.5% – was enjoyed on a TV set…. This is eight minutes more than we were watching a decade ago.”

BIG ISSUE Advertising Isn’t TV advertising declining as money moves online? “TV is not declining in any meaningful sense – not the viewing of TV, the viewing of TV ads, the effectiveness of TV ads, TV’s share of advertising, nor absolute revenue, which is growing. And online TV advertising revenue via the UK broadcasters’ on-demand services is the fastest growing sector within online display.” Don’t people fast-forward through the ads? “In the estimated 59% of households that own a digital television recorder, 83.6% of TV on a TV set in 2013 was watched live compared to 84.4% in 2012. This continues the trend of recent years which has seen the level of non-live viewing settle around the 15-20% mark…. only ads watched at normal speed are counted by BARB and so paid for by advertisers. Ads which are speedwatched (which do have some value) are completely free.

Dead tree advertising? One thing we can all agree on is that print is dead. Or can we? The link between printed pages and advertising revenues is crucial, and in their recent report on global entertainment and media, PwC says that global magazine revenue will return to growth in 2015, powered by digital readership

and advertising and especially in the emerging economies such as China, India, Russia and South Africa as local businesses look to reach global markets via the digital versions of printed magazines. In the US and Europe, sales of printed magazines are falling. According to Group M (a media investment company) UK ad revenues will drop from £691m in 2006 to around £397m this year. Media analyst The Media Briefing

At the prestige end there have been net increases in the profitability of luxury magazine titles (www.themediabriefing.com) say that the seven major UK publishers saw print circulation fall nearly 5% in the past year. Looking closer though, much of this is in areas where specialist websites are taking readers away by offering a more suitable experience via sound and video than a static magazine (and no, not just pornography, but also music, sport and movies – Total Film magazine sales fell 23% last year, for example). At the prestige end there have

been net increases both in the numbers of luxury and titles and their circulations and profitability. Monocle magazine, for example, was recently valued at $115million. The Sunday Times Travel Magazine has increased circulation by 50% in the past two years. In the property press, Town and Country has recently launched in the UK, according to its editor, riding the “tidal wave of global wealth that is pouring into London,” while Australian Property Investor (API) magazine has an audited average monthly readership of 109,000, an 11.5% increase on the previous year. They have an impressive array of advertisers too: “Recent and past API advertisers include major banks such as Macquarie, NAB, ANZ, Bankwest and HSBC, Federal and State Government Departments, blue-chip developers and premier project marketers including FKP, Defence Housing Australia, Devine, and Colliers International… Why? Because they’ve ‘crunched the numbers’ and discovered that API is a very cost-effective way to reach a high-income, high-net-worth market for premium products and high-ticket items.” At Monocle, aimed at exactly the kind of market who can afford overseas homes along with their luxury consumables, according to Media Briefing its October

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ABC DIGITAL EDITION CIRCULATION GROWTH

179,022

294,341

369,040

JAN - JUNE 2012

JAN - JUNE 2013

JAN - JUNE 2014

8,834 JAN - JUNE 2011

ABC Average Digital Edition Circulation (all titles)

OCTOBER 2014

Online advertising

DRIVEN BY DIGITAL, TOTAL MAGAZINE REVENUE WILL RETURN TO GROWTH IN 2015

GLOBAL TOTAL MAGAZINE REVENUE (US$BN), SPLIT BY DIGITAL AND PRINT, & YEAR-ON-YEAR GROWTH (%) DIGITAL MAGAZINE PUBLISHING REVENUE

YEAR-ON-YEAR GROWTH (%)

PRINT MAGAZINE PUBLISHING REVENUE

120

100

REVENUE

-4% 60

-6%

-8%

20 0

YEAR-ON-YEAR GROWTH

-2% 80

-10%

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

-12%

Source: PwC

edition has attracted $1million in print advertising for just 80,000 subscribers. As one high-end ads sales director told them: “Advertisers increasingly are looking for more targeted solutions. There’s lots of opportunities to be mass, there’s very few publications where they feel 100% confident where that circulation is going.” One recent campaign that has won acclaim is for Corcoran, a highend agent working in Manhattan

Evidence that digital magazines are replacing printed magazines in readers’ affections is sketchy.

The case for social media? Maybe we are in danger of going too far the other way. The people who love Facebook and Twitter are still consumers, still predominantly the future. Dan Johnson, Director of the property marketing company Leadgalaxy.com says: “Facebook reaches buyers where they spend time – online. Our biggest – and most surprising – change of 2014 has been the wholehearted adoption of Facebook as a viable lead generation tool for international property and investments. It’s easy to dismiss Facebook as nothing more than an informal social networking tool used mainly for sharing updates, pictures and video with family, friends and work colleagues. However, Facebook has nearly 50% of the world’s web users as active accounts on its site,

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and Palm Beach Florida. They recently spent $3million on a campaign featuring a mix of people, some well-known but mostly simply attractive or impressive in some way, photographed by Annie Liebovitch enjoying time in their own home. According to Corcoran’s CMO, the idea was to put people back into the home: “real people who have interesting professions or passions that I thought could be reflected in their homes.” The

industry has become too fixated on data and research, she says, who has the most listings, the fastest search facility, “What gets lost in all that is the focus on why someone is buying this home, who are they, how do they live?” Again though, the use of traditional, aspirational, disruptive advertising is at the higher end. How will Corcoran know if the campaign has been a success? Many publishers do see the growth of online magazines as the answer to the problem of showing the effectiveness of a magazine advert, because on digital magazines the ads are clickable. But generally the evidence that digital versions are replacing printed magazines in readers’ affections is sketchy. PwC says that digital magazine revenue is largely replacing falling printed revenue, especially from advertising (see graph above), whereas Media Briefing says that digital newsstands such as Apple’s have been a failure. Even where the numbers are going up (see graph left) and often they are not, the numbers are still tiny. The cost of a full page in A Place in the Sun magazine is somewhere around £1,800, and using a QR codes, which readers can scan via smartphone, the static 2D image can be transformed into video.

The two most quoted complaints about traditional advertising were firstly, that it is “the rattling of a stick inside a swill bucket”, as George Orwell once wrote, and secondly that “I waste half my advertising budget, I just don’t know which half” by no-one knows. Online advertising gets around that by ensuring payments by lead or by click. So, for example with OPP’s own electronic direct mail (EDM) campaigns, clients pay to have their email sent out to our database of relevant agents, or other professionals (the audience can be targeted). Clients are given a guaranteed number of leads and if those are not met the campaign is repeated or adapted, or a refund given. EDMs can be used to maintain communication and advertise to a companies existing database, or to paid-for lists. In the earlier days of the internet, this type of marketing may have gained a bad reputation as spam, but customers are more sophisticated today, they know to avoid giving details to untrusted sources and know they can unsubscribe by a click or two. This advertising is also controlled in many countries, for example in the UK by the Electronic mail regulations.

PROACTIVE AGENTS WANTED

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BENEFITS FOR AGENTS

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OCTOBER 2014

Mobile technology is driving new advertising trends

in mobile advertising. Firstly, that mobile will be an absolute priority for every brand, with a many new types of advertising formats opening up, including Google Glass and Apple Watches. Secondly, that advertisers will more clearly analyse when and why consumers use a smartphone, tablet and laptop and will mould their advertising message to those individual devices. Thirdly, that Cost Per Engagement (CPE) and Cost Per View (CPV) will replace simple Cost Per Mille (CPM) as quality of the view becomes more important that the quantity. Lastly, that new and unexpected advertising formats will replace the banner ads of old, with much more use of video and sharing.

public relations For those who find the choices too daunting and lack the expertise to choose which media is best for

Radio is still the world’s most widely used mass communication channel with 13,000 stations

A face for radio Changes in advertising can happen fast and leave people behind. For example, those online banner ads, says Duan Coetzee of Admakers: “Not long ago a ‘clickthrough’ rate of 2.5% was the average for online advertising banners. That has now reduced to less than 0.5% – five times less effective.” But there are some media that remain relatively unchanged. One of those is radio. As Mr Coetzee says: “You

them, an advertising agency can look after their media campaign, gaining discounts from publishing and TV companies. Alternatively, a public relations (PR) campaign is another way of avoiding the feel of an “in your face” advertising campaign by placing stories in local and national media. A basic campaign costs from £1,500 per month, either based on retainer or for payment per piece of media exposure.

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making it no surprise that 70% of consumer marketers have acquired customers on Facebook. Given the length of time that people spend on Facebook and the ability to position adverts right in the newsfeed of users, the opportunities are almost limitless. Done wrong, it can be a costly exercise in moneywasting, but get it right and it can provide hundreds of high quality, targeted leads that are specific to one particular opportunity. We will continue to experiment and refine how we work, but highly recommend Facebook for all serious advertisers we work with.” Charlotte Ashton, Director of AB Property Marketing, also swears by social media: “People absorb information from so many channels and angles and if you’re not doing it you’re missing a trick. It’s more personal and informal, more of a conversation rather than just pumping stuff out and shoving it in people’s faces. But you have to do it properly; at least an hour a day between platforms. We advise budgeting £50-£100 per month.” One benefit of social media is its mobility, and according to the VP of mobile at Ebuzz, there are four major trends just beginning

still cannot replace a good drive time radio show and the prime advertising value attached thereto.” Zillow, the US portal, launched radion ads summer as part of its $65million advertising campaign in 2014 (which is around 60% up from 2013). Radio does face pressure from streaming music apps such as Google Play and Spotify (although the free version of Spotify does include adverts), but according to PwC total global radio revenue will surpass $50billion by 2018, up from $44billion in 2013, led by the US with 44% of global radio revenue, all of which comes from advertising. And it is still the world’s most widely used mass communication channel, with 13,000 radio stations in the world. So many localized stations makes targeted advertising possible, using metadata with GPS and, of course, the production costs are tiny compared to TV. In the UK, according to www.radioadvertising. co.uk, a week-long campaign using a 30-second advert would cost from £500 on local radio, £2,500 on regional radio and from £10,000 on national radio. Production of the advert will cost from £200 to £700.

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BUSINESS Brieﬁng

Business Briefing Ideas and inspiration to help you run your business BOOK: Location Is [Still] Everything Your customers are all online now so it doesn’t matter where they are, right? According to the research that led Wharton professor David Bell to write this book, social capital (i.e. interaction of people) in the oﬄine world (i.e. in person, not via Facebook) is a hugely under-rated factor in making people buy a product. The practical implications of this include: 1. Your customers are highly powerful at getting friends, neighbours and relations to buy too. Far more powerful than the researchers expected. 2. Push your local oﬄine exposure where you see a cluster of buyers. 3. Research where your customers are from geographically. Analyse what it is about the physical world that means you have lots of buyers in one location and not in another. Published by New Harvest.

Stat of the month

In the past year London property prices have risen more than the entire GDP of New Zealand. New Zealand’s GDP was US$183billion. (Source: BBC Radio 4)

Apps for OPPs

ADVERTISING: Older folk = more money PEOPLE OVER 50… – Hold 75% of the ﬁnancial assets in the US – Are responsible for almost 50% of consumer spending – Buy 60% of all new cars – Have a net worth three times that of younger generations ... and 55% higher income – Will grow at three times the rate of the under 50s by 2030 – Own 60% of all vacation and second homes Yet only

5% of advertising is aimed at them. (Source: typeagroup.com)

So what? Two things. If 95% of advertising is aimed at people who largely DO NOT buy overseas property, then advertising that is aimed cleverly, imaginatively and directly at the over 50s will have extra impact. But does your advertising team know how to talk to the over 50s? Does it have a strategy for reaching them? Does it understand what media they consume?

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Can you get past the media’s blinkers to reach your real audience? For example, the newest TV channel in the UK, London Live, oﬃcially targets 16 to 34 year olds – the demographic that watches least TV – despite over-50s Londoners being far more likely than anyone else in the UK to be millionaires and billionaires, to buy second homes, to be serial investors in overseas property. They are exactly the people to whom London Live should be targeted its advertising. But they’re not.

LISTINGS IN A NEW DIMENSION Some agents are better than others at conveying the sense of a house through pictures (see page 54), but, no matter how good your photographer, it’s hard to ‘feel’ a space until you’ve visited it. But now, Redfin has teamed up with tech firm Matterport to launch virtual 3D tours of all its listings. Starting with 28 listings in Seattle they intend extending to more and more listings in coming weeks. Matterport’s cameras allow users to map the space around them in 3D. Redfin agents will use the cameras to create a walkthrough of a home, which will appear below the normal listing on their site. Customers can opt out of having their home mapped, though. www.redfin.com www.matterport.com

BUSINESS Brieﬁng

Bad gardener? Try paint

BEFORE

Survivorship Bias

AFTER

Necessity being the mother of invention, with California’s record-breaking drought in its third year, water rates at record highs and severe restrictions on water use, home sellers have taken to painting their grass green. So popular has it become that many believe it will become the norm in hot, dry locations instead of watering. “I see it as a cultural paradigm shift that we are just starting to make,” one lawn paint manufacturer told the NY Times, “this is a quick ﬁx, instant gratiﬁcation that does not make you feel guilty.” For further information and alarming images of the drought, go to ca.gov/drought.

