250 off-plan units delivered to market

In our last issue I began with the following:

“6 months into 2015.

…….over 200 off-plan units sold, near 26,000sqm of offices launched, a new bank, a new university and from the sounds of it, a great deal more to come!”

Well, without wishing to be too alarmist, the past three months has seen a further 250 off-plan units delivered to market with the great majority “SOLD”! Take stock of that why don’t you.

Once again, we apologise for the late delivery of this last issue, it’s been 4 months since our last offering and although we have had summer in between, it’s been a busy period which only serves to underpin the strong year that we have had so far.

Off-plan sales have clearly been the driver in a market which continues to be low in real “available” stock. We continue to hold low levels of properties listed in our portfolio with only a slight increase recently, taking our average throughout the year to approx. 110 units…..not a great selection by any stretch of the imagination. I’ll also make the point that we actually have one of the largest portfolios on the Rock and we take the time to update our website daily (no we do not include off-plan properties on our re-sale listings – that would be unrealistic).

So, reading between the lines and accepting the fact that you are reading an estate agents “point of view”, one should by now, deduce the fact that I am justifying high off-plan volumes of property sales with a current slump in real live stock, which will therefore balance out demand and deliver what we need ……..genius I hear you say?

Well, some agents will most certainly have you believe this, but the reality is not quite as straight forward – that’s not to say that we shouldn’t be bullish, far from it, but a reality check is sometimes the order of the day. There are indeed some property “experts” who will have you believe that we live in utopia, and no matter what, any off-plan property investment will just sky rocket and make you a successful property investor overnight – reminds one of the dot-com days or the gardener telling the broker what stocks to buy (no disrespect to gardener’s….. or brokers for that matter). The point I make here, goes back to a point I have been making for years now…..”know your client” and really get to understandwho is buying, why, and what their expectation is?

We have been fortunate to witness a consistent growth in GDP for well over 20 years now, and we are not just talking about low percentage increases either, the past few years have seen average figures of approx. 7.5%. This is unprecedented and unless otherwise informed, unheard of anywhere in the world; the question will be to what extent our economic growth can continue to unfold at the pace it has over the last two decades? Some say that because of our size and the nature of our economy (predominantly financial services and gaming), that the sky is the limit and to be fair I tend to subscribe to this opinion, whilst also (of course) wearing my cautious hat. In short, the medium to long term outlook continues to be positive, driven by the potential for growth. Historically, this has affected our property market positively over the years, save for 2008 -2010 which saw a dip in the market, a dip which was essentially driven by speculators desperately trying to off-load promises which had not been met. At the time there were particular developments which were more adversely affected than others and this very much depended on the ability of the developer to reduce its risk to speculators and increase sales to owner –occupiers or solid investors. There are also the “Agents”, who by and large are driven by sales and commissions and whose judgment and responsibilities can in times of heated off-plan sales be clouded – to those of you looking to invest, I urge you to take advice from more than one source and then come and speak to us…J Seriously though, seek serious advice and if it’s too good to be true, it normally is.

Our view over the past 12 months, particularly with the launch of Imperial and Ocean Spa Plaza, Midtown and Kings Wharf (as well as a few other smaller schemes), has been to focus on advising clients who are, a) owner occupiers and b) buy to let investors. Any real market of substance must be principally driven by these two profiles. We have purposely avoided being drawn in to high pressure sales, that can sometimes lead to a frenzy, with no real sense other than getting the sale done at all costs only to deal with consequences later. We believe that it’s important to provide facts and figures to all our clients, supported with experience and knowledge of the market with forecasts based on real evidence.

The overriding factor over the next few years remains the lack of availability in the market and the effect this may continue to have on prices which have, over the past 5 years, only seen increases. We take the view that prices have increased in the past 6 months, but have generally been settling and will continue to do so leading up to the delivery of the projects currently in the pipeline. I say this based on the fact that although the economy has grown, we have not really seen any new business of any substance entering the market and our growth over the years has been organic and not steered by new entrants; any positive change in the latter will clearly have an impact in further demand and will result in further price hikes.

So there you have it, our thoughts and opinions so far. I hope that at the very least we have enlightened you a little and at best we might even encourage you to visit us at our offices and seek our advice on any matters relating to property.

Finally big thanks to our contributors who continue to support our magazine.

Sincerely,

Louis C. Montegriffo

Managing Director