Facts about the Spanish Property Market
Listed below are a few examples of some conflicting stories you may have heard:
People making a fortune from off-plan investments in Spain
People buying off-plan properties but made little or no profit
Its a buyersmarket and the perfect time to pick up a genuine bargain
The market is saturated with off-plan investors selling just before completion
In fact, all of the above are true! We hope this website helps you to understand the true facts about the Spanish Property Market.
The market in Spain has now matured and although there are still fabulous off-plan property investments available, a new and exciting opportunity has arisen for investors, DISTRESSED SALES (properties being sold for approximately 10-30% under the current market value).
About 4 years ago, off-plan property investment was something only practised by the hard-core investor or entrepreneur and was extremely profitable. However, with the internet and television programmes making off-plan investment easily understandable and available to the general public, the market is now somewhat saturated with new properties for sale.
The off-plan concept was/is to buy property with developers offering a discounted price if the investor exchanged at planning stage (before being built). Many investors bought with the sole intention of selling 2 years later at an increased price of approximately 20-30%. With investors only paying 30% before completion, returns were and can still sometimes be very profitable. The benefits of the investors selling before completion were that tax and completion costs, could usually be avoided.
However, with so many investors trying to sell properties in each development, at the same time, just before completion, the market becomes saturated on that particular development. This results in adverse effects on their selling price. Therefore, many investors have now decided to keep their properties for “Buy To Let” purposes with rent subsidising mortgage payments until they feel the time is right to sell for maximum profit.
Some investors however, have a desperate need to sell before completion as either;
Their circumstances have dramatically changed, or
They exchanged on properties they could not financially complete on with the sole intention of flipping (selling before completion)
In the closing weeks prior to completion, these property owners unable to complete on their purchase are forced to make a decision, either;
Sell for far less than the market value (DISTRESSED SALE)
Have the property repossessed by the Developer and loose their 30% deposit.