Buying into offplan? Fine, as long as you can COMPLETE on it.

Dear all,

Lets get a few things straight here. Profit from selling an off plan contract before completion was only possible if you had a very good unit, and between the years 2001 and 2004. Value of a new built was rising enough in those days to off set costs and indeed some reasonable profit could be made. However, in 2005, capital growth in the Malaga region dropped by 7%, and is now in fact around the 4% PA. The famous 'Builders Increases' which would help boost your profits, are now not materialising, and in quite a few developments we are seeing prise reductions. Furthermore, the Spanish government has as good as closed the loop hole which allowed spectulation on this scale to carry on, and are making it very difficult to sell a unit on before completion through changes in the tax code etc. The market has changed, and properties have become a long term investment. And as long as the sun shines here, the Costa del Sol will remain one of the most desirable areas of Europe to own a property, which will show a healthy return in a few years.

There are some great projects out there, and if you are buying, remember a few very logical things, if you want to rent it out, think of the End User: Who is going to rent my property and why? Check what rental market you are going for, and research the net to see what properties can earn in your area. Be aware of the term Guaranteed Rental.

When selling it on at a later stage, you need to think on the same lines. Why would someone buy my property? If you invested into a mediocre product inland, in the wrong location, you will have little chance of renting it out, or seeing a great deal of growth on it. Location, location, location.

Check the re-sale market, as prices are coming down in most areas because of over supply and vendors having made financial commitments out of their reach now with rising interest rates both in the UK and the Euro zone, there are some good opportunities here for the smart buyer.

Yours,

Ivo, asesor fiscal, Marbella

Ivo

Good summary

Whilst experienced investors were attracted to the 'flip' market there were many who were talked into it by bullish agents but the world moves on

Off plan in Spain in the right location is still a good buy medium to long term

and I agree that you should always be able to finance the completion and that was a sensible precaution when the ''flip' market was good.....sometimes it is better to complete and sell after the development is finished to maximise your return 

And in the right location with good marketing you can make a rental return

Costa Spain has a very big advantage

The best weather in winter

Lots of facilities for Sports 

Huge catchment from northern EU Russia etc

Cheap flights

Strong Spanish economy

So whilst you have to take note of the current market if you are selective and use the right agents you will make a good return

If you are buying just for a holiday home or retirement applying the same principles you will have not only a great life style out of your Spanish home but a good investment

Even in the Costa del Sol but for example in the Costa Almeria between Aguilas and Mojacar property is circa half the price compared with Costa del Sol

But with all the new infrastructure and growing awareness of it's attractions prices will catch up so in this location the growth potential is excellent

Again you have to pick your location

eg You can get an off plan 2 bed 2 bath apartment 100m from yellow sand beach on new golf course from 177.400 € or 25 mins inland 2 bed 2 bath villa on 400m2 plots from 179.000 €

No but I suspect that they may reduce to Almeria during the winter

I often use Ryanair to Granada from Liverpool as they are cheaper... drive just over 2 hours

Flight are not always cheap from the NW to Almeria although I think Monarch are now flying all year from Manchester 

Acces has recently improved because the motorway from Cartagena to Vera is now open so the drive time is circ 45 mins to Vera and Mojacar form San Javier airport

The new airport at Corvera will also be circa 45 mins

Ryanair is unlikley to stop flying to Mercia

So in general access to the area between Aguilas and Mojacar has improved

It is also very popular with the Spanish and the new AVE from Mercia to Almeria will stop in Vera Playa.....just near the holiday home of the Spanish Prime Minister   

Hence the potential

Hi Brian someone said to me the other day that there is a rumour Ryan Air are pulling their flights into your area and someone had cut theirs by 40% -  two tour operators pulling out of Almeria too? Know anything about either of those?

I read that too on another forum, and it was on the Costa Almeria News website. It also said that Thomson and First Choice were pulling out of the Almeria region. Something about loads of hotels being given priority over economic development??? Dunno, can't remember now.

Mark

There is a proposal for more Hotel development because the standard of Hotels in general are not good and I suspect not up to the standard required by travel companies

The local government appears to want to concentrate on low rise [ no more than 3 story] home developments but regionally and national it is considered that to balance the tourist trade you need good hotels not just for the English but Spanish and other EU 

So it will be interesting to see what happens.....I suspect economic growth followed by property price growth