A BUSINESS CONCEPT IN 100 WORDS: Survivorship Bias Anyone coming into international property in 2014 might be tempted to look at those who survived the bad times and do what they are doing, or to read the books of successful people to ﬁnd ideas and inspiration, because you’ve no time for losers, as Freddie sung it. This would be a mistake. Because these people don’t know how to get it wrong and, to quote Daniel Kahneman, “A stupid decision that works out well becomes a brilliant decision in hindsight.” No, to be successful they should seek out the people who failed and ask them what they did wrong. (Heavily edited from, www.youarenotsosmart.com)

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Time to take Bitcoin seriously?

Cai-Capital, based in the UK, claims it is the first investment firm to accept Bitcoins and “other crypto-currencies”. OPP spoke to MD Richard Mathieson. www.cai-capital.org Come on, seriously? Seriously. We want to give our clients as many payment options as possible, which is why we accept all conventional currencies but also provide clients with the option of using Bitcoins and other cryptocurrencies to transact property investments. It’s just a matter of extending choice. Who would exchange bricks and mortar for something so insecure? Bitcoin is no more vulnerable than any other currency. A Bitcoin account is an encrypted digital wallet, which is accessed through a unique encryption key and password; the user can then gain access to view their balance and transactions at any point, so the whole process is transparent. How does a bitcoin ATM work? To use a bitcoin ATM you simply scan the QR code linked to your personal wallet, insert cash and within minutes your money has been exchanged into Bitcoin, which will be deposited into your Bitcoin wallet. Who pays with bitcoins? Many of our customers are technologically advanced and based overseas, such as Hong Kong and South America. If I am paid in Bitcoins, how do I pay my wages, tax etc? To have been paid in Bitcoin you’d have to have established a digital wallet into which the Bitcoin were deposited. Conversion to the local currency is via an exchange and the local currency is credited to your nominated bank account or Paypal account. How would I set myself up to accept bitcoins as payment? There is no one size fits all solution; it depends entirely on the size of your organisation and how you wish to conduct business. There are many websites and blogs that provide useful information and guidance, such as Coindesk and Bitbargain.

Last year’s Best Media winner hasn’t been complacent...

In 2013, the Overseas Guides Company swept the board with the OPP Gold Best Media prize, and in 2014 we haven’t been resting on our laurels! We have continually improved our highquality, up-to-date content, focussing on everything our customers need to know about moving or purchasing property overseas. With our new ofﬁces in Spain and Portugal, online property portals, websites, regular newsletters and resources sent to our readers every week and our guides to buying and living abroad, there’s lots of ways we could help your business grow.

Get in touch to find out how we could help you grow your client base: 020 7898 0549 partners@overseasguidescompany.com overseasguidescompany.com

BEST MEDIA WINNERS 2013

EXPERTS ADVISE Selling to Millennials Words | Francine Carrel, OPP’s very own millennial

Generation Can’t-Buy

They’re young, priced out of housing markets, saddled with student debt… and they’re your next generation of buyers.

www.opp-connect.com

illennials, sometimes known as Generation Y are the generation that have reach adulthood since the year 2000. This makes them currently between 18 and 34. They have been slower to buy their own home than the generations preceding them simply because the economy has been so bad, mortgages so hard to obtain and property so highly priced compared to their incomes. Hence their other names – Generation Rent, the Rentysomethings, or “those poor saps who still have to live with mum and dad into their 30s”. All over the world they are now becoming a vocal lobby, in the UK demanding more house-

building, forcing governments into interventions such as Help to Buy and leading the complaints against overseas buyers in cities such as

“Millennials are like humanity’s QR code they are everywhere and they’re useless.” London and Sydney that, they believe raises prices. They are also known as Generation Me, accused of being coddled, more likely to fritter their

money away on hipster glasses and hemp-lattes than to save for a house. Marketing blogger The Ad Contrarian summed up some business people’s opinion: “Millennials are like humanity’s QR code -- they’re everywhere and they’re useless. The only important thing you have to know about them is that there’s a double ‘l’ and a double ‘n’.”

Future buyers But, like them or not, they’re the future, and ignoring them would be costly – even for the overseas property industry for which younger people have always only been a niche market. So what is the good news about millennials?

OCTOBER 2014 28 and 26 respectively. In most of Europe the average age of a ﬁrst maternity has changed from 23-25 in the early 1970s, to 26-29 today) so there are still plenty of under 34s who are looking to settle down in their own home. But will they buy abroad? Of course the rich ones will, just as any wealthy market will do, but the Moneycorp evidence is that regular earners will do too. After all, a young professional from London could spend his or her savings on a broom cupboard in the city – or on a beautiful villa in the Costa Blanca. So how do you get millennials to buy property from you?

Good things in small packages? the rise of the micro apartment

Reeling them in The under 35s tend to want to live in cities, and cities are expensive. They also tend to be childless, so why the need for two bedrooms? Hence developers are becoming increasingly inventive in providing smaller, cheaper city-centre accommodation: micro apartments. The trick is to make these diminutive dwellings seem cool, clever and desirable, by fitting them out with flexible living arrangements and innovative, multi-purpose furniture that will enable a happy life within 25-30 square metres. The recent Dwell on Design expo in LA saw contributions like micro-toilets for bathrooms as little as 0.84sqm, desks that fold into beds and the use of vertical layered furniture to make use of every cubic centimetre. Communal areas that enable millennials to view “the city as their living room” are also key. Are our youngsters being conned though? Are these cool, or just poky, rabbit hutch-sized rip-offs? Some campaigners are calling for stricter rules on unit size, citing a “worrying” trend towards cramming those in need of affordable housing into unhealthily small areas.

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Firstly, Many of them are looking to buy abroad. Moneycorp’s latest figures for the UK showed the number of 19- to 28-year-olds using Moneycorp to buy property abroad rose four-fold from 2011 to 2013. They have also grown up more used to being abroad, and not just for two weeks in the summer, but for weekend trips via Ryanair or Wizz Air. Secondly, while the evidence is that they are pretty poor compared to previous cohorts the baby boomers and Generation X, not all millennials are poor. For every billionaire millennial such as Mark Zuckerberg there are millions of supremely well-paid professionals in the tech, finance and digital, as well as the traditional economies. While there are certain millennial trends that suggest they will be late to buy property, such as marrying later, if at all, and having children marginally later, the average age of first marriage and first child has only shifted buy a couple of years (US men got married at 26 in 1920, the women 22, now those ages are

Advertising-wise, your best bet is video of some sort, whether via TV, YouTube or some other media. However, beware the technology that can block your message, because millennials will have it. Have you seen all the ad-blocking apps available? Scary. If you’re going to go video, try to go viral. Aussie listing video creator PlatinumHD PropVid recently got the world goggling as their (arguably) tasteless ad focused way more on a model’s breasts than it did on the development being sold. But, hey, it got seen by loads of people who wouldn’t have known they existed otherwise. (Don’t assume that all millennials are politically correct. There’s a chance a few of those viewers are now mulling over a move down under.) If the claims of millennials being coddled and infantilized are true, don’t assume that they know anything about buying property whatsoever. One indian portal has created a beautiful advert pointing out the stress that millennials feel when faced with grown-up decision making. Can they even drive to view properties? The number of young people learning to drive has fallen by 20% in the UK in the past ﬁve years, and by 23% in the US. They may need help! We have all yawned along to the claims that the future is digital, but with millennials it really is, so a serious, entertaining, mobile digital strategy is essential. Millennials

EXPERTS ADVISE Selling to Millennials

Cool urban living, but not necessarily in your country of birth

www.opp-connect.com

spend an average of 96 hours per week online, according to Comscore.

Location, location, location Even allowing for the huge variation in the needs of say, a 25-year-old LGBT programmer and a 32-yearold couple with young children, certain trends are evident. One trend is against big houses in sprawling suburbs. Urbanisation and millennials go together like Facebook and selfies. Access to good public transport is essential – the days when Mrs Thatcher could say that no successful 30-year-old ever travels on a bus are long gone. Millennials don’t want to bother with a car if they can avoid it and they don’t mind living in a smaller house if it means being in a proper community. Millennials are, however, more willing to live in areas that are mixed racially and socially than previous generations. Ironically however, they are less likely to make friends with the neighbours (something about the callowness of youth, perhaps) and want buzzy bars and entertainment. If these aren’t nearby, then you’re better off targeting the baby boomers, who all own cars. “I do think their preferences are going to result in sustained change, this group is so different from previous generations,” said

Lynn Ross, executive director of the Urban Land Institute, which recently conducted a survey of millennial preferences. Interiors “You want [millennials] to think they’re walking into their potential home. A house is an emotional buy and you want to suck them in,” says Brendon DeSimone, real estate agent blogger for Zillow.com. Open-plan living is great for

“Their preferences are going to result in change, this group is so different from previous generations” this (so flexible, imagine what you could do with this space!), and so is a home office or at least labeled space for one. Millennials like the option of working from home, so make sure your clients can see the potential for a pleasant working environment. Neutral colours are out, feature walls are in. Get rid of the carpet and put in hardwood floors, maybe with a couple of cute rugs. “Hire a stage manager, repaint the walls to add some flavor,

The marketing millennial

OPP talked to Simon de la Rue, sales consultant at Click Innovation and full-time London millennial, about the best ways to advertise to the younger generation. “Talking property, a millennial probably isn’t that interested in things like insulation… we grew up surrounded by double glazing salespeople, we know something can be done if it needs to be done. Focus on things like 4G, internet providers, transportation links. What can I do in this location? Where are the bars? Where is the entertainment? We’re being exposed to so much marketing at the moment, our ability to sniﬀ out rubbish is very keen. Go big on images, low on text. When advertising, take out as much info as possible and focus on progressive disclosure. If I am interested, let me know how I can ﬁnd out more. Don’t throw every hook into the water at once – it’s so old fashioned and shows you aren’t being targeted with your ad. Think Instagram. Instagram is obviously a very visual thing. You can get an idea of the look, the feel and engage with it. Looking at young people in the city, the creative types will be on Instagram and will use it to look for holiday destinations and various other things. Imagery is key. Imagery is more important than ever

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EXPERTS ADVISE Selling to Millennials

Millennial advertising: bright and bold (but polite, they’re no punks)

www.opp-connect.com

persuade your buyers that the dining room could be used for something else completely, pull up the carpet and freshen up the flooring, liven up the kitchen with a modern look, and consider buying quiet, energy-efficient appliances,” added Paul Benson, an agent in Vermont. Millennials are not into DIY; their baby-boomer parents never showed them how. Generally they expect to buy pre-modernised properties. “If you spend $15,000 now, you might make an extra $30,000 to $40,000,” said Mr DeSimone. He also says that millennials are willing to go green – not just for ethical reasons, but for financial ones too. Tech-savvy Gen Y has long been bombarded with the benefits of solar heating, of water recycling, of low-energy products.

Money In a survey last year for Wells Fargo in the US, 42% of millennials said they found their current level of debt “overwhelming”. This was double that for babyboomers. However, having grown up in recession and austerity, with welfare payments much tougher than for previous generations and with student debts, they are arguably more likely to be responsible when they do get money. The same Wells Fargo

survey found that more than twothirds saw themselves as savers, given half a chance. But if they are struggling to buy a primary home, they will hardly be looking to buy a holiday home. According to research by James Wolfensberger in Mic.com, “Every single millennial answered ‘yes’ when I asked him or her if they would consider moving to another country for opportunity.” He drew the conclusion that this would

Millennials are not into Do-It-Yourself; their baby-boomer parents never showed them how prevent them buying property at all (“The house with the white picket fence will likely have to wait, and it might not happen at all for many from Generation Y.”) but could it not also mean that they will be more willing to buy overseas if they get the chance? Not as a second or holiday home, but as a primary home or buy-to-let, a bit of ﬁnancial security in their nomadic lifestyle? We would raise a cup of hemp latte to that prospect!

when selling a property. The BBC, for instance, are updating their website to be more image focused. Something like Facebook is where your mates put pics of mates and cats – it’s less formal and less structured. Because of the connotations it has, if you’re marketing something relatively serious such as property, I don’t think FB is a suitable platform. For people in professional services, LinkedIn is where more people are spending more of their time. Marketing indviduals are actively engaged with LinkedIn as a platform, so they’re more open to receiving news there. Let’s be honest, everyone winds down towards the end of the working day. You can put up images and articles about your property and catch people in that time. Fundamentally, as a millennial I want to be entertained and that’s how I engage with advertising. The Cadbury’s gorilla [for non-UK readers – Google it.] was a watershed moment. Why show a leggy brunette slowly taking a bite out of a chocolate bar? Why not a gorilla playing the drums? The brief was for the ad to show the feeling of eating a Cadbury’s bar, so there is a connection, but mainly it was just something you wanted to share with your friends. On the other hand, don’t be patronizing. Don’t be old hat. There’s nothing more cringe than someone like [UK bank] Halifax coming out with those godawful staﬀ choir adverts. Look at your website and strip it down. Cluttered websites are diﬃcult to navigate. You’d be surprised by the number of sites that don’t let people know what they do! If I can’t see what a company does, right away, I’m going to click out.

