Some
clients does not have to get access to their property straight
away and there are some advantages of buying something under
construction, please do not hesitate to consult us for more
information.
English, German and Spanish developers very often offer clients
the possibility to buy properties on a new development before
and during the construction phase on Majorca. By doing so
they improve their cash flow and reduce their risk. It is
called buying off plan and presents an excellent investment
opportunity.
The demand on properties on Majorca has
increased steadily over the years. Majorca is for many UK
and other international residents the number one choice for
having a “second home” either for private use
and/or as an investment.
Due to restrictions on new developments on
the Majorcan Island you will find a limited exclusive number
of developments left. The ones on the market now are a mix
of fabulous front line developments with exceptional sea view
to prestigious golfing developments.
What are the advantages of off–plan buying?
1. Price
The main advantage is the price. If you buy early in the development
phase you have the advantaged of choosing the best position
in the development to a lower price than in later stages.
Many developers sell to a lower price in the early development
stages to increase cash flow and finance their project. Another
advantage is the normal increased value of the property.
We know from experience that prices rise with
10-20% per year. Since you buy the property in its early development
stage, below its true market value, you can make significant
profits in a short term view. The mortgage rate in Spain is
today highly competitive with other European countries. It
offers you an excellent investment potential in a still rising
market. The initial capital investment is low. You can make
good earnings on rentals in a medium to long term span.
2. Better standard and personalization
If you invest in a property under construction you will acquire
a property according to latest building standard and materials.
A lot of constructors do also allow their customers to personalize
in terms of choice of colors etc, depending on where they
are in the construction phase.
What is the initial investment buying off plan?
If you decide to go ahead you normally make a deposit on 1%
of the value and the property will be taken off the market
for 14 days -28 days. During this time you will have time
to arrange with mortgages and paper work. The remainder of
the price is due upon completion.
Financing
When you buy a property under construction
there is very often a payment scheme to follow. The last payment
is proportionally the largest one and is very often up to
70% of the total investment. This can be a financial advantage
for some clients.
When you buy a property from a developer you
normally get a year’s guarantee of minor damages and
faults. Apart from this there is also, by Spanish law, a 10
year guarantee of major construction faults.
All your payments to the developer are also
guaranteed by a bank guarantee. Should something unexpected
happen (e.g. the construction is not finished or it’s
very delayed) you are guaranteed your money back plus interest
by law.
basic
Majorca information | Majorca
Property | Facts
about Majorca| Palma
de Majorca|
Why
buy a house in Majorca|
Property
Majorca buying off-plan| Majorca
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Majorca
Buyers Guide| Majorca
Location Guide| Investment
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