|
The revival of the British seaside has been one of the most heartening trends of the last decade. Whitstable, in Kent, North Norfolk's coastline, and wooden beach huts almost everywhere have seen prices soar into the stratosphere. Seafront homes are booming in value again, so everyone wants a slice of the action. But be careful. The Beach at Carlyon Bay in Cornwall, will include over 500 luxury apartments, designed by Tate St Ives architects Evans & Shalev, on one of Cornwall's best beaches in a £100m project which also includes leisure and retail facilities and boutique hotel. Developers Ampersand offer "Live and Let" packages on apartments from £200,000 to £850,000 already selling off-plan. Design standards, inside and out, are of Central London quality and owners choose from one of three professionally interior design schemes costing an extra £25,000 on average. Affluent folk now discovering the joys of Cornwall will surely want to linger in such luxurious surroundings. And Ampersand chief executive Johnny Sandelson believes that potential investors, fed up with the weak stock market and deteriorating savings rates, will have far more fun with their money in a beachfront home. Once in the rental pool, owners can nominate six weeks each year to use their own apartment. For the rest of the year, they can rent it out through Baylife, a company set up to administer The Beach by Ampersand and hotel group LHM - and the plan is that rental payments cover mortgage repayments and running charges of several thousands of pounds each year. The developer guarantees a 5% return on purchase price for the first four years - so owners putting down a minimum £40,000 deposit on a £200,000 apartment, can expect £10,000 a year gross for the first four years. Net profit, after repayments on a £160,000 mortgage, is closer to £2,000 a year. Another worry is the Baylife management charges - 25% plus VAT, which takes another big lump out of rental income. If the property is let for 63% of the year, says the developer, the 5% annual return thereafter is achievable. To achieve this, The Beach will be promoted as a conference venue in the winter. The scheme is packaged to attract tax breaks; for instance, as a commercially let furnished holiday letting, the property qualifies for full business asset taper relief. Of course, buyers can retain the property entirely for their own use and not join the rental pool - but the high prices of The Beach, plus ongoing management charges, make it likely that these buyers could find better value in the open market. Many local issues have to be addressed including access to The Beach, which at the moment is by two roads, one through a built up area with a mile of speed bumps and the other going under a small 'one car at a time' railway bridge. Traffic is already horrendous around St. Austell all year round due to bottlenecks and the Eden Project. At this moment in time, there are no plans for road improvements. Full planning permission has not yet been given. Restormel, the local council has recently stated that the project is not a foregone conclusion. Carlyon Bay is at the expensive end of St. Austell, so understandably most residents are opposed to having 500 apartments built on their beach! Construction work at The Beach begins in September, for completion in 2006. With Cornwall attracting five million visitors a year, most buyers will be sure they are joining a trendy and profitable club. But suppose interest rates rise - and tenants fail to show up in winter. Then buyers could be facing hefty mortgage repayments out of their own pocket for months on end. Visitors numbers are 10% down in 2005 already, and who really wants to come to Cornwall and stay in a flat! Long-term, greater risks could come from a profusion of new flats popping up in the more popular coastal resorts. If the revival of the British seaside turned out to be a passing fad, owners on The Beach could have problems trying to recoup their original investment. Some interesting links The Beach - official Ampersand website Carlyon Bay Watch - opposing the Beach project
|