'Off plan' purchases have seen spectacular returns over the last couple of years, especially on the Costa Del Sol.

Buying 'Off Plan' means reserving a property on a new development before the property is completed, often before construction has started and on some occasions before the 'Licencia de obra' (licence to build) has been granted. The developer is obviously keen to sell as many properties as early as possible to minimise the risk to themselves and to obtain better interest rates on their development loans from banks and investors. To help sell the properties at this early stage the prices are normally extremely competitive for the reason above and also because there is nothing to show potential purchasers except a floor plan and artists impressions of the finished development.

The real key to why buying 'Off Plan' can be such a good investment lies in the fact that normally you only have to pay 20% of the purchase price during the construction programme and the rest can be financed on a 80% mortgage.

Let us assume that you sell the property in March 2006 just before completion and that you sell for 130,000 euros (this is a much lower return than has been achieved in recent years)
Your profit is 30,000 euros which is obviously on the 100,000 euros asking price is a 30% return but remember all you have had to pay is a 30,000 euros deposit so your actual return on cash invested is 100%.

Property Developments in Spain, Property Investments, Off-Plan Property in Spain.