What is an off plan property?

Firstly buying off plan either in the UK or in Spain is not a new concept!

The developer of a building project is always keen to sell as many properties as early as possible in order to improve cash flow, minimize development loans from banks and to give the project some forward momentum. At this stage, prospective investors only have plans, computer simulations, models and a plot to view.

Therefore a certain amount of vision is required. To compensate for this the developer sells “off plan” at extremely competitive prices, often as much as 30% below current market value.

Additionally, it is standard practice in Spain for developers to re-evaluate the market value of a new project periodically throughout construction.

This is dependent upon the unit rate of sale within the project together with seasonal buying patterns and translates to approximately 3 price increases during the construction period. (Clearly, maximum return on investment will be achieved if investment occurs following the projects initial release).

Typically, you only have to invest 30% of the purchase price as a deposit with the remainder due at project completion. This is where the true value as an investor is contained as your potential profit will be based on the total value of the property and not just the deposit invested.

For a more in depth look see our example.

Next Page- How long will it be before I can expect to see a return on my investment?

Page 4