Is Palme Royale With Fractional Ownership A Good Thing?

Why would you buy Palme Royale 5 star Beach Resort Hurghada with the Fractional Ownership Option?

Some say ultimately right now, we all want pretty much the same thing with our overseas property. Namely, the lowest possible priced property that satisfies our requirements. But is fractional ownership for you and can it help buyers get what they want for less money?

Will Fractional Ownership Grow?

Some industry experts have been predicting that fractional property will take over from freehold sales in Europe within 5 years. For the average income, non-retirement, buyer a fractional ownership offers some tantalising benefits over freehold ownership:

• larger and better located property than could normally be afforded

• long own use periods not required for many in employment

• higher property utilisation

• much lower entry cost to property ownership

• is the season long enough to satisfy all four owners?

• is the back office administration of high quality?

• are you compromising your ownership due diligence?

• are you happy to forgo some individual input into the property?

• are you generally happy to share property?

• what is the premium you are paying for administrating the scheme over outright purchase?

• provisions for exit and resale of your fraction

What Developments Are Suitable For Fractional Ownership?

Look out for developments that try and launch fractional ownership to make them poor projects into good ones. Check carefully the details of administration.

Proper Due Diligence Is Still Vital For Fractional

Be sure to download the free guide on this site and also receive the forthcoming podcast from one of the UK’s top overseas property lawyers.

Right now, Jet2Let Property are launching Palme Royal Five Star Beach Resort in Hurghada, Egypt with a fractional ownership option. This development of mainly on the beach sea facing apartments, front line villas and townhouses set the standard for five start luxury in the area.

The resort is to be managed by a five star Swiss hotel chain will mean affordable luxury.

Final Thoughts

Beware of sun and beach locations where the August peak holiday season dominates. This happens in many of the traditional holiday areas of Spain. Cold winter temperatures do not earn rental - unless you are in ski resort.  Go for Egypt where the infrastructure is already in place. Prices are very low.

The season is all year round.

Other interesting fractional schemes area to be found in the new David Lloyd on the Mediterranean coast in Saïdia in partnership with Le Jardin de Fleur.

Fractional ownership can be the perfect way to get the property you want at a fraction of the normal price. Just make sure it is what you really want before committing as you can buy jointly with other people to achieve a similar reduction in cost.

And if you are part of a larger family looking for a prime beach front location, then take a look at Palme Royale Resort in Hurghada.  Its year round rental and own use during all the popular holiday periods in winter, spring summer and autumn mean that there are plenty of school holiday weeks to share between four owners.

What do you think? Will fractional ownership grow as fast as many think? Please let me know what you think and comment below.

Is Oasis Marina Beach Resort In Hurghada Like A Porsche?

Oasis Marina Resort reminds me of the day I got behind the wheel of a friends’ Porsche 911. A few minutes previously, on the look out for a replacement car I had been test driving a very worthy VW Golf.The difference of the Porsche 911 from the Golf was huge. A different league. Everything feels just so right in the  911. I felt more alive. I could feel the difference. And why my friend feels its worth the extra money fro the best.

Your Porsche costs three times the price. Not worth it? Yes but it is for some folks. And the same holds true for prime property, prestige locations and desirability.

So lets back down to earth and think property investment and not luxury toys.

But when I saw the Oasis Marina building site it was just like that special Porsche feeling.

But there is a difference

This is o Porsche location at VW prices. Clear uninterrupted views of the crystal clear Red Sea. The large protected beach in front your to wander over.

But, for me, this is not enough. Because its no use investing in property right now, unless its at a great low price and its really safe.

Developers can forget about attempting to come to market without full project funding and full plans. No Bank lending? Crunchie Credit times have stopped quite a lot of that.

And the irony is that Egypt has cash rich developers because so little debt was taken out.