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E Block, 5th Building, Hanwei International Plaza, Fengtai District, Beijing, P.R. China 100070

DESIGN Golf course Words | Christopher Nye

Hole in one

Golf course at the centre of Bangkok’s commercial district

Golf and real estate go together like golfers and startling socks. How do you get in on the action?

www.opp-connect.com

t one point in the boom years, the USA’s National Golf Federation (NGF) called for construction of “a course a day” to cope with the demand from soon-to-retire baby boomers. Since then, golf has actually slowed down in the western world it is getting bigger in Asia. But in any case – golf course developments are not entirely about golf. According to a meta-analysis conducted in 2007 of several studies, 70% of buyers on golf communities are not golfers. They buy instead for the unobstructed views, the ambience, the walking trails, wildlife, associated facilities and the social life. In fact when, in 2005, buyers on a Texas golf resort were asked the specific characteristics that made their golf course development most

attractive, the top seven responses were nothing to do with golf at all. They were: a safe neighbourhood, better resale value, quality of the property itself, the beauty, the quiet and the child-friendliness of the neighbourhood, with strong

70% of buyers on golf communities are not golfers. They buy for the views and the social life zoning restrictions. In the US gated communities already carry an average 6% premium, and the majority of golf communities are gated.

“A course a day” The overt linking of real estate development with golf course construction began in the US. One of the first golf resorts developed was the Sea Pines resort on Hilton Head, California in the 1950s, when its owner sought to match the premiums that he could charge for his ocean view property and created a golf course from forest. Within a decade there were 60 golf communities opening annually, especially in Florida, and by the 1990s there were 100 opening annually in the US. By 2004 there were 3,400 golf communities in the US, most of them designed by professional golfers and with a high degree of difficulty – especially those designed by Jack Nicklaus – that was to cause problems later. By 2007,

OCTOBER 2014

BANSKO’S SAVIOUR

In Bulgaria, Bansko began development of its golf course in 2006. Soon after, British property investment there became a byword for the global banking and property disaster – it is only now starting to seriously return. But throughout this turbulence, the 5-star Pirin Golf and Country Club has been a great success. OPP spoke to Debbie Gibbs of Bower Properties in Bansko. 70% of golf course construction was linked to real estate construction; indeed according to the National Golf Federation, it was hard to get funding for a golf course unless it was linked to house construction. Quentin Lutz, a leading golf course developer said: “Stand-alone golf courses are a thing of the past. They’re done. There are a number

“Stand alone golf courses are a thing of the past. They’re done. It’s all about residential sales”

How powerful has the course been in attracting buyers? Pretty powerful 8-9 years ago. There weren’t many golf courses here and the attraction, particularly for British buyers, was to ski in the morning and golf in the afternoon. It allowed other investors to build around it, adding another area for people to own properties. How much extra can you charge for a golf property? Prices are still holding well inside the Pirin Golf and Country Club resort at about €800-1000 per sq m. Directly outside is very diﬀerent, more like €350-400. Is it still eﬀective? People are still discovering the golf course – even if they don’t play golf it’s a lovely place to go, only 10 minutes’ drive from Bansko. It makes for a good day or evening over there as an alternative to Bansko. People are amazed at the stunning scenery surrounding the golf course.

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of exceptions… but today it’s all about residential sales… golf by itself is zero value.” But while real estate became essential for golf development, what does golf add to real estate? According to a thesis produced by David Wyman, an MBA student at Cranfield University in 2010, six hedonic studies (a hedonic

valuation calculates how much each characteristic of a property adds to its value) over the years worked out that overlooking the course had added a premium of 7.6%, 4.81%, 7.9%, 12.5%, 25.8% and 15% to asking prices. The latest study was the first to use GPS locators to get a true reading (compared to the other studies which used data from the MLS) and found that out of 5,782 sales within half a mile of a golf course, the 1,324 with a true golf course frontage were 15% more expensive than those without – with 23% premium on private courses and 13% for public courses. Furthermore, a study in the US in 2007 found that prices fell by $940 for every 100 feet they were distant from the club house. In comparison, various analyses of the eﬀect of views of water – from New Zealand and the US – found that a view of water added between 4% and 60% to a property price, while lake or ocean frontage added as much as 200%. This is why, with the decline in golf, some developers have taken to digging out fairways and filling them up with water,

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DESIGN Golf course on the basis that lakes costs less to maintain while giving a higher premium (50% higher according to one CEO).

Golf course requirements However, while the general trend has moved, perhaps temporarily, away from golf in some parts of the world, there are plenty of others crying out for golf and the income and benefits it brings with it. So let’s assume that you want to build a golf course and you have done the essential legwork in calculating that you will have a sufficiently large local population and visiting players, that you will have labour to staﬀ the course and build the properties, that there isn’t already too much local competition and that no other courses nearby have recently failed. All that is established, but do you have the space and the cash? On average, an 18-hole course will require 60-90 hectares of land. That is around 30-40 hectares for the playing surface and the same again for the landscape separating the holes. Those with real estate alongside require more space to allow for a safety margin (the danger area is around 150250 yards from the tee, which is particularly prone to sliced balls causing damage to property and person). To save money and suit time-poor younger players, many

clubs are now opting for fewer holes in a course. The cost of a golf course will vary according to many factors, but the American Society of Golf Course Architects (ASGCA) says that a starting price for an 18-hole course is $2million. That will cover design and planning, land clearance, grading, draining, construction of tees, fairway, greens, bunkers, golfcart tracks, seeding, grassing and

Let’s assume you’ve done all the essential legwork... but do you have the space and the cash? so on, but not including the price of the land and other expenses such as building the clubhouse or purchase of golf carts. In addition, owners should budget for $250,000 to $600,000 for maintenance costs.

Process The first step is to conduct a feasibility study. This will be need to establish whether the site is suitable for golf, analysing such elements as topography, the soils and geology, vegetation, drainage and water availability.

Dubai Creek Golf Course and Yacht Club

The European Institute of Golf Course Architects (EIGCA) recommends the following initial process to its members: 1. Carry out site suitability study. 2. Establish design concept – identify clients’ objectives, assess design opportunities and restraints, review site surveys and prepare conceptual options showing potential locations of all major project elements. 3. Develop masterplan – using information gathered from the marketing and site suitability studies and conceptual designs, establish final golf course layout, locations of clubhouse and maintenance facilities, road and infrastructure layout. 4. Determine development styles and landscape character. Prepare approximate construction programmes and budgets. 5.Prepare documentation to enable project approval by local and national authorities. 6. Prepare detailed design documentation – contract documents, plans and specifications to allow the project to be tendered.

improving affordability To help grow golf in a challenging economic environment, the EIGCA have drawn up a document explaining how to build golf courses more economically. This represents

THE CASE FOR GOLF

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For some, golf is a rich man’s waste of time and water, a blight on the countryside, a good walk ruined. But according to The Royal and Ancient (randa.org), golf courses: Restore land that was used in damaging ways, for example quarrying Encourage biodiversity compared to arable farming Can bring the countryside to urban areas, in pitch and putt courses Create employment along with social and economic benefits

DESIGN Golf course a clear departure from the type of tough, challenging, championshipstyle golf courses that America favoured in previous decades. Now, the suggestion is to build 9-hole courses, with par 3 holes that will retain the benefits of golf courses for real estate developers – the immaculate lawns and safety from over-development – but at a much cheaper price and lower ecological cost. They oﬀer a case study of a dairy farmer in Devon, England, who was quoted £110,000 for a 9-hole, par 3 course to be built over 70 hectares. In fact, the farmer created a clever membership structure that enabled him to build 18 holes for under £600,000. Another course in Sri Lanka has golf course properties around it. The full 18 holes were built for £410,000 by clever use of the land’s own contours to avoid heavy earth-moving, using natural local materials, and building it with local labour rather than a speciality firm.

Clockwise from top left: Idolwood Lagoon Estate, Bermuda; the “James Bond House” Quinta do Lago; Val de Lobo; PGA Catalunya

DECLINE IN THE WEST AND RISE OF GOLF IN THE EAST

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Abandoned course, Las Vegas

Returned to desert

Under the shadow of Kilimanjaro

Golf governing body Royal and Ancient (R&A) says there are over 33,300 golf courses in 200 countries, with more than half in North America and large numbers in the UK, Japan and Australia. But against predictions, America’s 78 million middle-aged baby boomers did not turn to golf, nor did the “Tiger boomers” stay in golf. US golf plateaued at 518 million rounds per year in 2000 and fell to 462 million since. For the past eight years more courses have closed than have opened, often because of real estate projects ﬂoundering. However, some 775 courses are in planning or construction, according to the R&A, with many thousands more projected in Asia, South America and Africa. According to Golf Architecture magazine, it is being led by wealthy elites, with courses as part of property developments or resort. ”[Asia] remains the most active region of the world for new golf,” said Alan Prickett of golf machonery manufacturer Jacobsen, “In markets like Myanmar, the Philippines, Vietnam, Cambodia and Laos, we are seeing a steady increase in golf course construction and a noticeable increase in the demand for golf from the emerging middle class.” In Europe, some high-end courses with real estate are going upmarket, such as Quinta do Lago in Portugal, which recently announced a €29million revamp, including nearly €10million just to revamp one course, just as it also puts onto the market 26 new villa plots.

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TECHNOLOGY Round up

Keeping track of new technologies: from state-of-the-art software to cutting-edge construction

Smart scribbling

Robot run-through

This nifty robot could be a boon to international property agents. JMA Ventures LLC, using a Suitable Technologies Inc system, has produced Beam Pro – a 5-foot tall, remote-controlled vehicle which allows buyers to conduct their own walkthrough from anywhere in the world. The buyer can sit at their computer, using a keyboard to guide the device around a building at breakneck speeds (well, over 2mph). Through the robot’s two microphones, your potential

client can also hear you – and any background noise they might want to know about! Facing the agent will be a screen image of the buyer (handy for gauging reactions), along with six speakers for easy communication. The Beam Pro costs $16,000 to buy and $1,200 a year to operate – pretty expensive. Coming this winter, though, is the Beam+: a shorter model with half the battery life and speed, which will go for $1,995. www.suitabletech.com/beampro

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Wi-Fi warming

A group from MIT has invented a new type of heater system that creates a “personal thermal cloud”. Called “Local Warming”, the technology tracks your location using Wi-Fi, then sends its heat right in your direction. The idea behind the invention is to save energy that would otherwise be wasted heating a space with

Heard of a new technology that could aﬀect the industry? Started using top-of-the-range software that sets you apart from the crowd? Tell us about it and get published. Contact: francine.carrel@opp-connect.com

nobody, or few people, within it. A working prototype was unveiled in the summer and, although it looks like a one-oﬀ for now, the research team says it could be used in a number of ways – including working with an app to manipulate each person’s preferred temperature. www.seable.mit.edu/local-warming

Architects are excited about the LIX 3D-printing pen (see picture, above). A smaller, sleeker competitor to the well-known 3Doodler, the LIX Pen actually looks like a pen – and is far more intuitive and easy to hold than its bulkier rivals. The pen’s hot-end nozzle melts various colour of plastic, emitting threads that cool and solidify on contact will air. It’s lightweight, easy to use and USBrechargeable. Check out www. lixpen.com to see it in action. It’s pretty cool. Classy stationary provider Moleskine has come up with a series of notebooks for use with a Livescribe smartpen, allowing users to turn hand-written notes and drawings into digital ﬁles. The MoleSkine Livescribe Notebooks work with the Livescribe 3 smartpen – which uses Bluetooth to talk to iOS devices. The pen has motion sensors to pinpoint position and movement, as well as audio receptors, which can be activated by pressing the record, pause and stop buttons at the bottom of the page. Architects and developers will be able to harness this technology to easily share ideas and sketches, either with individual ﬁles or slideshows.More info at www.moleskine.com

INTERVIEW Augmented reality

Augmented Marketing Interviewing Will McReynolds, company founder Real estate reality is changing

WILL MCREYNOLDS Augmented Marketing augmentedmarketing.ca

What does your company do? Augmented Marketing provides interactive experiences at the reseller level to ad agencies, as well as business-to-business. We focus on keeping the technology as relevant as possible, without falling into the realm of being “gimmicky”.

How did you get into augmented reality? I come from 15 years of the print/ marketing world, and I saw this as being a way to engage users on a whole new level, as well as making print relevant again. As we all know, when the senses are engaged you remember the experience. Augmented Reality is the best of video, audio and print all rolled into one. Before, your logo was your branding statement, a jingle was your auditory identity, and now, Augmented Reality combines all of those elements.

What’s the product you’re most proud of?

We are in talks with CREA (Canadian Real Estate Association) to implement their database into our AR way finding solutions to allow users to see listings floating around them, as well as allowing them to touch floating listings, bringing up more information and accessing AR/VR 360 experiences. We’re also working on Oculus Rift alternatives using products like Google Cardboard to work with our software – this will allow users

The next thing is the ‘holodeck’, where users can walk around a room without being there to experience VR tours at multiple locations.

