Oddly enough many thought off-plan buying had fallen out of favour, but we are finding it has a persistent role to play for the overseas property buyer, but varies by country, and location within those countries.
Environmentally-friendly property buyers
Buyers who seek a modern new-build, which conforms to all the latest building regulations and employs the latest energy-saving building materials, can get all of this in an off-plan property. In the dizzy days of the property boom, off-plan attracted speculators, counting on a rising market and its liquidity, to be able to off-load the property at a profit, often before completion, thus avoiding completion costs and stamp duties.
Hotspots where off-plan buying is particularly popular?
In City Centres like Krakow or Warsaw in Poland, off-plan buying is still popular, because buyers can get a new build apartment in a desirable spot, that may not be possible to access outside of a new development, or where possibly only old housing stock might exist. In Istanbul and parts of Turkey it has a role to play because the building standards are higher now and should withstand earthquake scares. In Spain, along the Costa Blanca and other Costas, off-plan can mean getting the latest technology and environmental builds thus keeping running costs down.
What you should know before buying off-plan property?
There is a greater level of risk when buying off-plan, or new build property, which has to be weighed up carefully. A buyer should be clear on the risk-reward trade-off, so they are aware of the implications of the property not being built to the agreed timeframe, or the property not turning out as expected. What’s more, a buyer should be very clear on their own risk profile. If build delays, or the worry of waiting 18 months for the home to be built will cause sleepless nights, then this might not be the type of investment for them. If they want greater security, it might be better for them to pay the 10-15% premium on a ready-build, or go for a resale home.
How to protect your off-plan property investment?
Before buying an investor should be clear who the seller is, so they make sure they are signing contracts with the right person. If they are looking to sell on, they also need to make sure the contract is assignable, before completion. The contract should be checked out by an independent lawyer so that the buyer has all the necessary protections built into the contract, like build-delay penalties and staged payments, contingent on building deliverables.
As a fundamental, the buyer should check the land has building permission, is not in a regulated zone, which may not allow the type of development you are about to buy and that the developer owns the land they intend to build on.
What can you do if property prices fall after exchange?
An investor should do their homework properly before buying, so they know the area they want to buy in and make sure they are buying at sufficient discount, to allow for a small price fall as a contingency. If market values have fallen, there may well be a strong local rental market, which would enable the investor to hold onto the property for a year or two longer, to allow the market dynamics to work through the system. If the buyer is in no hurry to sell, then price drops are less relevant, until they come to want to sell.
If you want to talk through buying off-plan Spanish property or Turkish Property or Polish property, then call us on +44 (0)1932 849 536
Property Venture® is an award-winning, UK-based agency for overseas property who helps people buy investment property and holiday homes in Europe, more easily and safely than they can on their own, because we offer grounded common-sense advice.
The focus is mainly greater Europe: Poland property, UK investments, Spain property, Turkey property, Cyprus property
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