We are seeing property here being sold at £12,800 ($19,000 14,000 Euros) because in the almost unique position for very little being paid for the land and exceptionally low labour costs. A good daily wage here is £5 for a site labourer. Now that raw material prices have come back down, then value property is still available. It just will not get cheaper because there’s no need. Developments in Hurghada, like Oasis Marina are selling. People who visit the Oasis site can see the scarcity of this premium location, the infrastructure and the safety of in built resilience to down turns elsewhere.

As property investors are waiting to see where property prices settle, in markets driven by speculation, and debt. So investor demand looks for sound alternatives. Egypt has a place in the property investor’s portfolio.

For those who just want some warmth and sunshine at VW prices, then I think this is one not to miss.

For more details on this Oasis Marina Beach Offer, contact Jet2Let Property Ltd:

http://www.jet2letproperty.com/eg/483-Oasis-Marina-Off-Plan-property-Hurghada-Red-Sea-Coastline.html

Tel: 044(0)113 3131000 or email: info@jet2letproperty.com

Why Palme Royale Resort Hurghada Impressed Me

Palme Royale Resort in Hurghada is just announced in pre launch and will sell fast. Surprised to be reading this in this economic climate? Then read on.

With pleasant daytime temperatures of 28 to 30 degress C, it was a shock for me landing in the UK. It was cold. The cold like you remember in school shorts in winter.

I was not arriving in a ski resort. But UK in late October - just one degree centigrade and snow. The point is that Hurghada does what it says on the tin. Its like summer all year round. Where else can you go within 5 hours of most european capital cities and guarantee this weather?

Property Review Process

It is always thought provoking work for me reviewing a new development.  In the emerging markets of Hurghada and Sahl Hasheesh its not getting easier.  The property choice is getting larger. Finding long term safe value, as apposed to the cheapest, can seem like a huge challenge. However, there is a way that helps investors decide a lot faster than you can imagine.

I call it a Property Due Diligence Process and encompasses location anlaysis, legal, viewing, rental and support.

So again, I used this process when viewing properties. View it for free yourself in “What Everybody Ought To Know About Property Due Diligence”, free for all email subscribers to my newsletter.  The job of selecting the best properties is made a whole lot easier. You will avoid common mistakes. Mistakes such as automatically assuming that the cheapest gets the best rental yield.

Economic Growth. Not Recession.

OK, I know its hard to believe Egypt has such good prospects. But consider this; Finance Minister Youssef Boutros-Ghali has just announced predictions that the country’s growth will slow to 6% in the current fiscal year, after three years of more than 7% growth.

At a conference in Cairo on October 21st, Prime Minister Ahmed Nazif stated that the Egyptian banking system was in better shape than many other countries, due to the reforms of the previous years and a regulatory framework that has limited the amount of borrowing for Egyptian banks.

Many analysts agree with the view that the Egyptian banking sector might largely avoid the international turbulence. “The overall impact on the Egyptian banking sector will be limited, when compared to what is happening in other countries,” Reham El Desoki, senior economist at Beltone Financial, told Oxford Business Group. “There seems to be enough liquidity, and the inter-bank sector appears to be working.”

Occupancy Rates

With near 100% occupancy on beach front properties and with the World Travel and Tourism Council (WWTC) predicting a 5% tourism in Egypt in 2008. The latest forecast are for 14 million visitors in 2008. Trying to get a room in Hurghada tells the story.  Increasing room rates, from a low base, is now the result.

Lets also consider that with political stability and strong economic growth, the rapidly growing Egyptian middle classes are driving high occupancy. Sometimes you have to just look around.

I got chatting to a couple in the Marriott hotel. They were Egyptian. It turned out they were holidaying on their honeymoon. The new Egyptian middle class is growing fast. The very diverse nationalities of other guests is also apparent. Wealthy Middle Eastern visitors and a huge Eastern European and Russian holiday makers are fuelling much of the tourism growth here.

Rental Yield

I’ll leave detailed analysis for another time on rental yields. However, there is just one major point to consider when thinking about yield. That is year round occupancy.