Are the augmented reality business cards catching on? Yes. The biggest hurdle is expense and/or content creation. Obviously they are going to be more expensive than traditional cards, but the one thing is the design. A lot of clients have minimalist design on their cards with a lot of text. Small areas and copy heavy design

do not fare well for a great end user experience, so we have to talk the client into changing their way of thinking, as well as getting the ‘education’ part of AR onto the card. Distribution for business cards, postcards, ﬂyers, etc., is paramount to the success of AR campaigns. Users can’t say it doesn’t work for them if they are not getting it to the right audience. We ﬁnd that repeat visits are through the roof for some cards that we have done and we attribute that to users showing their friends and family this cool ‘magic trick’ of print coming to life.

What’s next? I think that aiming your mobile device at a home that is listed and having information – like how many baths and where they are located in the house – revealed by virtual arrows pointing them out will allow home buyers to shop around without the commitment of time they would traditionally have to invest with a realtor. Not to detract from that, I think that realtors should oﬀer a ‘branded’ app to close more sales using the technology. The next thing is the ‘holodeck’, where users can walk around a room without being at the location. The technology exists and we are working with it, we just have to ﬁgure out how to stop getting bruised shins...

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They are all unique and the reaction we get when users see it for the first time is a novelty that has yet to wear off. I am most proud of what we have done in the real estate sector, by making it affordable to Joe & Jane Realtor so I guess in terms of “product” it would be the 360 tours and Green Screen Guide that allows the realtor to talk to you without being with you.

Which projects are exciting right now?

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LEGAL News

The East needschanges to get Our Middle round-up of legal stricter, andbut Venezuela finds taxwhile hikesEgypt in Spain speedier struggle with newFrance regulations processes in US, and India BAHRAIN BRAZIL REDUCED REGISTRATION SUPERSIMPLES TO BENEFIT CHARGES BROKERS

francine.carrel@opp-connect.com john.howell@opp-connect.com

More updates are available in our news section at www.opp-connect.com

will take months rather than Dubai Land Department (DLD). years. Procedures valuating The industry hasfor been waiting andmonths auctioning properties have 18 for the law to be also been introduced. passed and legal experts gave Additionally, borrowers their views on the draft to will the now be able to appeal against Land Department last year, estimated and obliges reports thevaluations, National website. No them to try to restructure loans specific details were available before but Ms repossessing Rashed says ithomes. is ready Banks will also be prevented and is being examined by from groundlessly their higher authorities. upping The DLD first lending rates. announced in October 2011 The bill will likely not to that it new was employing experts come into eff ect until the examine and improve theend real of the year, when the government estate investor protection law by submits a bill insolvencies. the end of theon year, but to date nothing has been finalized. [Reported by Adrian Bishop, Editor of OPP Connect.]

FRANCE NEW MEASURES TO BOOST MARKET FRANCE CHANGE IN Manuel CAPITAL Prime Minister Valls announced in August a new set GAINS TAX

of measures designed to boost France’s estateHollande market. He Presidentreal Francois has outlined tax incentives announced a change infor theinvestors capital and choice of letting a property gainsa tax system on second home for six, nine or twelve years – as sales to provide more ﬂuidity in the opposed to just nine years. The French property market. The taper government scaled back relief systemhas is toalso be changed so a recent law, introduced in March, that from 2014 the required time which capped rents inapricey of ownerships before property Parisian areas. is completely exempt from capital Some the gains taxhad willcomplained be 22 years,that down regulations would discourage from the 30 year system which was investors the market. ratiﬁed in in September 2012. Furthermore, regulations Nicholas Leach, Partner increasing at Athena the amount of documents Advisors, commented, “Thisthat could had to be provided by of sales has be considered as a bit a U-turn been back. The newestto by thescaled government, reverting measures (around 50 of a system which is similarthem!) to thataim to streamline developers’ processes when Sarkozy was in power. Last when launching housing projects. year’s property tax changes put

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On 20 May, Bahrain’s Shura Council ratiﬁed a motion to reduce charges for the registration of newly acquired real estate. The amendment, bringing the buyer’s fee down from 3% of the property value to 2%, is hoped to stimulate real estate growth. Furthermore, an incentive designed to push buyers to pay On 7 August, Brazil President quickly was approved – if the Dilma Rousseff signed Supplementary payment is madethe within 60 days Lawbuyer introducing the ‘Supersimples’ the will receive a 15% – a system differentialfees. taxation discount onofregistration for micro and small businesses [Source: Oxford Business Group, that unifies eight taxes on a single www.oxfordbusinessgroup.com] ticket and reduces the average tax burden by 40%. The new law will BRAZIL benefit some 450,000 companies REGISTRATION OFofFOREIGN with annual revenues up to R$3.6million (US$1,576,070). CAPITAL The updated law adds 142 service areas under the simple taxation regime – including real estate brokerage. Among key benefits is the reduction of bureaucracy: federal, state and local taxes are paid in a single ticket. All activities of trade, industry and most service activities pay less in taxes. Under the new law, taxation will be between 6% (annual revenues of up to R$180,000) and a maximum According to the Foreign Capital of 17.42% (revenue million Law, “Foreign capitaltoisR$3.6 considered per year). to be any goods, machinery or The new taxation rules will apply equipment that enters Brazil from 1 January 2015. Limitations with no initial foreign exchange for the new taxintended regime apply disbursement, for for companies with foreign partners. production of goods and services, Reported by Carol Weinrich, ICREA and any funds brought into the (www.worldproperties.com) country for use in economic

activities, provided that they belong CYPRUS to individuals or corporate entities FORECLOSURE BILL FINALLY domiciled or incorporated abroad.” Foreign capital must be THROUGH registered by means of an Electronic Statement of Registration – Foreign Direct Investment Module (RDE-IED), on the Central Bank Information System (SISBACEN). For the purposes of the Electronic Statement of Registration, foreign direct investment is deﬁned as permanent holdings in Brazilian companies or, in accordance with common market practices, longThe ownership Cypriot parliament has term by non-resident adopted individuals a controversial investors; or corporate foreclosure bill, domiciled meaning the entities residing, or country is set to receive the next incorporated abroad, through tranche ofofa shares €10billion loan. in ownership or stock In an emergency vote, a bill to Brazilian companies, or investments streamline foreclosures of bad to in foreign companies authorized debts was approved by a vote of operate in Brazil. 47 to 7 in the Cypriot House of The statement implies that Representatives. The MPs passed the Brazilian companies receiving the bill with seven amendments, the investment and/or the according to spokesman Nikos representative of the foreign Christodoulidis. investor are responsible for the The decision came by: justDaniela a day registration. [Reported after a deadline set by Cyprus’ Antunes, Maxwell Alves Solicitors, troika lenders (International www.maxwellalves.com] Monetary Fund, European Commission and European DUBAI Central Bank), who had TANWEER LEGISLATION TO threatened to withhold the next tranche in the country’s bailout BE ANNOUNCED programme – some €426million – unless the bill law wasaimed passed, A new property atas the country’s non-performing improving investors’ rights loans set would beannounced classed as nonlooks to be soon recoverable, leading Cyprus in Dubai. The long-awaited to fail its EU stress tests this Tanweer legislation will be autumn. announced “soon”, says Majida new law AliThe Rashed, the means head ofthat the Real foreclosures can longer be Estate Investmentno Management delayed indefinitely – the process and Promotion Centre of the

Lawyers and accountants around the world tell us about new developments in the law. If you know of any interesting changes to the law or taxation in the country where you live or do business, contact

41 63

LEGAL News After turning around to appease objectors, France’s government is now being accused of “bowing” to real estate lobbies; and President Hollande is facing questions of when his promised 500,000 new homes will materialise.

IRELAND PROFESSIONALS DEMAND HALT TO GAZUMPING

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Gazumping (agreeing to sell your property to one party then selling it to someone else for more money) has become common in Ireland since the beginning of the real estate recovery, say auctioneers in the country. The Institute of Professional Auctioneers & Valuers (IPAV) says that their professionals are being unfairly held responsible, and have called for a new type of contract to stop the practice. Under current law, gazumping is not illegal, even in the case of deposits having been taken. Furthermore, agents are obliged by law to pass on all offers to the seller. IPAV estimates that over 2% of sales in Ireland are affected by gazumping. IPAV would like to see that “the property that is the subject of the contract should be taken off the market once the sales contract is signed”, they told the Irish Independent.

MALAYSIA SELANGOR INTRODUCES OVERSEAS BUYER LAWS New restrictions on foreigners buying property in Selangor, Malaysia, could see volumes fall significantly.The state has put a series of measures in place, which took effect at the start of September, foreigners and

permanent residents can only buy residential properties costing more than RM2million in Zone 1 and 2. Previously, the cap was RM1million. These include the Petaling, Gombak, Hulu Langat, Sepang, Klang, Kuala Selangor and Kuala Langat districts, the Malaysian Insider reports. Foreign buyers are also allowed to purchase properties from RM1million, in Zone 3, which includes Hulu Selangor and Sabak Bernam. Overseas buyers are also not allowed to purchase landed properties or those sold by public auction and no more than 10% of nonBumiputera units can be sold to foreigners under the new guidelines. The state sets aside a quota of 30-70% of homes for Bumiputera peoples, depending on its location.

MALTA CHEAPER RESIDENCY PROGRAMME Malta has announced a new residency programme for EU nationals – and has halved the minimum property purchase requirement. The High Net Worth Individual Rules for EU nationals, which required property investment of at least €400,000 has been replaced by the Global Residence Programme (GRP), which requires a minimum spend of €275,000 on a property in Malta and €220,000 for one in Gozo or the south of Malta. The limits are the same as the Global Residence Programme for non-EU nationals, and both include the option of €9,600 annual rental for Malta and €8,750 for Gozo and the south. Those accepted under the Residence Programme and their family pay just 15% tax on any foreign-sourced income they bring to Malta and locally-sourced income at a flat rate of 35%, subject to a reduced minimum annual tax liability of €15,000 covering the main applicant and dependents included on the same application.

SPAIN INHERITANCE TAX RULED ILLEGAL

The European Union’s highest court has ruled that Spanish inheritance tax breaks the law by charging foreigners more – and it could lead to a change in the real estate tax system, lawyers say (read their opinions at www.opp-connect.com). The Court of Justice of the European Union (CJEU) has this Wednesday passed a judgement that Spanish Inheritance Tax violates European legislation when it imposes higher gift and inheritance taxes to foreigners and on foreign property. Regional Spanish laws allow tax advantages in Autonomous Communities if the donor and beneficiary are Spanish resident taxpayers and the inherited property is in Spain. The verdict highlights that in an inheritance or donation where there is an heir or donee, or a deceased or donor, who does not reside in Spain, or even a donation or state that is represented by real estate located outside Spain, “will not be entitled to tax advantages which are only applied if there is a connection with an Autonomous Community, and must therefore bear a higher tax burden compared to those inheritances or donations whereby the parties are all residents or which are only represented by real estate located in Spain”, the court states. The Court of Justice interprets European Union law to make sure it is applied in the same way in all EU countries. It also settles legal disputes between EU governments and EU institutions. Reported by Adrian Bishop, editor of OPP Connect (www.opp-connect.com)

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FEATURE Residential funds

Words | John Howell, OPP Editorial Director

Back to the Fundamentals

Around the world, there is a new focus on property investment funds specialising in residential property. Should we get involved? Could we?

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PP has written about property investment funds – Mutuals, REITs (Real Estate Investment Trusts), property investment trusts etc – several times, but one of the obstacles to the industry getting excited about them was that most invested only in commercial property and, as you know, our industry is deeply rooted in residential real estate. That focus on commercial property is changing – and changing fast.

Why invest via funds? They allow people to invest in the housing market – residential or commercial – without having to purchase and manage the property themself.

They also permit investors to get involved with as little as US$1,000 – though most will invest substantially more.

They let investors get involved with as little as US$1,000 – though most will invest much more Residential or commercial?

This is the old dilemma. In the end, people invest where they feel comfortable and in what they think will make them the most money.

Institutional investors – pension funds and the like - are (where they are free to do so) increasingly investing in residential property, usually via funds. The table, right, shows the percentage of residential property in institutional investors’ portfolios in various countries. Countries (such as the UK) with low levels of institutional investment expect to see that change. In 2013, Martin Moore, then chairman of Prudential’s property arm, described institutional investment in the UK’s private rented sector as being “at a tipping point; the journey from niche to mainstream is just beginning”. Many of the private clients of

OCTOBER 2014 ﬁrms in our industry also prefer residential. They think they understand it. They have done it before. The cost of entry tends to be lower. Yet there are good arguments for private investors going down the commercial route. Darius McDermott, managing director at Chelsea Financial Services, agrees that most investors should look to get exposure to commercial property as opposed to residential. “We feel that for most investors, the family home means that they have substantial exposure to UK residential property anyway, so they should look to diversify away from it.” Despite this, the fact is that many investors in the international property market have a huge percentage of their total investments in real estate and, in particular, in residential real estate. Whether this is a good plan is another matter… but it is their choice.

Who is doing what?

