Aquarius Properties have built a close relationship with clients, agents and developers since we were established in 1999. We recognize that business is built on trust and confidence in the people we work with.

We have worked with many developers and agents over the years and have a vast amount of experience in sourcing properties for our clients. We have the experience of dealing with excellent developers who have managed and still manage to sell their properties in these credit crunch times. Their success is a reflection of how they treat their clients and agents and I have no doubt they will be the big names in the industry going forward into the next decade.

Much has changed in the industry over the past ten years. Buyers are more informed which is a big positive and they are a lot more risk averse. Client’s don’t trust many developers or agents now as a result of the bad publicity about property frauds and developers going out of business over the past few years. Many agents have also gone out of business as a result of non payment of commissions and the bad behavior of the developers. Many of these agents could not cope with the amount of after care service demanded by clients who were left to deal with issues themselves through buyers committees and Lawyers. This is a bad reflection on all developers and I recognize that there are many good developers who excel at developing top class resorts and give excellent service to their clients.

Going forward I hope that developers will listen to agents and adopt to the new global market for property.

Need for Global Legislation

Firstly almost all investors want total solutions. They want a hands free investment. They don’t want to have to deal with management and rental companies or collection of rents. They also want more certainty around the flow of rental income. The most successful global developers are those who build properties with all the tourism facilities required by a 5 star resort and at the most competitive price. They have also to set up the management and rental business and make sure it runs effectively under a well known brand name because this helps to hold the value of property. For city properties investors are looking for properties that will have a good resale market and which can earn a good income so that the property washes it’s face. It is unlikely property prices will rise in value as quickly in the future as in the past so investors will focus more on the property being able to generate income for them. Yields will become more important and what investors don’t want is a property that costs them money annually to maintain as well as the mortgage costs. There is little or no market for this kind of property even in the upper end of the market. It is my opinion that most property investments in the future will be made to generate income and wealth for the buyers. Middle class buyers have been so adversely affected by the turmoil in the financial markets that they don’t want holiday homes in several countries that are not generating income for them.

New Legal Structures Required

My hope is that in the near future there will be legislation introduced across all markets in recognition of this vast and important industry. Developers should be forced to adopt higher standards around the marketing and selling of overseas properties through legislation. The legislation should set down minimum requirements which must be in place prior to bringing properties to the market and it should be compulsory that ordinary buyers should have more protection. What would assist this process greatly is a Certificate system that is awarded to developers prior to release of their developments onto the market. This would be government controlled but managed through independent contractors who would award the Certificates based on set down criteria and which would have global recognition. In the meantime there needs to be order in this market and common standards so that the public can rely on the vast amount of information in the marketplace. If you think about it, almost all other Investment Instruments have some kind of regulations built around them under the Financial Services Legislation in different Countries. Why can’t the Law apply to selling overseas properties as well. There is little point in introducing legislation that will tie the hands of local agents in the various countries because all that will happen is that the developers will market directly via the internet and this will be a lot more risky for buyers. To give the necessary protection this legislation is required within and outside the EU and needs to cover the property being marketed. There is of course benefit in applying regulations to Overseas Property Agents as well but it won’t achieve much if that’s where the legislation stops.

What Agents and clients want.

Investors and Lifestyle clients are looking for more transparency and security before purchasing overseas properties.

They don’t want to take the risks that have been the norm in the past and they will place their money on deposit with a much lower return rather than risk it with a developer who won’t give them more security for their money. If developers state in clear language on their marketing material what the exposure is for buyers especially where developers release properties to the market without a building license or without them actually having title to the land and the buyers know this and get the property at a price which reflects the risks then there is transparency. Not to make the disclosures on marketing material is totally unethical.

If developers want to attract Investors back into property the market they need to follow the following strict guidelines which include the following.

* Prepare a professional sales package including a fact sheet which includes all relevant information about the property including a detailed specification, a DVD, a location map, payment terms, details on mortgages available, an independent due diligence report prepared by an Independent Lawyer, a price comparison report, information on rental and management , furniture packages available and details of a show house if one is available.

* Make sure not to launch the project before all the due diligence is completed and all issues resolved.

* Give a full disclosure to clients of what is missing from the due diligence pack and when it will be delivered and meet the deadline.

* Make reservation deposits refundable for at least a 21 day cooling off period.

* Always profile the development company on sales documents and never seek to hide behind the agents or master agents, clients don’t trust developers who do this.

* Make bank guarantees available for payments made prior to completion and also for the rental income.

* Supply clients with independent research information on tourism and occupancy rates in the area, this is important for investor clients.

* Try to secure mortgages for the property prior to launch and if possible non recourse mortgages.

* Always give the clients information on the annual costs associated with the property so that they can see the whole picture, never hide information which is important to their decision to buy. Word of mouth passes quickly around so be aware reputation is everything in the industry.

* Never go to market with title issues not resolved or other important issues still outstanding, the Blogs are full of such developers.

* In Countries where you can’t get bank guarantees such as Turkey, Croatia and Montenegro put in place an alternative system such as an Escrow account or an Insurance Policy.

* Always agree to register the sales contract for clients if they want this.

* Seek to give clients as much security as possible even though it may cost a little extra because this is what makes the difference to clients now. Clients will feel safe in recommending you to their friends when they se the developer is providing this security.

* Always set up an after sales service for clients and have someone who can assist them with fit out services and management and rental of their property.

Developers can no longer just focus on building, they have to become more customer oriented and this is particularly important now with the economies of the world suffering the worst recession of our times. There is a great opportunity now for forward looking and visionary developers to do good business even in these credit crunch times.

Noreen Hynes B. Comm, FCA, AITI, MNAEA provides consultancy work to developers agents and clients. Contact her at noreen@aquariusproperties.com