The turd poslishers clouded....
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Global Edge.com
in the Video Blog
channel on 12-23-2011
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turd polishers clouded my judgement
If you’re one of our regular readers, you’ll be familiar with my late grandmother’s rule of thumb. “You can’t polish a turd”.
As a discerning overseas property agent you’ll also be aware of sheer number of them masquerading as property opportunities in southern Europe.
Post 2008, the fractional consultancy industry has been selling developers polishing solutions for hefty consultancy fees. The outcome? Cheaper turds and wealthy consultants. Not a great combo.
Our editorial position has always been that fractional property will never overtake traditional overseas property sales unless consumer attitudes can be changed (the stain of timeshare runs deep) and agents can be properly incentivised (more work, less commission is the default).
Fractional is also a short-term solution to problems in the mortgage and banking markets. Whole ownership is a better option for most when credit is cheap and deposits are low.
However, in the long run, to quote Keynes, we’re all dead. As Stuart Law, CEO of Assetz said in our interview earlier this week, the European banking system is more than two years behind the UK in terms of compliance with Basel III (higher liquidity requirements). Tighter lending conditions in 2012, particularly for overseas buyers, are a given.
With this backdrop, solutions that cut out the need for traditional finance win. That means things like purchase lease options for doing low money down deals and fractional property ownership will be essential for the survival of many businesses in 2012.
Pure investment sales will be difficult inside the eurozone (even with hefty discounts) until the crisis is resolved. The biggest UK investment specialists are either selling close to home or are focusing on the US or Turkey.
The good news is that the lifestyle market is at least three times the size of the pure investment segment. A significant minority of the people have money and, as we saw at A Place in the Sun this autumn, are coming to conclusion that life is too short.
If I could sum up in four words the products that will do well in 2012 they would be: Lifestyle, community, scarcity and price.
There is always a market for smaller developments in spectacular, can’t copy locations with a mixed community (local and international, whole ownership and fractional), great facilities at a competitive price point.
Robin Barrasford of Barrasford & Bird Worldwide told me this week that a key part of his business was “selling millionaire lifestyles at affordable prices”.
Did I misjudge the potential of fractional ownership? If I did, 2012 will be the year that proves I was wrong.
They’ll be plenty of opportunities in 2012 but they may be where you least expect them to be. Keep an open mind and ignore the turd polishers. Thanks for listening and merry Christmas.
Source: Global edge
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