International buyers returning to the market
International buyers are leading the charge with significant investment in off-plan purchases in the last few months coming from buyers based in China and Hong Kong.
Recently, investors from Hong Kong who might already have considered buying for investment have shifted their requirements. This shift follows the recent British Nationals Overseas (BNO) passport changes allowing Hong Kong residents a new route for work or study for an extendable period of 12 months and offering BNO a path to British citizenship.
Investors from Hong Kong now look to buy a property to live in for the longer term. In turn, this has impacted their requirements when buying. For example, they are seeking more space, bigger bedrooms and parking.
There has also been a definite uptick in investment from the Middle East, with many expat buyers originally from Europe and residing in MENA purchasing in London for investment. If you are looking to join the party, you better be quick with only a finite amount of property available and a lot of interest.
The return to London is driven by professionals who are returning to the office and are seeking a nearby home as well as international investors and students.
There is a clear appetite for London properties from abroad. In fact, during a recent Vauxhall presale launch, 90% of the apartments sold in just six weeks, with a large amount of investment coming from international buyers. There is also strong demand for properties in Canary Wharf and Battersea, however people are still buying with 'Work From Home' in mind with properties with communal workspace, outside space or balcony’s attracting the most interest.
The green exodus
With the move to remote work and the subsequent “green exodus”, buying off-plan out of London can also generate higher yields. The draw of more spacious properties in green belt areas is clear with Mill Hill, Watford, Kew and even Reading on the rise.
The pandemic is inspiring many moves and lifestyle changes with people looking to the north for a fresh start. As a result, demand for properties in cities like Manchester is on the rise with increasing numbers of people are choosing to live, study, and work in these cities. This increased demand in new homes has, in turn, created a boost in demand for new properties. Looking further north could be your chance to jump on up-and-coming areas.
What features to look out for
What are the in demand features you should be looking out for when looking to buy off-plan? Shared facilities are a must-have in any development and shared workspaces are on the rise with more people working from home, so securing a property in a development with these features could add significant value.
Security is key; a concierge, security cameras, secure car parks are now essential when looking to invest. Parking spaces are hot property but, with space at a premium, developments with car clubs and, of course, charging points are a must-have following the introduction of new legislation in 2022 making them a requirement for new build homes.
It goes without saying that access to transport links are essential. For example, developments in London near the new Battersea tube line are highly sort after at this time. Developments near key commuter stations like Slough, Surry, Guildford and Tunbridge Wells are also increasingly popular having access to London but enjoying more space seems to be a key trend as the world adjusts to flexible working.
How to recognise the best off-plan investment opportunities
Of course, the best investment depends on whether you are looking to invest for the short-term or the longer-term. If you’re buying then selling three-to-four years later, I recommend buying off-plan projects that are already completed or close to completion and aim to lock in a good mortgage rate. Upon purchasing you can then enjoy immediate rental returns.
Some examples of short-term developments in top spots that are completed are Signia Court Wembley, NOMA Maida Vale Kilburn and Chelsea Waterfront.
If you are looking for long-term investment, I recommend buying off-plan projects completing in 2023/2024 and to lock in a good mortgage rate. A few strong options currently on the market are Waterfall Residences and Vauxhall project which has already sold out the first phase however the second phase starts soon with prices starting from 715,000 GBP. Both are completing in 2023/24.
Our property developer clients are planning a string of new launches in 2022 to cater to buyer demand and we are not sensing a slowdown in the coming quarter.
If you are looking for assistance, Chestertons offers a new investor-led service to guide you through your purchase helping you secure the best mortgage rates and rental returns.
Your off-plan questions answered
Can you get a mortgage on off-plan properties?
Yes, Chestertons work with specialist lenders to get you a great deal.
Are new homes energy efficient?
Most definitely, in fact new rules announced by the government state that CO2 emissions from new-build homes must be 30% lower than current standards.
What’s a typical payment plan?
The typical payment plan is 10% / 90%, but some are extended and offer 5% deposit.
Are shared swimming pools a good idea?
Not necessarily. Watch out for shared swimming pools if you are hoping to keep your service charge costs down!
Are there any discounts/incentives to look out for?
Housebuilders will set prices, but it doesn’t mean there isn’t room for manoeuvre. In some cases, you can negotiate, free furniture or a contribution to your legal fees. Discounts can also be arranged for bulk deals as an investor