Virtually every location proclaims its year round attractions. Except the reality is usually five peak weeks. Hurghada has all the usual summer peak times but has eight other major holiday weeks.

You don’t get these peaks week rentals to anywhere the same extent in Spain, Cyprus, Greece, Malta, Morocco, France or Italy. Why? The air and sea temperatures are not warm enough. You risk rain. Hurghada and The Red Sea Riviera may get a very light drizzle for 5 minutes once a year.

So renting in Hurghada you get October Half Term Holidays (two weeks), Christmas, New Year, February half Term holidays (two weeks), Easter, early May holidays. Think how this impacts on your rental. Hurghada at its coldest is January, followed by February. Permanent sunshine, 18 to 23 degrees. There is little competition to the Red Sea Riviera that covers all these times within five hours flight of most European Capital cities.

But its the sea temperature that impresses most. Its 25 degrees in the sea this week. At night it drops to 18 degrees. I see only a few Egyptians needing a jumper in the evening.

Anyhow I digress. Rental yield. If you buy the right property in the right development, the Net rental, after maintenance and fees, is highly likely to achieve 10%. 15% for the right property is realistic.

Why Palm Royale Resort?

Two major reasons…the Sea and the Design. Palme Royale is very close to Sea. At last, I found a front line resort that gives nearly every apartment owner a proper sea view. By designing the apartment blocks in a V shape it means every apartment gets a great view. There are no second line, second rate apartments just a few rear studios on each block.

North of Hurghada is flat as a pancake. Sea views are like gold dust.

Beach space is as hard to come by as a front line seat at your favourite show. You have to pay good money for it.

But I could mention why I was impressed with the builder, the international Swiss Hotel Chain for the on site hotel, the Spa, the Gardens. But I wont. Go to www.jet2letproperty.com for this.

Front line you no longer have to dream of. A pre launch 10% discount gives prices of €48,510 ($62,577 or £37,898 approx) for a 49m2 studio. That means the first investors, who want strong rental yields, will be best not leave enquiring long. Register at www.jet2letproperty.com for due diligence report and FAQ’s.

Palme Royale Resort is not just about its 5 star tag. Its about a private 340 metre private beach, sea view, design and rental. All this within ten minutes from the international airport.

What do you think of investing in Egypt? Is Hurghada the best place right now?

Your comments are welcome. If you found this useful please register for regular new posts to be sent straight to your inbox.

Property in Hurghada

More House Price Falls

Well I have to say that my last comment about the US economy was over optimistic. Fannie and Freddie will not be enough to see the return of optimism. With Lehman Brothers gone I think we can be sure of another Bank ceasing to trade. There will be bank mergers as well and a fair bet that many of the investment Banks will end up being owned by the proper Banks - following JP Morgan Chase lead with JP Morgan merging with Chase Manhattan.

However, not so widely reported was the 10% fall in oil yesterday, its now under $100 (approx $93) and looks set to go much lower, laws of supply and demand are working.

Oil will be the catalyst for recovery

I see this oil price slide as the start of a long process of recovery. More falls will temper inflationary pressures, stimulate demand and, combined with interest rate reductions, set the US and the rest of us for recovery. My main fear is the housing market in both UK and US. Demand for houses has yet to start up again and further house price falls are most likely. Negative equity is going to be an issue, its possible there will be a million homes in UK in negative equity. This means that bankruptcies will sharply increase and further test their liquidity. Its going to be tough times

What about overseas property?

There is no doubt that overseas property demand is linked to the economy. However, in the same way people are downgrading from branded to won label goods so I am seeing people search for low prices outside traditional markets.

The reason is simply to do with price. Why pay 500,000 euros in Spain for sea view when the same thing can be had for under 80,000 euros in Hurghada Egypt? The difference is that large.  When investors think that there is no “off season” for rentals in Egypt then they start to understand that this cheap option is one which has more than just price upside.