SWITZERLAND NETHERLANDS AUSTRIA FRANCE GERMANY DEMARK SWEDEN US UK SPAIN NORWAY ITALY 0%

10%

20%

30%

40%

50%

SOURCES: AEW EUROPE: IPD NCREIF

(pension), Oﬀshore Bonds or direct investments. Investment start at $1,600 or $80 per month. India is just about to launch new residential REITS with an entry level of about $3,000. “REITs will allow even middle income individuals to invest in real estate. Without this, they can’t participate because of the huge entry barrier,” says Keki Mistry, vice-chairman and CEO of Indian mortgage giant HDFC. “The low ticket size means that investors can diversify their portfolios by including real estate without investing huge amounts in the asset class”. Other opportunities exist in places as diverse as Australia, Turkey and South Korea. The PwC Compare & Contrast report Worldwide Real Estate Investment Trust Regimes is worth a read for those wanting more detail. (www. pwc.com/sg/en/real-estate/assets) Of course, opportunities and returns will vary a lot over time as the prices of property and rents received rise and fall.

Open-ended or Closed-ended? Open ended funds permit the investor to take his money out of the fund at any point but, in order to make sure that there is enough money to buy him out, force the fund manager to keep a substantial part of the fund in cash. This can be 20% or more of the fund. With the present low interest rates this can dampen returns considerably.

Closed-ended funds, on the other hand, tie the investors in to the fund until a ﬁxed date. On that date all the assets in the fund are sold (unless all the investors agree otherwise) and the proceeds are split between the investors. Of course, the date chosen for the closing of the fund is usually far in the future – say 10 years away – and so the investors could ﬁnd that, when the date comes, they are in the middle of a huge property crisis and that the investment is worth little and/or very hard to sell. Think 2008.

Regulation A serious deterrent to many people wishing to explore the sale of funds as a business opportunity is the fact that, in most advanced countries, you need to be licensed and regulated in order to sell (or even promote) them. They are right to be worried. Penalties for noncompliance are severe. So, for many of our readers, their interest in funds will be limited to having enough knowledge to understand where they ﬁt into the world of investment and to discuss them with buyers looking to make direct investments into real estate. For those who see property funds as an important product that should form part of what they have on oﬀer, their choice is to become licensed and regulated. In many countries this is far less complicated, expensive and limiting than you might think… but that’s another story.

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In the US investors started pouring money into residential property as we started to come out of the crisis in 2010. Apartment REITS – funds that make money by renting apartments, which they own and manage – and residential mortgage backed security REITS – funds that own and receive income from mortgages – are both growing, though more slowly than four years ago. Number one by value and number of units owned is Equity Residential, with $36 billion in assets. Returns over the last ﬁve years have been 23.3% per year. Investors looking to Germany can also ﬁnd opportunities. Propfund has 156 units and generated rental returns of over 8%. Typical of the UK funds set up to appeal to smaller investors is the TM Hearthstone UK Residential Property Fund. It was included in the Investors Chronicle Top 100 Funds for 2014. It is a UK Financial Conduct Authority (FCA) authorised and regulated Fund which is purely focused on UK residential property. The funds are eligible for ISA, SIPP

SHARE OF RESIDENTIAL IN INSTITUTIONAL PROPERTY PORTFOLIOS

FEATURE Two funds

The bullet is in the gun name: Feltrim Real Estate Equity Fund (freef) contact: www.thefreef.com Elevator pitch: To take advantage of the market conditions, applying local expertise to create a specialist fund for well informed investors focusing on quality US real estate initially in Central Florida. The fund will enable investors to beneﬁt from income generation and capital growth over the medium to long term.

Why this fund? There are still distressed assets

out there and still people willing to sell property that we can refurbish to a good spec and put back on the market. It’s a combination of refurbishing and selling, combined with holding the property for three or four years until we see markets recover and then sell.

Why a fund format? It gives us the ﬂexibility to target opportunities rapidly. If I was to talk to you about investing in a home, it might take you months

to do your homework, by which time the opportunity has gone. But there is power behind a fund. If the fund has $5million in the bank, the bullet is in the gun and we can pull the trigger. That gives me a lot of power when negotiating. Who is it aimed at? Sophisticated investors. They need a combined salary of over $250,000 or a net worth excluding their private residence of a million dollars.

Expected returns? 12 to 15%.

Your track record? We have been an expert in the central Florida market for 18 years now. We know the market, we know what we are doing and we have done it successfully so far.

London or New York Name: Manhattan fund and London fund Contact: www.rocksure.com Elevator pitch:

A stake in high-quality real estate in the most exciting cities in the world.

www.opp-connect.com

What is the fund?

Each is 64 full units of investment and will purchase four two-bedroom apartments in coveted boroughs such as Kensington, Chelsea and Westminster in London, Midtown, Upper East Side and Lower Manhattan in New York, all luxuriously furnished and equipped, managed, with daily maid and concierge.

Why this fund? With high quality apartments in central London costing £3million-

plus, Rocksure’s Fund oﬀers hasslefree entry. This is a shrewd time to buy as industry experts including Savills report that growth in prime central London property has now slowed with many attributing this to feelings of uncertainty in the run up to the 2015 election. Prices are expected to surge after the election by as much as 8% in 2016 alone.

Why a fund format? This model allows investors to own a stake in prime residential property in two of the world’s most important markets at a fraction of the normal cost. With a planned exit strategy at 7-10 years.

Who is it aimed at? Most Rocksure buyers are between 45 and 55. Typically they are empty nesters with a passion for travel, culture and luxury or with grown-up children that can still be tempted to holiday with their parents if the oﬀer is appealing enough!

How much investMENT? £245,000 for London or $350,000 for Manhattan, plus annual dues, buys secure equity ownership with the opportunity to spend 18 or 21 nights accommodation there.

Your track record? These are the company’s 6th and 7th Funds and their launch coincides with the opening of Rocksure’s oﬃce in Manhattan. Founded in 2006, the company has raised over $30 million. Its model of combining property ownership with low-cost use has proved popular with its 150+ investors.

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MORTGAGES Barbados

Mortgages in Barbados Can a foreigner obtain a mortgage in Barbados? Type of mortgage

Available

Interest rates from

Max LTV

Lending

Maximum term (Years)

Maximum age at repayment

Repayment

Yes

3.65%

65 %

From US$250,000

20 years

Yes

5.5%

65 %

From US$250,000

20 years

Yes

3.65%

65 %

From US$250,000

20 years

Yes

5.5%

65 %

From US$250,000

20 years

N/A

Purchase

Yes

3.65%

65 %

From US$250,000

20 years

Remortgage

N/A

Equity Release

Yes

3.65%

65 %

From US$250,000

20 years

Buy to let (assessed on rental income)

N/A

Self Certified

N/A

Fixed Interest Variable Interest Hybrid (part fixed, part variable) Interest only

What are the lending criteria? This depends on the individual mortgage provider. However, typical lender requirements mortgages in Barbados can be found below: Aﬀordability requirements: The cost of the applicant’s existing liabilities and new mortgage should not exceed 50% of their net income minus liabilities. Employment history: Minimum six months required. Self employed history: Minimum three years required. Property types accepted: Must be habitable with a minimum property value of US$385,000. Applicants accepted: Individuals, local companies and UK limited companies. All nationalities considered except those aﬀected by international sanctions.

Further information

Currency options for mortgage payments: The most favourable option is repaying the mortgage in American dollars – however, there may be an option to repay the mortgage in either euros or sterling. Some lenders will require you to open a bank account with them in order to make the mortgage payments. Securing a mortgage oﬀer can typically take between six to eight weeks.

www.opp-connect.com/ category/data-and-reports

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The OPP monthly mortgage report is brought to you by Connect Overseas, international mortgage advisers. They are based in the UK but deal with mortgages in over 50 diﬀerent countries around the world. See www.connectoverseas.co.uk. They can be contacted by email at info@connectoverseas.co.uk or by telephone on +44 (0)1708 676134.

This guide was accurate at the time of production.The mortgage market changes all the time. For more industry reports see:

FX REPORT Philippine peso Words | Charles Purdy, Director of Smart Currency

Philippine peso T

he Philippines may be an up-and-coming property investment destination, but the people most interested in the exchange rate are likely to be the 4-5% of its 100 million population who work abroad and send remittances home. They have helped to cushion the economy from economic downturn, as has the Philippines’ strong export performance that has led to average GDP growth of 5% in the past decade and 7.2% last year – one of the best in the region after China. This was helped by a 14.4% growth in construction in 2012 and an 18.9% increase in real estate. Meanwhile, the government has strong ﬁscal management that has seen the peso achieve investment grade status. The Philippine peso could never be classed as either a major or key international currency; especially when compared to the US dollar,

the euro or sterling. But it did enjoy a long period of strengthening against each of these currencies following the 2007/8 ﬁnancial crisis that devastated the economies of the US, Eurozone and UK. In fact the trend only came to end in late 2012, early 2013. Since then all three currencies have appreciated against the peso, gaining between 15 to 20% in the last 18 months. This reﬂects the improving economic conditions happening in the western hemisphere, especially the US and in the UK, and the tightening in

Get your live quote today or discuss your property business and impact of the foreign exchange – call the partnership team at Smart Currency on +44 (0)207 898 0541

PHP per GBP

www.opp-connect.com

PHP per EUR

certain southern hemisphere states as China’s insatiable demand for commodities begins to wane and worries over its economy continue to increase. Indeed in the past few weeks concerns over the Chinese economy has seen most emerging Asian currencies fall slightly – the Philippine peso being no exception. However, all things being equal, the Philippine peso seems to be a reasonable holder of value given the uncertainties that surround it elsewhere in the world. Perhaps small is beautiful in this instance!

75 70

PHP per USD

65 60 55

50 2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

40 2010

2011

2012

2013

2014

COUNTRY REPORT South Korea

South Korea

fter the catastrophic Korean War in 1953, South Korea broke off from its Northern neighbour and now sits beside a daunting demilitarized zone. But after the war, the South came around to democracy and started building a fairly stable economy. Its cities are often 24-hour centres of commerce – though rural areas continue on much as they have for decades. South Korea is still a fairly traditional country, though, with plenty of cultural relics and traditional housing sitting alongside more modern trappings.

South Korea has beneﬁted hugely from a Chinese interest in its culture. Television series broadcast in China boosted their investment into South Korea – it reached $70.8m in the ﬁrst half of this year, an increase of more than 600% year-on-year. One issue blighting the nation is a low birth rate of just 1.9 children per woman (the global average is between 2.33 and 2.5). A recent study by the National Assembly Research Service in Seoul predicted that the country would reach zero inhabitants by 2750. More immediately pressing, it could lose 40m of its 50m

inhabitants by 2136, according to the research. The country’s closed immigration system means that it is currently unable to counteract this problem in the way, for instance, Germany and the US are. As of June 2013, the number of non-Korean citizens in the country for longer than three months amounted to a little less than 3% of the total population, reported the Washington Post. This also means that culture shock could be a problem from both ends. One 2008 study claimed that almost half of South Korea’s population had never spoken to a foreigner.

GEOGRAPHY

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NORTH KOREA

Seoul

SOUTH KOREA Gwangju Busan

Area: 100,210 square km Similar to: Iceland, Hungary Coastline: 2,413km Highest point: Halla-san (in Jeju Island) 1,950m Capital: Seoul, population 10,251,297 (as of 2012) Other cities: Busan (3.5m), Incheon (2.8m), Daegu (2.5m) Climate: Long, cold and dry winters – short, hot, humid summers. Jeju island has the mildest, warmest weather in the country. Expect one to three typhoons in a year. Looks like: “Land of High Mountains and Sparkling Streams” is how Korea is poetically described (from Koryo, an ancient kingdom). It is, indeed, extremely mountainous; only around a ﬁfth of land is arable. Most of this land is near the southwest coast, which is the most populated area.

OCTOBER 2014

THE ECONOMY GDP: $1.666 trillion (2.8% growth in 2013) Inﬂation: +1.1% Tax as % of GDP: 24.7

GDP per capita: $33,440 Currency: South Korean Won

CORRUPTIONS PERCEPTION INDEX: 46 OF 177 COUNTRIES HUMAN DEVELOPMENT INDEX: 15 OF 187 COUNTRIES

EXCHANGE RATES:

EASE OF DOING BUSINESS INDEX: 53 of 189 countries Starting a business

Dealing with construction permits

Registering property

US$1

1,001 KRW

€1

1,635 KRW

Trading across borders

£1

1,297 KRW

Enforcing contracts

AU$1

939 KRW

Getting credit

CNY

16.5 KRW

Protecting investors

INR 1

162.5 KRW

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SEOUL, SOUTH KOREA - AUGUST 24: The new Dongdaemun Design Plaza in Seoul, designed by world famous architect, Zaha Hadid. Photo taken August 24, 2014 in Seoul, South Korea.

COUNTRY REPORT South Korea

PEOPLE Population: 49,039,986 Urban population: 40,235,386 Population density: 508.86 per sqkm Average age: 40.2 Ages: 0-15 = 14.1%, over 65 12.3% Life expectancy: 79.8 Languages: Korean, English (widely taught in junior high and high school) Religion: Christian 31.6% (Protestant 24%, Roman Catholic 7.6%), Buddhist 24.2%, other or unknown 0.9%, none 43.3% (2010 survey) Politics: A multi-party system with a president heading it up. The current Sixth Republic was established in 1987 with the last big constitutional revision. Park Geun-hy of the conservative Saenuri party has been president since February 2013.

