Content:
- Pros and cons of off-plan investments
- Real estate in Spain: off-plan or ready-made housing
- Examples of off-plan and pre-launch investments
- We will help you choose a property in Spain
Pros and cons of off-plan investments
The housing market is undergoing a recovery period partly due to housing subsidies and the state housing plan for 2018-2021, which according to real estate experts, increases the demand for new homes by about 120,000-140,000 units per year. Due to this demand, new property prices will increase by about 4-6%.
Off-plan property is the purchase of housing before its completion at the initial stages or even at the project phase. In recent years, off-plan investing has become popular in Spain for several reasons.
Advantages of buying an off-plan apartment
Economy
The benefits of purchasing an off-plan house are numerous. The main reason is savings which can reach 15% in the market. For example, if you buy an apartment for an average of 150,000 euro with a 15% discount, your savings are 22,500 euro. This can be spent on paperwork, notaries, or home improvement.
When buying an off-plan apartment, you pay only the final cost of the housing without additional surcharges that accumulate every year due to market demand.
Payment flexibility
There are various advantages. One of the most interesting is the flexibility to pay fees throughout the construction. For example, when buying a finished property, cash may be required for payments and unexpected expenses such as repairs, notary services, or amounts that the bank does not cover.
Choosing the best quality real estate
Buying an off-plan allows you to choose houses, garages, or warehouses of good quality that are most suitable for the buyer.
High-floor penthouses and apartments are the most popular with clients due to their many advantages.
Control of the construction process
It is necessary to renovate houses according to the customer's taste. When buying an off-plan home, you can monitor the work process and adjust it.
Disadvantages of off-plan investments and precautions
All that glitters is not gold, and buying an off-plan property is no exception. This system has pros and cons. Next, we will tell you how to eliminate negative consequences when buying an off-plan property.
- To avoid fraud, an analysis of the real estate situation is the first step. It is necessary to check the documentation, drawings, technical cards, dimensions, and information about the house.
- An analysis of the solvency and responsibility of the developer. If everything is fine, a private sales contract is signed with insurance and warranty clauses.
- An effective investment security system is a return guarantee in the contract. It is preferable to indicate the amounts and control the money transferred to the developer's account.
- The construction may take several years so it is necessary to have a place of residence during the construction of the apartment.
Real estate in Spain: off-plan or ready-made housing
People have doubts when buying an apartment in new buildings in Spain as the real estate market offers a wide range of off-plan and ready-made housing.
Let us consider the features of ready-made housing.
Some people prefer buying a ready-made new home. The buyer can see the result before making a decision and he can check the actual features of the house like the layout, dimensions, etc.
The main advantage of ready-made new housing is that it is ready to move into. Another advantage is that the buyer can get a mortgage to pay for the house.
Due to this factor, the future owners of the finished property do not pay for the valuation used to determine the actual property price. Moreover, when buying a new ready-made apartment, you can talk to the neighbors who live in the building.
Advantages of investing in pre-launch
The developer usually has a plan that has not yet been approved by regulatory authorities. He announces the start of construction and buyers can invest in the pre-launch project at this stage.
Pre-launch is a project at an early construction stage, before launching the sales process, when the developer expects the project to be approved. When buyers pay for the booking, the developer has some money to build the project after obtaining permission. Thus, the construction company may not have to depend on loans or postpone the actual launch of the project for lack of sufficient funds.
What are the advantages of investing in a pre-launch project?
Pre-launch at reduced prices
One of the main advantages of investing in real estate before the launch is that its price will be lower by 10-40% than after the launch.
Making a profit
If desired, the purchased project can be sold at the current market rate after its construction and receive sufficient profit.
Choosing more options
If the buyer orders an apartment at the pre-launch phase, he can choose the best option that meets the buyer's requirements.
Faster project start-up and completion
Since the housing units are sold at the pre-launch stage and the capital is available through the pre-booking amounts paid by investors, projects will likely be started and completed quickly after obtaining permits.
What are the risks or disadvantages of a pre-launch investment?
A favorable price, of course, will entail certain risks. At the pre-launch stage, the developer does not have permits from the relevant government authorities. This creates certain risks for the investor.
The plan can be changed
The initial plan for pre-booking may change during the approval process. Adjustments may be minor or significant depending on the circumstances.
The project may be postponed
The project approval process may take an indefinite period as there are many permits from various authorities that are required.
The project can be canceled
If a developer in Spain fails to get approval, the project may be canceled. This will also happen if the developer cannot raise enough funds for construction.
The developer may be denied bank loans
Financial institutions may refuse to receive mortgages so the construction may be canceled. It is difficult to find buyers who will not use bank loans to purchase this property.
Who can invest in pre-launch?
Since there are both pros and cons in investing in real estate before the project is launched, not everyone can invest their money and enjoy these advantages.
- If there is no certainty of financial safety and some degree of risk, insurance is desirable.
- Investment in a pre-launch project is suitable for those who want to buy a second home but they have a primary residence.
- You can invest in real estate before the launch if you have additional funds and a desire to play in the real estate market.
It is important to exercise some caution when purchasing a pre-launch property.
- Find out that the developer is reliable; examine his track record and experience to see if he can be trusted.
- Analyze the location and infrastructure when buying any real estate.
- Find out that you have the necessary documents including the land title document.
- Get a copy of the construction permit certificate.
- Get a copy of the document with instructions that the developer must follow during construction.
Examples of off-plan and pre-launch investments
The off-plan property is suitable for those buyers who can wait, have a limited budget, or want to save money.
You can buy pre-launch real estate if you know how successful the project is and how reliable the developer is.
What are the advantages of purchasing a property during the construction stages, or before the construction is completed in Spain?
One of the most important investments for a person or a family is their housing. Therefore, it is necessary to analyze all the factors when purchasing real estate.
The budget and waiting time are calculated for this purpose. These factors influence the choice of the project status. So, the difference between the price of real estate under construction, pre-launch, or off-plan is between 10 and 15%.
Housing at the initial stage of construction
Buying such housing can lead to savings of up to 30% of the final price as the price will increase as the housing is built.
In addition, you can get special discounts on the first installment or bonuses. The deadlines vary from company to company; the average waiting time is between 1 and 2 years.
Housing under construction
When buying a home under construction, you can save up to 15%. Other advantages are the numerous options, especially in interior decoration and equipment. The construction completion date is shorter than the initial stage as the pre-sale has already been completed. The average waiting time is 6 months to 1 year depending on the developer.
Ready-made housing
If you want to rent immediately or move quickly, a ready-made home is a perfect choice as you are purchasing a finished property. Thus, you can avoid many risks. You will also see the result in design and infrastructure.
We will help you choose a property in Spain
An expert's help in buying a home will help you find the best solution. On Spain-Real.Estate, you can get individual consultations on real estate. The specialists are responsible for selecting the residential projects that meet the buyer's needs, checking all documentation, and accompanying the customer throughout the purchase process.