So house prices in certain overseas markets are attractive and I predict that more people will be making the effort to search them out. Its really the same process as paying a thrird of the price for own brand beans or tomatoes. You get pretty much the same thing and save a whole load of cash.

12 Reasons - Why Hurghada?

1/ Strong economic growth in Egypt - 5.9% forecast for 2008

2/ Infrastructure good but with more investment from the government improving

3/ Lots of facilities, diving, snorkeling, windsurfing, kitesurfing, historical and cultural attractions

4/ No capital gains tax

5/ No inheritance tax of British residents

6/ Improved purchase process

7/ Warm climate with virtually no rain. Year-round tourist season

8/ Many airlines fly into Egypt and Hurghada from many countries

8/ Low cost destination and low cost of living

9/ 9.8 million Visitors to Egypt in 2007, forecast to double to 16 million visitors by 2014

10/The property market in Egypt is developing fast - low prices capital appreciation are likely

11/ 35Km of sandy beaches

12/ Developments in great locations with 5 star facilities.

Before investing anywhere overseas, be sure to register for free Guide to Due Diligence.

Samra Bay Hurghada

Samra Bay, Hurghada offers possibly the best location along the Hurghada “Golden Mile” of Hurgada is launched today with 10% discount first 50 units ONLY Situated right next to 5 star hotels this development location is top pick. Completion Dec 2011 (approx).

SAMRA BAY Marina & Spa Resort with all facilities is for those who are looking for quality and front line. Yet its only 5 minutes to the airport meaning you can be from leaving UK an into your apartment realistically in around 5 hours. Beat that for 265 days of sunshine per year.

With 10% off the starting price of €1,250 per m2 to give €1,125 per m2 (or £892 per m2). This discount is only for the first 5o units. (studios 47m2, one bedrooms 75m2, and two bedroom 111m2)

The “Abrim Residence” is the first building to be offered:

10% discount of the purchase price for the first 50 purchase agreements
5% discount of the purchase price for the second 50 purchase agreements

Furthermore a generous payment structure will be available:

a) Studios and 1-bedroom apartments: 40% upon signature / 20% to 01.07.2009 / 40% upon delivery (scheduled approx. end of 2011)

b) 2-bedroom apartments: 30% upon signature / 20% to 01.07.2009 / 50% upon delivery (scheduled approx. end of 2011)

In addition up front payment of purchase price instalments before the above mentioned due dates will qualify for a discount of 7%.

(Example: Client pays the purchase price in one single payment = 7% on 60%) The purchase payments will be made through a trust account managed by a lawyer in Germany.

Once again, Samra Bay should be considered for those looking at Hurghada. Contact Jet2Let Property Ltd - +44(0)113 3131000 for more info or email, info@jet2letproperty.com

To come and view developer’s previous quality our 7 day inspection trips start at £325 per person (subject to availability). Hurghada has received rave reviews from our clients. It feels safe, low cost of living, no capital gains tax in Egypt, no VAT. (Taxes and laws always subject to change).

All clients should employ a lawyer and conduct their own due diligence. Please read ten top tips for due diligence series.

Front Line or no Front Line - is that the question?

Well its the front line question that we hear a lot about and on the face of it the answer is simple, front line. or is it? Before examining the issues my I recommend to check whether it really is front line. Without putting too fine a point on it, I have inspected sites which are called front line and they are not really. They have a road in front of them and then the beach.

Google Earth can help on this, but nothing beats a site visit to be sure.

This may be ok if you are sure there will not be anything built the other side .. but usually there is, or will be a building, so its not front line. The clue can often be spotted in the price… if it seems good value compared to the other front line developments then maybe there is something not right. It could be beach front line but there could be an electricity station next to it.. or a factory.

