Investing in Spanish Property
Because of the recent recession, many property developments in many countries underwent financial difficulties. One of the hardest hit is Spain, which is currently implementing many austerity measures to prop up its economy. Until such time, the economy of Spain will be in the doldrums which means investing in Spanish property could be a smart move for consumers.
One of the most affected markets in the country is the property development sector of the country. During its heyday, there was a gold rush of properties being built all throughout the country. Much of the financing came from offshore clients or foreign investors seeking to have a roof over their head in the Spanish vistas. Because of the rush, many of the developments were called off-plan or simply, to be built properties. When the global recession hit, many of these developments suddenly went belly up.
There are many reasons why many off-plan developments went bankrupt or were discontinued in Spain. The first reason is the drying up of its foreign investment pipeline, as many individual purchasers were unable to forward the funds in accordance with their investment plan. Since the expenses of the development could not be sustained, many of the property developers left their projects incomplete. The second reason is the sudden increase in interest rates made the investment unable to cover the development, as the cost of the debt to finance the project became too expensive. The third reason, albeit illegal, is that the profit interest of the developers was paramount over the interest of the investors.
The good thing about all this, the property sector, especially the off plan segment, has become a buyer’s market. This means that the purchaser has many options to choose from at prices lower than previous levels. In investing in this scenario, you need to follow some tips regarding investing on off-plan properties in Spain.
- Do your due diligence. Before paying your hard-earned money, you need to do your due diligence. This means you need to thoroughly review the state, the finances, the ownership as well as condition of the property you have set your sites on. Since this is off-plan, you are essentially stepping in to invest on a soon to become project, so you need to be adequately advised on all the aspects of the property and investment to be made.
- Check you finances. Since these are financially troubled times, you need to be very aware of the purchase you have made, the interest you need to pay and all the other obligations you need to fulfill to make your investment a reality. You must be aware of your income as well as the costs of transfer in order to keep your head above water when you invest in your dream vacation home.
- Negotiate at all times. Because it is a buyer’s market, you can leverage for lower amounts or even longer terms for your gain in the investment. Since you cannot be on the ground at all times, it would be best to engage the services of a representative in your transactions who would negotiate for and on your behalf for your property purchase.
As can be seen, now is the time to consider investing ion Spanish property. The economy is still trying to recover, thus allowing for lower prices in many sectors, especially in off-plan property investment. If you do your homework, plan ahead and negotiate properly, you would be able to own property in one of the most beautiful and mystical places in the world, Spain.
For a more comprehensive discussion on purchasing property, visit the International Property Forum.