Buying a property is not an easy decision to take and if you are not even able to see the finished product like when buying a property off-plan it even makes the decision more difficult. In order to decide which off plan property is the right one for you, you need to keep in mind a variety of factors.
First you should seriously investigate what type of property you are interested in buying (size, location, views, etc) and you should also make clear from the beginning the purpose of buying the property. Is it primary an investment, are you planning to live there yourself, are you planning to rent it out?
If you are buying the property as an investment you will have to take other issues into consideration compared to a buyer looking for a place to settle down in Spain. Investors will have to focus more on the price and how easy it would be to re-sell whereas private buyers will have to take into consideration facts like whether they like the area to live in, access to jobs or a school for the children, etc.
When you have made clear what type of property you are looking for and your reasons for buying it the time has come to start the search for the right development. In our property database you can find information about off-plan properties all over Spain see Spain Property Search.
In the search for the right off-plan property you will have to be aware of the fact that you will not be able to see the results of your investment - the finished property - for a relatively long amount of time. There exist thousands of new developments all over Spain and not all promotions offer the same quality and guarantees.
We can therefore highly recommend seeking advice from professionals. Apart from the legal advice about building license, bank guarantee, property deeds, etc it can also be recommend to seek further information about what the developer have build before and the satisfaction of former clients.
There are relatively important differences between off plan and resale properties. One of them is the seller: for off plan it is a developer and for second hand properties it is a private owner. In Spain off plan selling is becoming quite popular, thus you will not have any difficulty in finding a developer anywhere in the country, of varied nationalities, with more or less remarkable reputations. You should be vigilant in your search; although the law tries to control this sector through guarantees and permits, there are still many developers around who do a very questionable job. Unless you are an expert about construction, it is highly recommended that you inform yourself thoroughly about the constructor's and promoter's past works, legal and financial details before you purchase a property off plan. This type of problem is not present when you look for a second hand Spanish home. You will not have to make sure about licenses or go through too much paperwork. You will know that the construction was successful as you can see the house standing in front of you. There is the security that someone else has lived in it so that the house is clear of major unsolvable defects.
Another variance is the way a certain price is determined for a Spanish real estate. In off
plan the developer wants to sell as many properties as possible in the new development before
starting the construction work. This is why prices for the off plan properties will initially be well
below market value in order to attract buyers. Construction can take up to 3 years depending
on the scale of the project. While construction takes place, the prices of the properties that
are not sold will progressively increase until they reach market value. If you consider that
property prices in Spain increase approx 5% each year, then you can end up with quite interesting
returns. (the 2007 price increase for Spanish property was 4,8% the lowest in more than 10 years
- see the sections Property News & Property
Articles for more information).
In other words, in addition to the low price at which you will have purchased a property in a new development, your property's value will have increased by the average increase of the real estate market. However, you will not be able to see the final result for a few years; if this represents a source of worry for you, you might want to consider second hand properties or buy a property in a new development just before it is finished.
Finally, when starting to look for an off plan project for interesting deals you need to keep in mind a precise idea of what you want. Developers will provide you with all types of brochures, building standards, plans for each property, technical drawings and descriptions with all the information you will need. This facilitates your choice quite a lot and saves you time relative to buying a second hand property where not as much information is provided by the sellers (i.e. you must visit a lot of properties before you can make a choice). If you are really interested in something after looking at all the information available, then you can ask to visit the promotion. Besides, as so many off plan Spanish real estates are available in the market you will have a wide range for choice of properties without having to bother about failing installations or other potential problems that can arise when purchasing second hand.
If you are looking to buy Off Plan Property as investment please see the next section OPP as an Investment.
Copyright © 2004 Spain Real Estate Index. All rights reserved.