Property investment is always about the demand recognition as the supply is usually fixed. Although, as with any investments, election causes a slowdown and investors staying put while considering their options, house prices remain strong and stable. Increase in prices year to February 2017 has been recorded at 5.8%. We had slower half of the year in terms of the transactions and lower gains in house sales than in 2016 but this does not mean the cycle is coming to an end. Although Chinese property market is widely described as a bubble, it is worth mentioning that bubble has been growing for years now. Somebody is going to be lucky and after years of guessing finally be able to “predict” the day. A property is not a type of an asset class that is particularly good for speculation, it is just too illiquid for that. What you should think of is value investing. Always! Even if you buying a property, only to sell it in a few months time.
So what makes the value?
General perception is that, if something is high quality it will sell for more. Therefore naturally it would seem logical to employ best builders & decorators you can find, use Farrow & Ball paint and perhaps fit chandeliers instead of basic light pendants. Ambitions are great but the purpose is the most important. For that you need to know the market, demographics and local trends. You also need to know your building well, particularly when it’s a period property. It doesn’t matter how much you will spend on the house extension if it creates little value to buyers or tenants. Common misconception we have come across was building extension simply to enlarge particular room in a property. Although it is a right thing to do if you need a space, make sure you don’t do it just to break even. Most money you will ever make will be from creating extra space, even if it’s just changing the layout. For example, a big family bathroom is nice to have, but you will make more money by dividing it and creating en-suite to the master bedroom. The value is not in what you have paid for works, but how desirable the outcome is going to be.
Sound structure of a building is very important. This is what holds the value of a property and can be decisive whether you will make profit or not. If you feel that you may need a crash course in making money from investing in property here are five simple steps:
- Location, location, location
- Improving rather than rebuilding. Get a building survey done.
- Value creation. Little work, little profit.
- Evaluate your project. Get a property expert on board.
- It’s all in numbers. Pay for performance not promises.
If you have any further questions or you are interested to learn more about property investing contact us.
PROPEGO is the first of its kind Personal Estate Agency which provides you with expert knowledge at every single step of your property ownership journey. One point of contact throughout the process, choice and no tie-in contracts or small print. You have absolutely nothing to lose, where we are in this all-in.