But is it all about a beach? Well frankly not in some resorts being close to the amenities of shops and restaurants may be highly desireable and then you have to apply town centre versus outskirts argument. All of a sudden its getting more complicated. Then of course you have to look at price. Jet2Let have Tranquilla Town a nine story refurbishment buy to let building in Hurghada town centre. With an expected rental of £400 per week on six or 12 month contracts you are looking at after management costs a pretty certain yield of 8%. This is th sort of deal that suits the non lifestyle buyers who views overseas property as a long term investment proposition and has little intention to visit -or is their second purchase in the country.

I will leave it to another time to talk about investment strategies, but those who invest in shares will be familiar with taking contrarion view. I like this view as it can often work well. Historically those with patience almost always are glad they were brave by buying whilst all around said that price will go continue to go lower and lower.

For example of a typical contrarion view right now would be buying several banking shares at these low prices because the credit squeeze will reduce competition and Banks will be set to restore their balance sheets after their rights issues. Enough of stock markets but the contrarion view is worth thinking about now that overseas property sales have slowed the current deal could well turn out to be very shrewd buys indeed.

Spo turning again to property, in most markets we have see price inflation on building materials (cement, steel) and in some of the emerging countries labour costs increasing significantly. I am also interested as to what local buyers are doing and why. The great thing at the moment is that the squeeze on mortgages means that the speculative element is much reduced - so look for where people are moving to - where are they needing to rent? Possibilities here are Istanbul with a huge population increase under way and even Hurghada in Egypt where a new population is moving to the coast for more than just tourist related activities.

Egypt’s growth in tourism is such that local workers accommodation which include expats in real estate and tourism and Egyptian professionals covering legal, construction and media sectors. This is why we have secured a great deal on an existing building which already has tennants. Prices of £410 and £570 per m2 is really good value with minimal risk as the building is already built as of ten years ago and an after fees and costs yield of 8% means this is the sort of deal to be had there right now.

Please post your views on front line and taking a contrarion view.

Tranquilla Town - Hurghada’s first pure domestic buy2let

We regard Egypt as offering superior ‘relative value’ to the international property
investor for a number of reasons:

• With strong economic fundamentals and political and economic reform well-underway, long term prospects for the economy are very good. The Government has streamlined the property ownership process for overseas investors and is actively seeking inward investment, thus providing favourable conditions now for property investment by foreign nationals.

Wider availability of mortgages for foreigners (which carry 0% tax on interest) will add liquidity to the market, and there is no inheritance, income or capital gains tax for overseas investors in Egypt. Furthermore, investment entry points are low and projected yields are high.

• Egypt is at the beginning of an expansionary cycle, in contrast to many property investment markets. In Spain, for example prices, on the coastal regions have been falling****, while Florida has been hit-hard by the recent ‘credit crunch’*****. Property markets in other less established
areas eg Dubai, Bulgaria, Croatia have already attracted significant foreign investment, so investors seeking aggressive capital growth opportunities are looking further afield. As well as the obvious buoyancy of the underlying economy in Egypt, the fact that the country has historically under-exploited its role as a major tourism centre suggests there is substantial value currently in Egyptian real estate related to the tourist markets. Growth in European tourist traffic will have the effect of driving short-term rents (and therefore yields) higher. This effect is likely to be particularly pronounced in the Red Sea Region, where there are plans for
a major new international airport at Ain Soukhna.

• Indeed, Egypt’s year round sunshine, relative proximity to Europe, low crime rate and rapidly improving infrastructure will in our view see it emerge as one of the world’s major tourist destinations over the next few years. Finally, we feel property prices in Egypt should benefit from petro-dollars: Gulf investors (who often have a preference for assets in the Middle East) are increasingly likely to be attracted to Egypt’s strong fundamentals, and the fact it welcomes foreign investment.

