Call us now on 08717 20 20 10 [UK - Special Low Rate]
Callers from outside the UK: (0034) 952 587 541
Call us now on 08717 20 20 10 [UK - Special Low Rate]
Callers from outside the UK: (0034) 952 587 541
When you purchase property in a new development directly from the plans there are normally very good terms for payment. A pre-arranged mortgage of around 70% is usually available and the purchaser will need to pay only 30% of the purchase price in stage payments over the 2 year construction period. During this construction period the following factors may cause the value of the property to increase.
| INFLATION | General property values should increase with inflation and 5% per per annum would be a reasonable expectation, although in recent years this has been much higher. |
| BEST UNITS SOLD | The best units such as penthouses, corner units, etc. usually sell out quickly, then prices of these units start to increase. |
| INCREASE IN CONFIDENCE | Similarly as sales progress and very few units remain, the promoter increases his original prices and everything else follows |
| CONSTRUCTION PROGRESSES | Once the main structure is up or a show flat is ready, prospective buyers can envisage the finished product, this makes the project more attractive and values continue to increase. |
| COMPLETION | On completion of the project you will have a brand new apartment in a new block with beautiful gardens and pool. This will obviously be worth much more than when it was only a plan and a plot of land. |
| DEVELOPING AREA | If the property is in a generally developing area where projects are in place for golf courses, marinas, 5 star hotels etc. then the overall value of the property in the area will rise as the area projects progress and the area improves. |
The above explains why values increase during the various stages of development and so it would not be unreasonable in a normal market to expect a property to increase in value by a modest 30% during the construction period. In that case if you purchased for € 200,000 off plan you would sell for € 260,000 on completion giving a profit of € 60,000. But as your stage payments have been only 30% i.e. € 60,000 you have in simple terms doubled your money over the 2 years and don't forget that the € 60,000 euros which you invested in stage payments was paid gradually during the two year construction period so the whole was not invested for the whole time. Even after legal fees and taxes you should still have a very healthy profit.
The key factor which makes this possible is the low deposit of 30% required by the promoter which in effect enables you to buy a € 200,000 property for only € 60,000 and hold it for 2 years before taking the deeds and arranging a mortgage. During this time you are receiving the benefit of price increases on the € 200,000 not on your € 60,000.
You do not need to be rich to invest in off-plan properties or buy your own holiday home overseas. You need from as little as around £,20,000 which is paid in small instalments over the 2 year construction period. These payments can be protected by a bank guarantee.
At the end of the two-year period you will own a beautiful brand new apartment in a private development with tropical gardens and pools. This will obviously be worth more than when it was on the drawing board and may have increased in value by as much as 50% of the original promoters price.
You have the choice of selling and taking your profit, or keeping the apartment to enjoy. There will be a pre-arranged mortgage, but if you keep the apartment, the monthly repayments can be normally covered from letting income.
In this way, many small investors have made large profits in recent years.
| 2 bed apartment | € 140,000 | |
| Average purchase costs and taxes | € 10,000 | (depends on country) |
| € 150,000 | ||
| Assume 70% mortgage | € 98,000 | (pre arranged) |
| Investment required | € 52,000 | (over 2 yrs constuction period) |
Typically the € 52,000 investment is paid in stage payments over the two year construction period starting with a deposit of € 3,000.
If you sell on completion, it would be reasonable to expect the original investment of € 52.000 to increase by 50% - 100%.
After completion, mortgage repayments on € 98,000 could normally be covered by letting income.
The information and figures above are for explanatory purposes only. Obviously no guarantee can be given of income or profit achievable and you should always consult your financial advisor before entering into any contract.
As the dust settles on the Costa del Sol after the frantic off-plan dealing of 2003 and 2004 there are real bargains to be had. We have clients who bought at pre-release prices and now wish to sell before completion to avoid closing costs. They are now prepared to sell at bargain prices, not exactly cutting their losses so much as accepting less profit
From the point of view of investors these bargains can be sought out and provide serious options. But it is also still possible to buy in Spain off-plan and expect a good return on completion. The same strategy applies as it did in the rapidly growing market of 2003 but the investor needs to be more discerning in selecting the right properties which are sensibly priced off-plan leaving room for appreciation in the future. Also in Spain investors have the advantage of a well established property market and sound infrastructure which may not be the case in some emerging countries.
With the high price of land and property in coastal regions of the Costa del Sol there is a general increase of interest in inland properties. Here you can have the best of both worlds, a retreat from the hustle and bustle of the coast to the peace and tranquillity of the countryside, and yet still have easy access to all coastal amenities when required. Residents both local Spanish and foreign are buying these properties as a weekend retreat or as a permanent home from which to commute. Land is cheaper and off-plan property can be less than half the price of similar property near the coast.
ONLY 145,000 EUROS
One example is a golf resort only 35 minutes from Malaga in a fast developing area. A proposed fast train link to provide 15 minute commuting to Malaga will enable workers in the city centre to live in this magnificent resort and enjoy a wonderful lifestyle at very low cost. The resort offers 2 or 3 bedroom apartments built on 3 floors and all frontline to the golf course. It also has a 5 star hotel, large sports centre, 2 swimming pools and commercial centre. The license has been granted and apartments are selling fast.
Prices start at 145,000 Euros of which 30% can be paid over a very realistic 3 year construction period. This should prove to be a very sound investment
FROM £ 35,000
A tempting alternative is to try other European destinations. Bulgaria is enjoying a boom similar to that of Spain in recent years.
It requires very little capital to invest in this property boom as Bulgaria is like Spain 25 years ago with very low cost of living and the property prices
There is a new development on the Black Sea near Varna in an unspoiled area with long sandy beaches, 3 new golf courses and a yacht harbour to be built. You can invest in 2 bedroom luxury apartments in this resort from only £ 35,000. Prices are rising fast and helped by Bulgaria’s entry into the European Community.
FROM £41,000
In the Southern part of Italy is an area still untouched by the property boom in the North. It has received massive investment and government funding in recent years laying all the groundwork for another property hotspot. There are direct flights from Stansted to Lamezia.
Here you can buy one bedroom apartments in coastal resorts ready to move in from only £41,000. A 70% mortgage is available and there is excellent letting potential
FROM £23,000
Morocco is only 9 miles from Spain and has the same climate. Its green and mountainous landscape is like an untouched Andalucia.
Its young king has many plans to develop tourism making Morocco an excellent emerging market for investors.
Here, a deposit of only £9,200 will secure you a fully furnished golf apartment ideal for letting. The peak of the letting season in July and August alone can easily produce an income of £6,000.
FROM £19,800
The Red Sea Riviera in Egypt is receiving huge government backed funding to develop luxurious resorts including 330 berth marina, 7 star hotel, world class golf and spa complex and palace residences to make this an area of unmatched opulence.
You can buy, in this breathtaking location, golf apartments overlooking the sea from only £19,800.
Expected rental income is expected in excess of 10% through the resort’s management company.
So why not spread the risk?
At these prices many small investors can afford to pay cash to purchase properties in these exotic locations and dispense with mortgage worries.
You could be the proud owner of holiday apartments all over Europe, purely for investment and the enjoyment of your family and friends, or of course to create additional income from letting.
All the above developments are available though Casa Blanca Real Estate (Tel. 952 587 541) who offer 3 day inspection trips to all of these locations from only £99 per person.