Bust or Boom? Who is Profiting in Property During the London Olympics?

With only two weeks to go, the Olympics are filling the news and the hearts of people around the globe. Stories of huge profits being made by temporarily inflated properties and hotels are filling internet and economic commentators’ pages.

HomeAway, a popular holiday rental website, have reported booking enquiries for July and August are up by 695% compared to the same period last year. With the old adage “If it sounds too good to be true, it probably is” ringing in my ear, I decided to do some research on the benefits and traps of investing in property surrounding a big event.

Well, it turns out that many of these stories are true. Many different sources from holiday & property websites to the Economist newspaper have reported both huge investment and healthy returns on rental property in this time. The clear winner in this climate has been luxury, short-term rentals either close to the action or in fashionable, residential suburbs such as Chelsea and Notting Hill. These are being leased from £1,000 per week for a luxury apartment or small house to a reported £30,000 per week for the ultimate in home-style luxury retreats.

In addition, more than £1.4 billion has been invested in the previously dilapidated city of Stratford to give it a facelift that has been sorely needed for decades. Developers have built brightly coloured blocks of luxury apartments and the planning doesn’t stop there. After the Olympics, it will get a boost of £147 million to build 11,000 homes and offices as well as refitting the Olympic Village for rental homes.

It is not all good news, however. Due to the economic instability of the European Union, the muddy waters of Olympic investment are even harder to predict. From forum chatter to expert opinion, no-one agrees on the situation. The Olympics have a mixed history in creating a housing boom or draining cities of resources needed elsewhere. In addition the increased unemployment could mean the bottom could drop out of the market in the next six months as predicted by property group Knight Frank.

Where, then, do the opportunities lie? If you keep to these boundaries, you could be surprised at what you can achieve.

Plan Your Buying Strategy

Ideally, investing in property well before the event would provide the best returns. In Perth, savvy investors bought up central, self-contained apartments before the Commonwealth Heads of Government Meeting (CHoGM) and a significant return was made on many of these. There were others, however, that lost out because they bought too late or were buying in complexes that were not bidding to provide accommodation for the delegates. Make sure you have a strategy when buying and be clear on why you are buying.

Make Sure You Know Your Stuff

Researching which will have short-term and long-term growth is necessary. Some of these luxury apartments will undoubtedly be superfluous as tourism returns to pre-Olympic levels. In contrast, mid-level apartments in residential or recently developed suburbs can expand. As always, make sure your research includes talking to people from the area and not just developers. 

Anticipate a Post-Olympic Drop

This can actually work in your favour and in some places will be inevitable anyway. If the predictions say that the bottom will drop out of the market, then waiting until that time to invest could put you in front. Whilst the Olympics will have created a temporary boom, if you have prepared for afterwards and know what other investors are planning, you can strategise appropriately. This could be a risky market for some, but for those with the confidence and the right advice, a profit is there to be made. Keep your eyes on the long-term investment and use short-term windfalls to reduce existing debt or reinvest in areas that may be improving.

Get Help

Finally, use registered professionals in your area and the area you hope to buy. There are specialist lawyers and brokers who can help you invest in the United Kingdom with far less risk than doing it on your own. They know the law and appeals you can make if deals go south or vendors are being difficult. If possible, either visit the prospective unit yourself or have a buyer’s agent look through it for you with a solid brief. Any money you might save by doing it yourself really is outweighed by the risk you take trying to do it yourself.

5 Reasons to Auction Your Exclusive Property

Are you looking to sell your property in exclusive suburbs like Peppermint Grove, Claremont, Dalkeith, Nedlands or City Beach? An auction may be the best investment you make when selling your home. 

Potential Buyers Get To Really “See” Your Property

When a property is marketed as an auction, the price tag isn’t there to distract people from your property. Through advertising, editorials and visits to your property, people will start to formulate what they are willing to pay for it. This is one of the reasons why auctions in exclusive areas work. With beautiful, fashionable and feature-packed houses like the ones in Perth’s Western Suburbs, potential buyers get to experience what living in an exclusive property like yours could be like.

Removing the price tag from an exclusive properties also helps produce the holy grail of property marketing – the person who “falls in love” with a property. In fact, up to 20% of properties are sold before the auction. Instead of relying on the price to sort buyers, the property itself will attract those who are truly interested. This has some great benefits including….

Raising Your Property’s Profile Draws More Than Motivated Buyers

The marketing campaign that surrounds the Auction is vigorous and effective. This gives your property a status in the property market as a “must see” and, if it reaches the buyer early, can establish your property as a benchmark to judge others in the suburb. In addition to motivated buyers, the profile of your property will attract those who are “just looking” or who think “maybe one day”.

This is a good thing!

Motivated buyers do not know who will bid seriously and those who won’t, once again reinforcing the competitive nature of auctions. In addition, your house’s one-of-a-kind status will be emphasised. It is not unheard of for someone to fall in love with the house and transform from a “maybe one day” perspective to a motivated buyer when they see it in person. Whilst it’s not advisable to focus your marketing campaign around this possibility, these people can add to the drama and suspense of the auction.

BUYERS BEWARE: 

All real estate vendors are not experts in marketing a property for auction. A one-size-fits-all approach can be disastrous, hurting the eventual selling price. Careful strategising and professional expertise in execution is key and should only be done by a person with a successful track record of selling at and after auction.

Auctions Give the Right Impression

When it comes to the property you’re selling, there is only one and it is unique. Being forced to openly ‘compete’ with other potential buyers can push the price up during the suspense and drama of a live auction. Just watching any shows like “the block” or “under the hammer”, demonstrate the drama that can come from auctioning a property. This can really work in your favour if the marketing leading up to auction is done well.

The reason for auctions gaining high selling prices in your suburb is the same reason they may not work elsewhere – the image of luxury, exclusivity and quality. Whether it is a boutique apartment on the river or a mansion complete with manicured gardens and a swimming pool, a property that is auctioned speaks to what quality-minded buyers are looking for. Your agent will tailor the way the property is marketed so that it speaks to the specific demographic you are targeting and emphasise these qualities that your property possesses.

There are Less Opportunities for Post-Offer Blues

When you sell your house by auction, the sale is unconditional. Yes, really. No more worrying about finance not being approved, no building or termite inspections for you to organise and usually a 30 day settlement really puts your mind at ease. In a place like Peppermint Grove or Claremont, where the difference between a successful sale and simply taking the offer can be hundreds of thousands of dollars, this can really alleviate the worry of how long a property will stay on the market or the possibilities of offers falling through. 

Auctions Get Better Offers – Even After the Event

Auction day provides a unique environment for buyers to openly compete with one another improving chances of achieving the highest selling price. Approximately 20 - 25% of properties sell under the hammer and the chances improve if you use a reputable real estate agent with a history of successful auctions. This, however, is not the best news. On the day to 48 hours after the last hammer goes down is where 38% of properties sell. These are not just sold at the reserve price, either. Often shy or unsure buyers who did not participate in the auction can offer figures you may not expect. This time, from auction day to two days afterwards is the true power of auctions.