Tourism NUMBER OF INTERNATIONAL TOURISTS ARRIVING IN SOUTH KOREA

MILLIONS

15 0.17

0.97

2.95

5.32

6.02

6.89

7.81

8.79

9.79

11.1

12.1

1970

1980

1990

2000

2005

2008

2009

2010

2011

2012

2013

Japan and China account for by far the largest proportion of tourists to South Korea. A recent interest in Korean popular culture (the “Korean wave”) has boosted these numbers. The South Korean government is planning to attract greater numbers of Indian tourists, as well, focusing on Seoul and Jeju island as “twin destinations”.

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VISITORS TO KOREA BY COUNTRY OF ORIGIN

JAPAN

3.5m

CHINA

2.8m

0.7m

TAIWAN

0.5m

THAILAND

0.4m

HONG KONG

0.4m

PHILIPPINES

0.3m

MALAYSIA

0.2m

RUSSIAN FEDERATION

0.2m

SINGAPORE

0.2m

OCTOBER 2014

TRAVEL TIMES FLIGHT DURATIONS TO SOUTH KOREA: Beijing

2 hours

Tokyo

2 hours

Hong Kong

3 hours

Singapore

5.5 hours

New Delhi

6 hours

Moscow

8 hours

Dubai

8.5 hours

Sydney

10 hours

Vancouver

10 hours

London

11 hours

Paris

11 hours

New York

13.5 hours

Auckland

11.5 hours

Rio de Janeiro

22 hours

RIO de janeiro

Residential MARKET Useful websites:

Portals:

www.investkorea.org www.korea4expats.com

www.r114.com www.onnara.go.kr

professional organizations:

exhibitions:

Korean association of Realtors - www.kar.or.kr Licensed real estate association of Korea - www.lak.or.kr

Asian International Property Show (AIPS): www.ts8949.co.kr

Residential Property RESIDENTIAL PROPERTY FACTS n.a.

Rental Yield:

n.a.

Rent/month:

$2,778

Income Tax:

2.48%

Roundtrip Cost:

22.90%

Cap Gains Tax:

38.00%

Landlord and Tenant Law:

Pro-Landlord

Source: Global Property Guide

www.opp-connect.com

Price (sq.m):

COUNTRY REPORT South Korea

Property Developments Seoul H-House (top right) This unusual house in the Seongbuk-dong area of Seoul was designed by architect Sae Min Oh, from BANG by MIN. It was built to house three generations with a certain amount of privacy, good daylighting and ventilation – a challenge on sloped ground. A courtyard and sunken garden help to achieve it. Seoul Dancing Towers (top left) A residential project by Studio Daniel Libeskind, who says the design is inspired by the traditional Korean Buddhist dance, Seung Moo. The 41-storey towers move to take advantage of solar exposure and to mix up the views for residents. www.daniel-libeskind.com Jeju Island Jeju Airest City This US$2.3m project is one of six key developments being promoted by Jeju Free International City Development Center, which is trying to turn Jeju into a free international city. The development, due for completion in 2017, will be a resort-style residential area. www.poscoenc.com

Immigration and emigration Chinese buyers' interest in Jeju Island has hit headlines recently. Koreans see the island as a cultural treasure, as well as a centre of technological development (Daum Communcations recently relocated its headquarters there). The Chinese see it as a great tourist location – they can stay visa-free for up to 30 days – and they now own around 5.92million sqm of land on the island, a staggering increase from 20,000 just ﬁve years ago. Part of the draw is the residency-for-investment scheme, which came at a price of $480,000 until this year. Pressure from South Koreans, who fear Jeju Island turning into a Chinatown, means that the same visa now costs $980,000. Meanwhile, more South Koreans are leaving the country for Northern Europe. The South Korean Ministry of Foreign Aﬀairs published statistics showing the population of Koreans in Denmark rising 83.3% between 2011 and 2012. Emigrants have cited more relaxed working cultures and wage equality between blue- and white-collar jobs.

property market

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The South Korean government is working hard to boost the property market out of its years-long slump. Within a month, two sets of measures were announced: ﬁrst relaxing loan-to-value (LTV) and debt-to-income (DTI) ratios, then a 10-year reduction in the age of apartments eligible for reconstruction. “I will drastically boost the property market and loosen up unnecessary regulations so that the economy can be revitalized,” President Park Geun-hye said earlier this year. “Many measures adopted to prevent property market overheating turned out to be obstacles after the market went down. These need to be loosened up a bit.”

Oversupply has been a problem in the country. As of the end of June, the number of new, unsold housing units was at more than 50,000. This has been bad news for builders, developers and agents. However, the market is showing signs of recovery. Seoul apartment prices rose a tiny amount (0.03%) month-onmonth to August, and a survey of 4,200 agents showed that the majority expected the incline to continue. Foreign nationals can buy property in South Korea, but with some restrictions. Overseas buyers must be residents of the country, with an alien registration card. If the buyer’s source of funds is from overseas, they will need a contract document. If they’re buying for investment, they must acquire Foreign Direct Investment Notiﬁcation.

THE BUYERS ARE BACK, BUT ARE YOU READY FOR THEM? This October and November, OPP brings you TWO global B2B property shows

23RD & 24TH OCTOBER 2014

27TH & 28TH NOVEMBER 2014

/// CHINA WORLD HOTEL, BEIJING

/// NOVOTEL LONDON WEST

We all know about the incredible opportunity to sell property to Chinese buyers, but we also know it can be a hard place to do business. OPPLive China is the shortcut to market for developers to find Asian agents.

OPPLive London is dedicated solely to those involved in the industry. The show is aimed at developers seeking agents, master agents seeking sub-agents and people wanting to sell residential real estate.

We are confident we can beat even the success of our Singapore show in April, which attracted 1,000+ professional visitors over two days. OPPLive China will include a large-scale conference, a full seminar programme in Chinese and English, plus innovative networking opportunities.

Register today for your complimentary ticket. Info below GO TO WWW.OPP-CONNECT.COM/REGISTER-4/ AND USE PROMO CODE CHINA14

London will also include a large-scale conference, packed with informative and entertaining seminars from top-level speakers, to help international companies increase or begin their business operations.

TO BOOK A STAND AT EITHER EXHIBITION PLEASE CONTACT REUBEN GURUNLIAN:

+44 (0)203 540 2224 reuben.gurunlian@richmondgreengroup.com

EVENTS REVIEW Developers Conference, Cyprus

Try, try & try again, Cyprus Sometimes, says John Howell, apparently unconnected events can illuminate a problem more clearly than an international conference of experts

www.opp-connect.com

s I write today, 345 refugees, fleeing Syria in a leaky trawler, refused to land in Cyprus. They had paid smugglers US$3,000 each – that's over $1million in total – to get them to Sicily. A glance at the map will tell you that the journey from Syria to Sicily is much longer, much more difficult and much more dangerous than the short hop to Cyprus. Yet that's where these refugees wanted to go. The reason: once they were in Italy (on the mainland and, unlike Cyprus, a Schengen country) they could disperse throughout Europe. So, when the overloaded old fishing boat got into difficulties in rough seas, they were none too pleased to be rescued and taken to Limassol. Eventually they agreed to land – they had no choice – but they didn't want to do so. The same factors that have led to Cyprus receiving only a minute percentage of the refugees from the Syrian catastrophe may also have led to them struggling to attract foreign buyers. Today (event two), figures revealed that in the year to July 2014 only 340 foreigners bought a

house in Cyprus: down from 1,017 for ( the whole of) 2013 and 1,476 in 2012. This is a far cry from the peak demand for 5,000 units per year that fed a thriving building industry and a goodly number of major developers. Yet the Cypriots have tried... and tried... and tried to get their message out to the world. They are a nation of international

How does Cyprus (and other small countries) get recognised for what it is and has to offer? traders and entrepreneurs; they understand the importance of luck, and they are not having a lot. Today (event three) was also the 10th Cypriot Real Estate & Construction Conference. Very good it was too. Speakers looked at everything from improvements to urban planing to enhanced legal safeguards for buyers and how best to learn from other countries. Good stuff. Good plans. Sensible and clear headed. I was there speaking

about selling to the Chinese. In fact, Cyprus has been no slouch in seeking new markets to replace those that almost disappeared in 2008. They are active in Russia. There are more Russian magazines on sale at Larnaca Airport than there are English. Nor have they been slow getting into China. Today (event four) also saw the opening of a new University of Cyprus Confucius Institute, celebrating all aspects of Chinese culture, this must further increase Chinese investment in Cyprus. At least one major developer (Leptos) already has offices in China and others will be at OPPLive in Beijing. Yet the fact remains: they sold 340 properties to foreigners in 7 months. Even though Cyprus has (let's say for now) better infrastructure, less crime, less corruption, better government, lower taxes and a wider property offering, the refugees still wanted to go to Southern Italy. So what next? How does Cyprus get recognised for what it is and has to offer? With a population of only 800,000, they can't compete on budget, so how do they – and other small countries – make their star shine brighter?

EVENTS Review

Where were you? Real estate events of September 2014 CityScape, Dubai Review by Paul Childs, OPP Commercial Director, London Overall impressions? It was a fantastic show, with over 200 exhibitors. There were lots of Dubai developers – it was probably 80 to 90% local properties – but also developers from Cyprus, Turkey, Italy, the UK and USA. Plenty of immigration stands too. What was most eye-catching? The Damac development called Akaya Oxygen was the centrepiece. It was very impressive. Omniyat had a very slick and modern offering, and Union Properties had a Formula One simulator that was getting lots of attention. How big was it? It was a big show – you needed three days to get around – but it didn’t feel unmanageably big. Some of the stands were enormous: 100-150 square metres; some were two storeys! Phenomenal. How well run and accessible? It was great on all those counts. Very well organised indeed and very well put together. The venue was extremely accessible, right opposite the metro and with everything there.

“Properties were being sold, lots of good news...” Was there a positive vibe? Yes. Properties were being sold, lots of good news coming out of Dubai itself and a really positive buzz about the local market. Then again, international was getting a lot of interest from the local market too. How was the B2B? We got a lot of interest, lots of contacts. People were especially interested in getting into the Indian and Chinese markets.

Beijing International Property Expo

how many were buying – many Chinese see this as first source of information for decisions that can take years. It was a well organised show in a good venue, slightly out of the way because of its large size. For the B2B contact, networking opportunities included a boat tour for around 20 exhibitors after the show so we could get to meet each other.

www.opp-connect.com

Review by Sophie Liu, OPP Commercial Director Beijing The show was quieter than in previous years, and exhibitors we spoke to felt that both the quantity and quality of visitors was down. It’s easy to see why – the economy has slowed down and people are cautious – and it wasn’t the only show on that weekend. But it was still a good show, with hundreds of exhibitors more or less evenly divided between domestic and international. There were new destinations, such as Germany, Hungary, especially where there is an immigration programme (though I am not sure if that applies to Mongolia, which was also represented). Spain and Portugal were strongly represented in the €500,000 level, since that is the price where the golden visa starts. There was much less of Greece and Cyprus than last year, when it was crazy. There were plenty of more mid-range products too, especially for Canada, the US and Australia. I’m not sure

interest s but plenty of ar ye us io ev an pr Less crazy th

SELLING LUXURY PROPERTY JUST GOT EASIER

or invest in luxury property? If your business is about selling quality real estate, one of the biggest challenges is often being able to meet face to face with potential clients. Exhibiting at The Luxury Property on’s exclusive Hurlingham Club Looking to buy or invest intheluxury property? Show provides the platform to do just that. Over last seven years, thousands of wealthy buyers have visited the show to buy and invest. mber You’ll 4th and 2014 find5th, it at London’s exclusive Hurlingham Club

this November 4th and 5th, 2014 exhibitor ter asFor a visitor go to:enquiries please contact Robbie Hall on: E-mail: robbie.hall@dhpub.co.uk or call: +44 (0)1327 315476 / +44 (0)7595 651 833

rypropertyshow.com To register as a visitor go to: Join us at London’s exclusive Hurlingham Club this November 4th and 5th, 2014. www.theluxurypropertyshow.com please contact Robbie Hall on:

l: +44 (0)1327 315476 / +44 (0)7714 648826 For exhibitor enquiries Robbie Hall on: To please registercontact as a visitor go to: E-mail: robbie.hall@dhpub.co.uk or call: +44 (0)1327 315476 / +44 (0)7714 648826 www.theluxurypropertyshow.com 15/08/2014 11:09

EVENTS Preview

Where will you be? Real estate events of autumn 2014 A Place in the Sun Live

and property industry professionals will gather at this show. Around 40% of the exhibition is dedicated to international property. Some of the leading names in UK and international property will be attending. In addition to the traditional bricks and mortar, the Property Investor Show has an array of alternative investments, FX companies and landlord services. More than 100 exhibitors are expected and there will be around 70 seminars on varied topics. www.propertyinvestor.co.uk/london

