An island of misfit toys - 19th May -

An island of misfit toys

An Island of Misfit Toys

One of my favourite sports films is Moneyball. The combination of sport and statistics is likely to get any actuary excited!

There’s a scene where Peter Brand (Jonah Hill) is explaining to the Oakland Athletic’s General Manager Billy Beane (Brad Pitt) how to spot undervalued players. He describes how players get overlooked due to biases and perceived flaws such as age, personality or appearance.

To see the clip – click HERE.

One reason that valuations can differ is that the market for baseball players is not perfect. Every player is unique, there’s a lack of market information and valuations are often based on perceptions and judgement rather than facts.

These market imperfections also exist in the property market. Age, character and appearance can all have an impact on a property’s value that results in anomalies in the market value. Examples include new properties where customers are prepared to pay more because the property contains modern, stylish features. Off-plan property is often at a material discount because today’s consumer generally wants everything here and now. It often pays to be patient.

Another good example is this property in Capo Greco which is likely to be some €100,000 undervalued because of its age and it needs some modernisation. But how much does a new kitchen, bathrooms and a lick of paint cost?

On an island that already looks undervalued,  the property market is some 30% below its peak value of 2008, in an area that is relatively undervalued compared to the average, this looks like a real opportunity.

If you would like to discuss how we can help you meet your investment objectives – please contact us.

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