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Investment: Best to Invest: Old or New Build

Overview

Research suggests that more than three-quarters of potential international buyers want to buy either an off-plan or new-build property. Whether to look for new-build or older property is a question that depends on your reasons for buying. Putting aside the question of personal preference, this is about working out which type of property will be the best investment in any given area.

Older Property

In France, for example, the market is calibrated to older property and buyers tend to look for something with charm rather than novelty. This is partly also a case of buyers adapting to availability. With an ample supply of older housing and strict planning laws, something older may be easier to find and provide better value for money.

Italy is another country where the market is adapted to older properties. It is not insignificant that these countries are among the most sophisticated and developed of second home markets. A link can often be made between the youth of the market and the youth of desirable housing. People prefer new developments in Eastern Europe because the quality of existing housing is not good.

The key to the appeal of new-builds is the confidence that they instil in the buyer. The thought of older houses, with the potential for dry rot and rising damp, can put off even the most determined buyer. And whilst coping with a leaking roof and fragmenting walls is possible if you are living in a house, coping with the manifold disasters that may beset your paying tenants several thousand miles away can be spectacularly daunting.

Newer property can sometimes also seem better calibrated to social and cultural developments. This is not a case of ‘all mod cons’, but of the growing demand for smaller properties across the world. The trends for later marriage, higher divorce rates and more single households ensure that prices for apartments often climb faster than for houses.

New-Builds

New properties may also be easier to maintain than older buildings – an important consideration if you are stuck a thousand miles from a building with a flooding washing machine. If you buy on a new development the developer may even have made arrangements for management before completing the project.

For people looking for a second home, there is often some comfort in numbers. Master planned communities can include facilities which older housing can’t match. This doesn’t just mean swimming pools integrated into the design of the house but can extend to golf courses, shopping centres and water parks.

A sense of community can add value to a rental property, especially if you are aiming for holiday lets. If a development is well placed, close to the sea or a ski resort, and attractively planned, you will hold a competitive advantage over other properties in the area which lack these benefits. With new builds the reputation and prior experience of the developer is often a useful guide. Large developers have to run their businesses on very professional lines and this gives the buyer a chance to demand good service. Asking to look at references, to look at completed developments or even to talk to people who have bought before are all valid requests. You won’t get this level of service from someone selling their family home; but then, you can explore a completed house at leisure, whereas a new-build may not be completed for two years after purchase.

There is also a less positive side to newer builds. Just as the presence of developers can be an advantage, showing you that an area is very much on the way up, in areas where a great deal of new building is underway, there is a danger of over-supply.

© Vacation Work 2005

“Where to buy a property abroad – An investors guide”, First edition 2006 David Cox, Ray Withers, Kate Godfrey.

Reproduced with the permission of Property Frontiers.

Further information on this topic can be found in “Where to buy a property abroad – an investors guide” 1st edition, by David Cox, Ray Withers and Kate Godfrey.

This book is available from all good bookshops nationwide at a recommended retail price of £12.95 or can be ordered directly from www.aninvestorsguide.com for £10.95 including postage and handling (to UK addresses only).

www.propertyfrontiers.com

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