* International Monetary Fund Statistics, 2006
** International Monetary Fund Statistics, 2006
*** International Monetary Fund Statistics, 2006
**** Financial Times, 30-09-07
***** Financial Times 30-09-07

The Deal:

Its always good to be first with an offer that is very much in the vain of buy2let or, as I would say, “jet2let” investment. With prices from just £26,000 up to £52,000 you can invest in an existing building which will be refurbished. This suits many who do not want to be concerned about the financil viability of a builder or developer.

Tranquilla Town is on Sheraton Street right where the fast growing numbers of local workers wish to live. This population is growing fast with the growth in tourism in Hurghada and also the growth in general business activities. Lawyers, accountants, doctors from Cairo and Luxor are in need of accommodation in this area.

In addition there are those involved in the Hotel and Hospitality industry and of course the huge diving and boat trip industry. Final there are those expatriates involved in the fast growing real estate industry who need accommodation. Sales people from UK, Germany, Russia, Italy and elsewhere. All of these people arriving have pushed up property prices and rentals.

All monies held in escrow account at UK lawyers until title transfer. You pay 90% of the price and get title. The final 10% is paid when the refurbishment is complete (within 6 months).

All you need to buy is appliances and furniture and packs will be offered for around £2,500.

Just £1,000 refundable reservation fee will reserve your unit in this building of 53 apartments.

For further details on Tranquilla Town contact Jet2Let Property Ltd
Tel: 0044(0)113 3131000

Samra Bay, Hurghada

Samra Bay will be one of the very best developments in new Hurghada and will be launched off plan in June. Located by the Grand Plaza, Intercontinental, Hilton and Steigenberger hotels the position is superb. Located on the beach front line and on the Esplanade pedestrianised area this area feels upmarket feel and very safe/

Many restaurants are springing up here as well as shops of all kinds. Frontline is getting scarce in Hurghada and we expect demand will be very high for Samra Bay as the developer finishes to a very high standard. There will be over 1,000 apartments and we therefore expect rental potential to be one of the best as it has only 5 star hotel as competition.

Viewing Trip Just £225 per person. Call 0044(0)113 3131000 to book now. In case you cant make it please see video of the site which will have a jetty for boats and safe swimming area.

£700 per m2 front line in Hurghada

Today I have been speaking to the MD of the UK developer of Hania Beach. Delighted that I have had confirmation that some important finish details such as branded bathrooms with decent showers and quality tiles that I submitted to the developer have actually been incorporated. Final plans due soon and images in a few weeks. Due diligence completed here and satisfied developer owns land etc. As always our clients always use a lawyer to verify ownership and for due diligence.

The investor and buyers response to Hania Beach, front line has been superb. Priced right now at 30% less than competing developments. 125 apartments on reservation (refundable reservation fee) out of 171 apartments and t specification is going to be top notch here. This would be a good buy at £1,000 per m2 but at £700 it a steal. Price goes up to £800 soon and £850 in a around a month. Final sell price will be £1,150 - if there are any left of course.

The policy of pricing to sell gives comfort to both the buyer and the developer alike and is just what is required to make and a successful development.

However this is only part of the story an excellent development requires a strong rental demand giving investors a growing rental return. Again this is where so far matters are looking good for Hania Beach with a company already appointed to manage tour operator rentals and most importantly to actively promote the development to the travel companies.

Overall the image of the Egyptian Riviera is changing fast from a destination of specialist and marginal appeal only a few years ago to one that is being advertised as a mainstream high quality and value destination. Easyjet now flying there is yet another part of the jigsaw which will I think will stimulate further interest from both travelers and property investors alike. I expect to see more flights added over the next 12 months as existing flights are very full.

The cost comparisons with Spain are that property here, like for like, is less than a third of Spanish prices. One investor said to me that even in todays market he could not find front line Spain at less than £350,000. This value is further enhance if you consider that the peak rental periods of Christmas, New Year, February school half term, Easter, May school half term, October school half term are all peak rental seasons but mainly low rental season in Spain so opportunity for high rentals in these peak periods exceeds the typical Spanish Costa destination.