MAY 24: Ensuring proper due diligence of your overseas property investment has been a hot topic in recent months following the collapse of several high-profile property schemes, and with them the loss of many millions in cash and thousands of shattered dreams.
However, Southeast Asian investors are not the sole targets of what some are referring to as “scam” investments and Loxley McKenzie, Managing Director of U.K. real estate investment firm Colordarcy has seen it all.
He was clearr: “Investors are suffering around the world with poor products, and they will continue to do so if due diligences are not improved.”
Several recent stories have pinpointed what investors can do for themselves prior to signing any agreements, and McKenzie has added one more.
He said: “The quickest tip I can give to an investor is that if the product has no mortgage possibilities – meaning funding from a bank for purchasers who would like finance is not available – then that product should be classed as a high-risk product.
“Every property developer would naturally want their products to have as wider market as possible and having finance options widens the market tremendously.
“So if a product comes to market and no bank is lending on that product, immediately you know something is not as solid as it should be.”
That factor alone, as McKenzie admitted, should not be viewed in isolation.
He added: “I am not saying you should not invest in products of this type, but it must be placed in the high-risk profile category.”
“I have seen some high-risk investments that worked very well for investors, and the rewards are high, but more careful due diligence is needed when investing in high-risks products and of course, don’t ever invest more than you are willing to lose.
“A bank will provide funding on products with good security. They would never support a product if the licences and permits are not in place.
In conclusion, McKenzie added: “I hope we see improvements in the coming years, however with some products I see coming into the market, I would say 50 percent should be avoided.
“However, with careful due diligences and knowledge of how the product is structured these risks can be easily avoided.”
