Off Plan Property in Spain

What is an Off Plan Property?
Off Plan Properties (OPP) are properties sold at attractive prices below market value in the initial stage of a new development before the property has been completed.

An Off Plan Property will go through several steps until completion...
The first stage in the development of a new property is to secure the land and complete the paperwork for planning. Approval to build must thereafter be acquired from the proper authorities and federations and once it is granted, the developer must arrange for a bank guarantee (aval*) and subsequent financing for the project. Next, the developer must secure the arrangements for contracts of the project's construction.

At this point (the second stage), many developers begin to market the property to initial phase investors by making a number of properties in the plan available at discounted rates (below market value). These are what would be termed off plan properties. The main reason why off plan properties are sold at discounted rates is that the off plan property buyers are helping the developer financing the building project and as a compensation they pay less for the property. Furthermore it gives the developer a certain guarantee knowing that part of the development is already sold before even starting the building work and some banks even require that a certain amount of units are sold before the construction starts as a condition for financing the project.

Throughout construction and as soon as the necessary discounted units in the project have been reserved, the developer increases the price of the remaining properties in the project. This brings the prices closer to the current market value. The remaining units in the property are then further increased at various phases of the development until they ultimately meet the real market value. The price increases and natural growth of the market during an average two year construction period further increase off-plan returns.

For further information about how oppSpain can help you find your off plan property in Spain see oppSpain services offered or you can take a look at the many Spanish properties we have available.

* SEE Spanish Property Dictionary