Moscow Overseas Property & Investment Show

BIRMINGHAM NEC, UK 03-05 The show that brings to life the British overseas property TV show, A Place in The OCT Sun, is back for its autumn show. Organisers, who had a successful spring show at London Olympia, are expecting over 5,500 visitors. Their proﬁle shows an average budget of £164k, with an encouraging 92% of visitors planning to buy within 24 months. The show was sold out for exhibitors, with 150 stands showcasing properties from £20,000 to over £1million. As usual, the exhibition will include pavilions/ zones for France, Florida, Italy and Portugal, with specialised buying advice and appearances by the show presenters. www.aplaceinthesun.com/exhibition

TISHINKA EXHIBITION CENTRE, MOSCOW 10-11 The Moscow Overseas Property & Investment Show, run by aiGroup, was launched in 2007 OCT and has since seen great success in its twiceyearly exhibitions. Around 190 developers, agents, brokers, banks and management companies will exhibit products from close to 40 countries in the 2014 autumn exhibition. The Bulgarian Property Salon is a special event within the show, which aims to arrange direct contact between potential investors into Bulgarian real estate with the product providers. There will be 60 exhibitors in this section alone, with a lot of holiday homes complimented by golf resorts and some commercial property. www.investshow.ru

The St. Petersburg International Property Show

Second Home International

The Property Investor & Homebuyer Show

EXCEL, LONDON, UK 10-11 Over two busy days, a dedicated visitor audience, including private buyers of UK and OCT international property, portfolio landlords

ST PETERSBURG, RUSSIA 01-02 As Russia’s second largest city and the third largest in Europe, with a population of NOV more than 5million, St. Petersburg oﬀers excellent opportunities for overseas property developers and agents. The St. Petersburg International Property Show has been running for seven years, so has built up a loyal following. More than 6,500 qualiﬁed visitors are

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JAARBEURS UTRECHT, HOLLAND 03-05 Largely targeted at the over-40s market, this Dutch show usually attracts a healthy audience OCT of keen second-home buyers. Property professionals attending will include local and international agents, holiday home developers, banks and insurance companies. The visitor proﬁle includes: Average amount of investment is €229,000 38% of visitors plan buying within one year 75% earn two times above the (Dutch) average income Top ﬁve most popular countries are: 34% France, 30% Spain, 22% Italy, 17% Germany, 15% The Netherlands. www.secondhome.nl

EVENTS Preview expected to attend. The show, at the Sibur Arena, St. Petersburg, Futbolnaya alleya 8, is organised by the ai Group. www.spb.propertyshow.ru

NAR Conference & Expo 07-10 NOV

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The 5th Guangzhou International Lifestyle & Property Expo 2014

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POLY WORLD TRADE CENTRE, GUANGHXHOU 04 In 2013, around 26,500 visitors attended the Guangzhou International Lifestyle & Property NOV Expo. This year, organisers hope to attract more than 30,000 to the show – which is said to be the biggest in South China. The 5th Guangzhou International Lifestyle & Property Expo 2014 will feature investment projects from 30 countries, including the United States, Canada, the UK, Australia, Singapore, Spain, Greece, Cyprus and aims to have 150-200 exhibitors. www.gzqlp.com

For news of OPPLive China and London, see page 6.

MORIAL CONVENTION CENTER, NEW ORLEANS The National Association of Realtors’ four-day Conference and Expo, from Friday 7 NovemberMonday 10 November, is set to welcome 17,000 members and guests, plus more than 1,300 international real estate professionals from more than 60 countries. There is even a reception held especially for overseas delegates on Thursday 6 November. Friday 7 November is Global Day, when simultaneous translation into a number of languages is available for select committee and conference events. The Full Swing conference plays host to 100 education sessions, featuring nationally recognised speakers, trainers, and industry experts, who discuss timely topics and critical issues of value to Realtors and provide ‘big ideas in the Big Easy’. The expo includes around 400 exhibitors with new and innovative tools for real estate professionals spread across 100,000 square feet. Special events, networking lounges and more are included and single-session and single-day passes are also available. When the organisation previously held its conference in New Orleans in 2006, it had the catchy title NAR di Gras. www.realtor.org/convention.nsf

Smart Investment & International Property Expo HONG KONG CONVENTION AND EXHIBITION CENTRE 22-23 Asia’s longest-running property and investment showcase. With over 30 NOV expos in 10 years, Smart has opened its doors to more than 1,500 exhibitors and has welcomed 100,000-plus quality investors and hundreds of senior industry experts. Visitors from 40 diﬀerent nationalities, from highincome, educated backgrounds, come to make informed decisions about the investment and property market at Smart shows. Properties from Singapore, Malaysia, Australia and China have been among those featured. www.smartexpos.com

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WESTERN EUROPE BUYING MARKET 2014

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WESTERN EUROPE Buying Market

COMPARE AND CONTRAST Xxxxxxxx

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How do the western European buying markets stack up against each other?

BELGIUM

FRANCE

GERMANY

N’LANDS

SWITZ’LAND

IRELAND

Population (million)

4.6

Av age

UHNWI 2013

1,370

3,800

11,392

2,735

4,137

10,149

811

UHNWI, by 2023

1,681 (+23%)

4,126 (+9%)

13,546 (+19%)

3,303 (+21%)

4,924 (+19%)

12,015 (+18%)

928 (+14%)

Amsterdam 440

Zurich 1,314 Geneva 1,156

London 4,224

Dublin: 365

Wealthiest cities by UHNWI

Brussels 345

Paris 1,500

Berlin 464 Frankfurt 1,868 Dusseldorf 524 Hamburg 843

Currency

€

CHF

€

Predicted GDP growth % 2014

Eurozone Average 1.1

0.7

1.9

Av 1.1

3.2

Predicted GDP growth % 2015

Eurozone Average 1.5

1.4

1.7

Av 1.5

2.7

n/a

GDP growth EU

0.1

1.3

0.9

1.1

3.1

5.1

Cost of Living (New York = 100)

128

n/a

112

Human development index

89.7

89.3

92.1

91.3

87.5

91.6

House price % change 08-13

13.4

1.8

7.5

-17.4

23.2

-9.2

n/a

Gross yield % (main cities)

4.36

3.63

4.42

5.68

3.1

2.09

8.2

Corruption perceptions index (of 177)

Ease of doing business (of 189)

Ease of starting a business (of 189)

111

104

Ease of dealing with construction permits

100

115

Ease of registering property

180

149

Ease of getting credit

Ease of protecting investors

115

170

Ease of trading across boundaries

Ease of enforcing contracts

Economic freedom %

70.15

64.59

71.79

74.68

81.95

74.53

78.7

Souces: World Bank, Global Property Guide, The Economist, Eurostat, Knight Frank, CIA

OCTOBER 2014

Belgian Buyersâ&#x20AC;&#x2122; Guide

or a country of only 11 million people, Belgians make a big impact on the European property market. The birthplace of Tintin and Hercule Poirot, like Britain, has bad weather, plenty of money and an imperial past; all the raw materials for making foreign property desirable. It is also the HQ of the European Union and Nato, giving it a cosmopolitan outlook. The number of Belgians buying in Spain more than trebled between 2007 and 2013 while the number of Brits buying their halved. They now make up around 4% of total foreigners buying in Spain, but they also feature heavily in Turkey, France and Italy.

Where to sell Portals Immoweb.be is the largest portal in Belgium, five times larger than its closest rival and with 68,000 foreign properties. Immo.vlan.be. is next biggest, also with an international section. Also see: immotransit.be Belgian buyers also access Dutch portals such as funda.nl Exhibitions Second Home International: spring in Ghent, autumn in Brussels. The shows are similar in size, and often on the same weekends, as A Place in the Sun Live. www.secondhome-expo.com Also: www.expoitalia.be, everything Italian, including homes, November. www.zenith.be - for the over-50s, including property, November.

Newspapers News daily Het Nieuwsblad carries a preview for the Second Home International exhibitions Magazines Leven in frankruijk (Living in France) Italie magazine

Bad weather, plenty of money and an imperial past; all the raw materials for making foreign property desirable

The norm in Belgium is to buy a property as early as possible in your adult life, and on a repayment mortgage. Hence they may be short of money as young families, but by their 50s are debt free and ready to buy abroad. Last year the number of Belgian dollar millionaires rose by 14%, or 11,000, putting it in 16th place in the world for people with US$1million-plus in assets. The Belgians are also notable for their low levels of household debt, one of the lowest in the OECD at 91% of household debt (compared to 280% in the Netherlands). Selling property in Belgium agents from overseas will be pleased to know that they do not need to brush up on their Walloon. Official languages are Dutch, French and German, but English is widely spoken.

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Meet the buyers

OCTOBER 2014

French Buyers’ Guide

elying the image of French as smug and isolationist, French buyers can actually be found near the top of many countries international client lists, including in Spain and Italy. Recent press reports showed a clear move towards Portugal by retiring French people looking for an easier tax regime. But not only the wealthy are looking for property abroad, the middle class is also keen to buy overseas.

Where to sell

Property Portals Southomes is an international property portal with a French language version, offering some agents’ services. ImmoStreet offers over two million properties from all over the world. SeLoger, the leading French portal includes thousands on non-French real estate abroad. Explorimmo. Vivastreet is a smaller platform offering international housing. Lux residence is a portal for high end properties in France and abroad. Trade Fairs Real Estate Show Nimes, October. Immotissimo, Metz, October. Real Estate Fair Vannes, November. Salon de Co-Propriete, focusing on co-ownership, in November Simi Paris, in December, one of the most important real estate fairs MIPIM-World Property Market, International Event, March Salon de l’Immobilier Toulouse Midi-Pyrenees, March

Need to Know

Le Figaro: France’s best-selling newspaper, with 321,500 copies sold each day. It’s print version includes a daily property section. Nouvel Observateur: Weekly magazine with a circulation of 511,900.

French buyers can actually be found near the top of many countries international client lists

Meet the buyers A significant number of wealthy French have left France to become tax exiles. The UK, the Netherlands, Spain and Portugal are among the favourite destinations to sit out the presidency of Mr Hollande. Every year around 115,000 French leave to become expatriates, joining the 1.2 million of French senior citizens who have already moved abroad.

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Legal and Financial: Most French banks only lend money to customers who already have a mortgage on a French property, since they take this as security for the property abroad. Alternatively, they might let buyers pawn jewelry or other valuables in order to have a security for the property abroad. French are the biggest buyers in Spain, according to the portal kyero.com, masking up 20% of foreign buyers; 51% of their enquiries are within an hour of France.

Newspapers Le Monde: One of the most-well known broadsheets in France, it is centre-left in politics with a circulation of 314,000. It oﬀers a print and online property section, with over 1 million properties online.

WESTERN EUROPE Buying Market

German buyers’ guide

iven the high percentage of renters domestically, it is surprising that Germans are such big buyers of holiday homes. Some 70% of those holiday homes are bought in Germany itself, on the north and Baltic coasts. Beyond their borders, Germans are often second-only to British buyers on the better-known holiday destinations on Spanish costas. Mallorca remains the Germans all-time favourite.

Where to sell

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Property portals Immoscout24 is the best known property portal in Germany, which also oﬀers a section of international real estate. Bellevue operates in the luxury real estate sector and publishes a monthly magazine including international properties. In their section “Best Property Agents 2014”, they advise German clients where to buy in each country and recommend agents there. Immowelt.de oﬀers detailed information and need to know for buying abroad, additional to a portfolio for international real estate. Also: Planet Property, Immobilienmarkt. de and auslandsimmobilienportal.de.

The high street Within Germany: Engel and Völkers operate internationally, with a varied, multi-country portfolio. Savills operates in Germany, with a main office in Frankfurt. Other important international agents include Colliers International Germany and Sotheby’s International Germany. Outside Germany: Many German real estate agents have been opening offices on Spanish Islands, especially Mallorca. The website Geprueft.de oﬀers information about real estate agents oﬀering international real estate. Exhibitions Expo Real Germany, the biggest B2B show for property and investment in Europe, with 1663 exhibitors; October 2014, Munich Property and Living Stuttgart, Immobilientage Regensburg, Duesseldorfer Immobilienmesse are all in September. Bonner Immobilienmesse, in August Second Home International, with their first Berlin show in autumn 2015.

Meet the buyers Spain and especially Mallorca are top of the German’s foreign buying lists. Other popular destinations include Austria, Italy, France, Switzerland, Croatia, the Netherlands and Portugal. Germans were the third biggest buyers in Turkey, with the US – especially Florida – the top long-haul choice.

Newspapers Immobilien Zeitung: a weekly specialist journal for real estate, featuring IZ aktuell, the online version updated every day. Die Sueddeutsche, is a wellknown, centre-left newspaper with 1.1 million readers a day and international circulation. It has a section in print called Immobilien on Wednesdays and Fridays, additional to its property portal online. Readers have a fairly high income and interest in higher price real estate. Frankfurter Allgemeine (FAZ), a liberal conservative publication with about 400,000 readers, co-operates with the property portal Immowelt to oﬀer a wide range of real estate and does feature a category on real estate abroad. There is a regularly insert on real estate in the print version and an additional one called Drinnen oder Draussen in the Sunday paper. Readers have – similar to Die Sueddeutsche – above-average incomes. The best-selling and popular newspaper is Bild, which includes e real estate section online.

