In search of profits by saturation with unsold apartments

Investor from Miami Rodrigo Nino does not care if people describe his investment group which heavily reduced buying luxury apartments in Miami and New York as a "vulture fund". "Let us say as you want. We buy cheap and sell cheap, this is our business plan, he cut down.

Nino, executive director of the company for sale Prodigy International, created the fund in July, initially paid $ 100 million purchase of groups of unsold apartments in new projects. His plans provide for the sale of the apartments within 90 days of purchase, using a network of brokers to advertise Prodigy units, which are mostly in Italy and Spain.

Over the past months have witnessed a flood of ads new investment funds as the Nino, which hopes to buy residential properties drastically reduced prices from desperate sellers in places like London, Dubai, Bulgaria, the United States and Ireland, writes New York Times.

Funds seeking opportunities in markets in which prices have fallen by between 20 and 50 percent over the past two years, although some delay purchases in anticipation that prices be lower still.

Although the general fund share a focus on property owners with financial difficulties or withdrawn by banks, different strategies vary. In February, for example, started Appreciating Assets Fund for the purchase of apartments in resorts in Bulgaria, mainly of British and Irish investors who want to quickly exit the market.

In July, the British entrepreneur Finchatton, specializing in luxury projects announced plans to raise 250 million pounds, or about 405 million dollars from private lenders and investors for the purchase of distressed properties in central London.

Such funds vultures are common in business properties, but are a relatively new phenomenon in the market of holiday properties and luxury homes. Even in good economic conditions luxury homes are considered risky investments requiring much capital and with little likelihood of short-term returns.

Falling prices, forced withdrawals and empty properties in new projects, however, made housing more attractive to some investors.

Often these funds are negotiated directly with banks or entrepreneurs who need cash. "Search is not the price of a security sale," explains Stuart Law, CEO Assetz, property investment company based in the UK.

Assetz recently announced the creation of a fund for 25 million pounds with a focus on distressed properties in the UK and plans to lease property, while selling prices improved.

Considering that the rental income are key to its business plan, Lowe says Assetz avoid markets such as Bulgaria and Spain, although prices in these countries are more reduced than the island.

"We just have too big supply and no demand for rent. Can not do this if there is demand for rentals, "said Lowe.

In some cases, funds are backed vultures of entrepreneurs who hope thus to reduce their risk in a weak market. In June, Dubai Deyaar Development announced that it has attracted 250 million dirhams (about 68 million dollars) from local and foreign investors to buy distressed properties - mainly from the portfolio itself Deyaar.

Many analysts remain skeptical about short-term prospects of the vulture funds. According to them, in many markets may take years before they return to higher levels than before.

Despite the influx of new ads a few large transactions in the sector, experts explain.

"Talk to the creation of many new funds. The issue is that they do not buy, "said Andrew Pratt, managing director of the British housing market of the investment company Grainger.

In recent months, Grainger reported increasing investor interest to Britain from Switzerland, Italy and other EU countries because of the renewed strength of the euro, said Pratt.

However, many of the proposals for luxury homes in bulk failed to materialize. In some cases, lenders prefer to keep the property rather than accept lower offers. However many investors remain cautious, they are of the opinion that prices in many cities have not reached bottom.

"We still are not convinced that it is time to enter the market. We believe that possible new significant reductions in prices, "says Anton de Liu, head of South African investment company YDL. Earlier this year YDL set up a fund for 100 million rand, about 13.6 million dollars for the purchase of distressed properties in Ireland. However, the Fund has not made a deal.

In Miami, however, the situation is different. The so-called "bulk buyers" were paid a total of about 195 million dollars for 766 units in Miami last year, according to Condo Vultures Realty, a three-year consulting company for investors who buy apartments in bulk.

Nino's Fund, recently bought 10 units in a project in Miami, having paid about 156 dollars per square foot, or 1150 euros per square meter. Market price would be between 215 and 225 dollars per square feet for such apartments, says Peter Zalevski of Condo Vultures.

Vulture funds often go bad name, and should not, says Zalevski. "Look at the fund as a lifeguard at the beach. The ship sank and we are going to save.