Article: Off-plan Real Estate Investments

Investing in property before it is built is undoubtedly an effective way to increase your profits in the real estate market. By investing at the development stage you are benefiting from below market prices, where developers are keen to offer early purchasers substantial discounts against market value to help finance the project and the investor is able to buy a 2009 property at 2007 prices. As you are reliant on the paper value of the property increasing over the period of construction, it is vitally important to seek out locations where the property markets are set to become hotspots in the future to maximise your potential returns.

There are 3 main elements to consider when seeking out your investment:

1. Price: the development must be at a highly competitive market price

2. Profit: does the market have growth potential to maximise profits?

3. Performance: Investments are dictated by performance returns and as such it is important to establish your time frame, when will you look to release your investment?

In any investment you must have an exit strategy in place, to maximise the resale potential of your property you need to do your due diligence and thoroughly research: location, true comparative prices of units in the nearby area, finish and property specification and importantly market analysis. Are you investing in a growth market? Is there demand for real estate in the area?

There are two main exit strategies to consider, firstly, there is ‘flipping’ the property, a popular low cash flow technique for multiple investments. Secondly, investors have the option to buy-to-let. This requires greater liquidity to exercise, however is made more accessible with guaranteed rental schemes and apart-hotel investments.

Off-plan investing is no longer merely on the real estate investor’s radar; all types of investors united in their desire to create wealth are turning to the strategy. Indeed, according to a recent poll conducted by NBC News/Wall Street Journal, 80% of Americans deemed real estate a safer investment than stocks – an opinion backed up by historic precedence. As illustrated in a recent CSFB report, equities between 1920 and 2000 generated an average yield only 20% above that of property, whilst incurring a risk ratio between 3 to 5 times that of property investment.

There is a discernable trend towards purchasing property purely for investment, with much of this money moving to the emerging markets. Investors are realising the advantages of real estate investment and the increased financial power it can bring. For example, a few thousand Euros invested in a leverage-based off-plan investment in Turkey or Bulgaria essentially gives control of a tangible asset worth much more than the initial capital outlay. Investors in stocks do not have that luxury and whilst leveraging is prevalent within the Forex and Commodities markets, the risk exposure associated with these investment types for small-scale investors is such that it does not represent a low-risk investment vehicle.

John Limbrick of Obelisk International, reiterating previous comment, says: "Real estate is considered a safer asset than stocks. For a start, property and land aren't generally traded as quickly and easily as stocks and aren't liquid assets. Real estate investors tend to behave more calmly than their counterparts on the stock market, so the real estate arena is less subject to the effects of panic selling than stocks and shares."

Just like any investment strategy, investing in real estate needs to be carefully managed throughout the process: from research and selection, to purchasing and resale. Specialist companies such as Obelisk International offer a wide range of real estate investment opportunities in sought after locations as well as more dynamic, emerging markets. Obelisk International focuses purely on real estate for profit – an attitude that dictates selection and due diligence over glossy marketing and panoramic pictures. Investor education and information is high on the company’s criteria – an illustration of Obelisk’s belief in allowing its investors to choose only those opportunities that present tangibility, security and profitability.

For more information please contact Obelisk International on:

Tel: (0044) 808 160 0670Fax: (0044) 808 160 0671
email: info@obeliskinternational.com
www.obeliskinternational.com