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OCTOBER 2014

Swiss buyers’ guide

witzerland has a large and wealthy middle-class that likes to spend money on a nice little (or nice big) vacation home. The two traditional spots to buy are either holiday favourites such as France, Spain, Italy, Portugal and Florida, or the Swiss mountains. But with options in the mountains increasingly expensive and restricted by planners, Swiss buyers are looking at newer European countries and more unusual destinations: Croatia, Malta, Bahamas, Canada, Sweden, Ireland even as far as Iceland.

Where to sell

Estate Agencies There are few agencies in Switzerland oﬀering international real estate. The most well-known Engel and Völkers, German in origin but with its main office in Zug. De Rham SA is the Swiss branch of Sotheby’s International Realty, with good international contacts, although working in Swiss real estate too. Remax is strong in Switzerland, though mostly oﬀering Swiss real estate, they can link clients to their local branches abroad.

Property Portals Among the Swiss property portals, homegate.ch and immoscout24 are the most popular, though immowelt.ch has the best choice of foreign investments. Urbanhome is less well known international portal, in various languages, as is Homestreet.

Need to know

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Money Swiss banks don’t normally give loans for property purchased abroad, except perhaps close to the Swiss border in France or Germany. However, some foreign banks operating in Switzerland will oﬀer loans to Swiss buyers. Legal For Swiss people buying in the EU, normal EU citizens’ rights apply if the property is being used for business or a primary residence. For second homes Swiss buyers require permission of the EU. Many retirees use their pension fund (pensionskasse) to buy. However, the Swiss government is now considering banning the early drawing of pension money in order to buy real estate, which is likely to mean a big decrease in foreign investments.

Newspapers Tagesanzeiger, with over 180,000 readers is the second largest national publication, independent newspaper with a centre-left orientation. Neue Zürcher Zeitung (NZZ), with roughly 130,000 readers, is traditionally a liberal publication with well-heeled readers. Its property portal NZZ Domizil is well known, and links to Immoscout24. The print version includes real estate pages on Monday, Wednesdays and the Sunday paper NZZ am Sonntag. Additional to that, it oﬀers a weekly extra on Friday called NZZ Domizil, which has 249,000 readers, plus an extra called Residence, which focuses on luxury real estate and is published quarterly. Book Internationales Immobilienhandbuch, written by Christian H. Kälin. Event Immo-Messe Schweiz is the most important and only countrywide event for real estate in Switzerland. It takes place once a year at Olma Messe St. Gallen, and is scheduled for 20-22, March 2015

WESTERN EUROPE Buying Market

UK buyers’ guide

he British are the world’s biggest buyers of overseas property – both for holiday homes and emigration. The drivers of this have undoubtedly been the UK’s wet weather and its global post-colonial outlook on the world: many British people still think that the sun never sets on their property portfolio. From New Zealand to California, British buyers are present in large numbers in almost every overseas property market apart, perhaps, for South and Central America. There is a highly efficient and sophisticated overseas property industry and media, with nationally famous TV shows, magazines and exhibitions selling overseas property. There is a significant publishing scene devoted to buying abroad too, with innumerable books advising Britons on how to buy abroad safely. Indeed there is such a big emphasis on buying abroad safely that the Association of International Property Professionals (AIPP) was set up in 2004 to bring standards to the business. The boom years of the early 2000s gave way to some lean years more recently, but as the UK economy appears to be powering its way up, with domestic property especially in London rising in price at some 20%, the overseas property business looks to be ready for a sharp upswing. As well as the business to customer (B2C) media listed below, the UK has several companies serving to bring professionals together, including this publication and Global Edge (www.globaledge.co.uk).

Need to know

Legal: There are few legal barriers to selling, however, tightened FCA rules are limiting collective investment products. The AIPP is the governing body of the overseas property industry, with a code of conduct. Membership starts at £295 per year. Cultural: Many British buyers will claim that they want to stay out of the wellknown British enclaves and in the ‘local community’. The evidence from Spain, Turkey and Cyprus, however, suggests that many wish to be near other expats.

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Industry bodies/useful sites: AIPP: www.aipp.org.uk Financial Conduct Authority (FCA): www.fca.org.uk

Meet the buyers

Many British people still think that the sun never sets on their property portfolio. From New Zealand to California, British buyers are present.

British people of all ages, social classes and incomes buy abroad. Upmarket destinations could be, for example, France, northern Italy (dubbed Chiantishire), Corfu, Mallorca, New York, European ski resorts, Catalonia. More popular destinations are Spain, Turkey, Florida and Cyprus. Buyers come from all parts of the UK, but buyers from London and the south east, with the higher incomes, property equity and better transport links, dominate the market. Retirement and emigration is a major element. Last year around 316,000 people emigrated from the UK. The main locations are: Australia, New Zealand, Canada and the USA. Within Europe, France, Spain, Portugal and Turkey are the most popular choices. British buyers also feature heavily in destinations such as Thailand, South Africa, Egypt, Dubai and Mauritius.

OCTOBER 2014

Newspapers The Sun: downmarket Readers: 2.1 million daily, 1.7 million on Sunday. Online paywall.

Where to sell

Exhibitions A Place in the Sun: three per year, in London, Birmingham, Manchester. Average 150 stands, 6,000 attendance. www.aplaceinthesun.com The Overseas Property Show Multiple events all over UK, autumn and spring. www.theoverseaspropertyshow.com The France Show 23-25 January 2015 www.thefranceshow.com French Property Exhibition September www.fpeolympia.com Property Investor Show: two per year, in October and April, London Average 3,000 attendance www.propertyinvestor.co.uk Luxury Property Show 4-5 November 2014, London www.theluxurypropertyshow.com

High Street Many high street agents sell overseas property too, or will operate as master agents for overseas property.

Property portals There are dozens of UK portals advertising overseas property. These are just a sample of the portals covering worldwide property. www.rightmove.co.uk/overseasproperty www.aplaceinthesun.com www.primelocation.com www.zoopla.co.uk www.homesoverseas.co.uk

A Place in the Sun Combining a clever name, attractive and famous presenter and shown on a cool channel, A place in the Sun is the best known ‘buying abroad brand’ in the world. The TV has run since 2001, the magazine since 2004 and the exhibitions since 2005. It is the only magazine that covers the whole market and is second only to RightMove Overseas as foreign property portal, attracted visitors both from the UK and British visitors from abroad.

Daily Telegraph: upmarket, professional and retired. Readers: 514 printed daily and Sundays. Very popular among British expats. Daily Mail: mid-market, right of centre Readers: 1.7million readers of the print edition, plus the 90th biggest website in the world (Alexa). Excellent property coverage Evening Standard: mid-market, free London newspaper. Property supplement every Wednesday. Magazines A Place in the Sun: 100+ pages, quarterly, £3.99 Abode2: 224 pages, twice yearly, £6.95. www.abode2.com French Property News: monthly French Property News, France, Living France: all from completefrance.com Published monthly. Property Investor News: monthly, £6.65 monthly property-investor-news.com

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MIPIM UK 15-17 October 2014, London Expected: 100 stands, 3,000 participants. www.mipimuk.co.uk

These include the large chains such as Knight Frank, Savills and Connells, but also independent operators.

The Times: upmarket, professional, youngish. Readers: 391,000 printed and 390,000 paying online members. Sundays 830,000 print readers. Property supplement: Bricks and Mortar, every Friday. Home every Sunday in Sunday Times.

BUSINESS Next month

Coming next month in DESIGN

AROUND THE WORLD

… LEGAL

BUSINESS

United Arab Emirates

Waterside property

Staﬃng structures

Capital control

If you get your Ras alKhaimahs mixed up with your Umm al-Quwain, read our guide to the property star of the MIddle East

Continuing our design series, we look at beautiful lake and seaside developments, the advantages of life by the water and consider ﬂood prevention

How should you employ staﬀ? Salary or commission, employed or self-employed, long or short contract? What works best for both sides?

“Aren’t there controls to stop people buying abroad?” “Oh, they ﬁnd a way around that.” But suppose they can’t? OPP looks at getting the money out

Liverpool

SELLING

As the southern UK market starts to look peaky, northern cities such as Liverpool are rising in interest

Selling to the diaspora North-East Europe

Ghana-ing clients David Disick has traveled the world in recent months, taking fractionals to some unexpected places. Here is his report

Which is the market for whom the land you’re selling property in needs no introduction? Correct, those who left the country in the ﬁrst place. We look at how you market to returning expats and your folks overseas

PLUS ALL YOUR USUAL…

MEET THE BUYERS

As winter sets in across northern Europe, many blond and blue-eyed people look to buy a southern bolthole. But where do you contact these Nordic and Baltic folk to sell to them? OPP dons hat and wooly gloves to go ﬁnd them

• News & comment • Branding ideas • Mortgage report • Currency report • Business and training • Correspondents’ reports • The OPP Interview • Statistics and data • Show previews, reviews

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For further details contact: 00 385 (0) 20 361 650 | residences@dubrovniksungardens.com | www.dubrovniksungardens.com

BUSINESS The life of a ...

…a home stager Homes that just won’t sell often need an expert’s eye to make them appealing. Enter the home stager

’m a DIY person. I used to do property renovations – buying them, knocking them about and selling them – and I love all things property. So, when I was made redundant from my day job, I thought I’d give home staging a go! I did a few jobs, thought “I like this” and now I’ve been going strong for two years. My day starts, of course, with reading and answering emails. Then, if I’m working with a homeowner who lives in their property, I’ll go and meet any contractors on site, as well as trying

www.opp-connect.com

Changes can be quite simple: I saw one house with seven different coloured carpets!

to catch the homeowner before they go to work. I’ll be back at the end of the day, too, to quality assure any work that’s been done and make sure the contractor has tidied up after themselves. In between that, I’m generally doing consultations for homeowners. That means going from room to room; taking photographs, taking measurements, and seeing what changes need to be made. Then I prepare a report and either the client gets on with it themselves or I organize it all. The changes can be pretty simple:

for example, I saw one property that had seven different coloured carpets! We soon narrowed that down to a palette of two and it made all the difference. On the more complex end there’s things like DIY jobs that haven’t been finished (including one man who’d left a door-frame hanging half off…); knocking through walls; extending a property; breaking through chimney breasts etc. Difficulties occur when I’m working with a homeowner who’s still living in their home, and who can find it quite difficult to accept changes that need to be made. People generally don’t take criticism well, so I have to be very diplomatic! One lady I worked with had a beautiful house, but the master bedroom was all accented with black: a black wall, black curtains, black furniture… she insisted that she wanted to keep it that way initially. Six weeks later she contacted me saying that the “customer feedback” had persuaded her to paint it cream! If customers really want to sell then they need to detach themselves from a property. I’ve only had to sever contact with one client, who completely refused to listen to anything I said – he was constantly asking for second, third, fourth opinions. It was really stressful. In hindsight I wouldn’t take the job now – alarm bells ringing from the start! – but I was naïve and wanted the work. On the other hand, the work can be very rewarding. What’s great is

ANDREA CHOTT Niche Nooks (owner) www.nichenooks.co.uk seeing simple things make such a diﬀerence. One client in her late 60s was so pleased with how everything looked when we’d just decluttered and rearranged the furniture. I’ve worked on houses ranging from the usual three-bedroom suburban properties to ones worth millions. Consultations start at £149, and beyond that it depends on the extent of the work. My tips for anyone wanting to sell a property are simple. First, and most importantly, be aware of kerb appeal. If a person has had reservations about a property before they even enter then they will continue to be negative throughout. Secondly, make it tidy and clean. Get rid of pet odours. Finally, be aware that a house that looks poky is probably just suﬀering from oversized furniture! If you go around a show home you’ll notice that furniture is small – sometimes even undersized – which makes the rooms feel so much better.

The industry body. The industry voice. The industry standard.

The Association of International Property Professionals (AIPP)

THE STANDARD BY WHICH OTHERS WILL JUDGE YOU Based in London, AIPP drives business opportunities for our approved members from 24 countries around the world. AIPP members abide by our strict code of conduct with each other and with their clients. There is reassurance in membership and recourse if things go wrong. AIPP members include; Agents, Developers, Banks, Lawyers, FX, Media & technical advisory co’s.

AIPP Member Benefits Summary · Buyer reassurance via our Code of Conduct · Access free & independent property ombudsman scheme · Trade introduction service · Members promoted at UK property events · Member listing in Buyers Guide · Trade member events · Free use of our London offices · Monthly newsletters

AIPP is owned by NFoPP (National Federation of Property Professionals) with over 15,000 members www.nfopp.co.uk

To find out more about the benefits of AIPP membership, please contact us on:

Tel: +44 (0) 20 7222 6172 memberinfo@aipp.org.uk www.aipp.org.uk We are a not-for-profit organisation. We do not sell property. Association of International Property Professionals Ltd Clutha House, 10 Storey’s Gate, Westminster, London SW1P 3AY. UK Company No. 5677417

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