Welcome to our property section of the Asian Voice. We have some interesting pieces in this supplement, in particular the article from Charter House, which speaks of getting the formula right before investing; this is of particular significance in the current environment.
It is not enough now simply to want to invest in property, one needs to examine the structure used, the tax implications of this structure, not just income and capital gains but also inheritance depending on which stage of life you are in; and once you have done all of this to regularly check again whether this is the best structure for you periodically; as rest assured the environment will continue to change.
We have had a massive shift over the last couple of years. If you are reliant upon the mainstream media, you will not be getting a correct picture of the actual geopolitical landscape. There is more going on than meets the eye, you need to study the undercurrents to see what’s actually occurring.
Regardless of the cause it would be correct to say the commercial landscape has shifted permanently, there is no going back to normal. The damage caused to the economy is likely to be permanent, and has not floated up to the surface yet. In short, expect further redundancies and bankruptcies, rest assured they are in the pipeline.
So, what does this mean for the property market? Well, the most accurate parameter is the auction market, as this shows the pulse today. There is no time lag here. When the hammer falls you have your price.
Often when one examines comparables the view is distorted, as you have an intrinsic time lag of usually 3-6 months, this is the difference between when a deal is agreed to when it actually completes. Therefore, you don’t actually have the correct information from looking at the figures, especially in a rapidly changing environment as we are in now.
The figures show sales in auctions are heating up in both sectors, residential and commercial. Mostly, they go well in excess of the guide price. A recent Acuitus auction had a sales rate of 94%; and a very recent lot we were bidding on went to £331K from a guide price of £200K.
So, are there deals to be had in the auctions? Yes. I just met one gentleman yesterday, who picked up a deal from a prominent auction. He picked up a probate property prior to the actual auction, purchasing it for £200K in Shepherd’s Bush, and looking to resell it for £350K, all within a few months.
They do exist, but you need to look harder and do the digging. Look for anomalies, e.g. properties in the wrong auction is one. What I mean by this is, for example, a London property in a Liverpool auction. This is less the case now as all the auctions are online. There was a stronger chance when it was in a physical room. Nonetheless the chances are you are likely to get this at a more favourable price. Also, look for unknowns in the auction lots, then do the investigations to make them known to you. Thereby, you have knowledge which the chances are others may not.
There will be many opportunities coming soon, especially in the commercial sector. Empty commercial properties, which have become redundant. The money will be made in repurposing them to residential under a new piece of legislation, which has only very recently come into force on the 1st August 2021. Exciting times ahead.
