bank guarantee on spanish developments banks in spain buy off-plan in spain developments in spain new developments spain property investment spain spanish developers spanish property a
Despite the current recessionary times and the insecurity of several leading Spanish developers, there is still a small percentage of prospective buyers that is keen to invest in off-plan Spanish property.
So is buying off-plan in Spain such a bad idea?
There are several things that you should consider. We will deal with the first 2 here:
FINANCIAL SECURITY
Well, first of all, you need to be very careful. If you are thinking of investing off-plan, you need to be certain in the knowledge that your funds will be secure.
Most developers in Spain will demand staged payments during construction that could amount to between 30% and 50% of the purchase price. By law, a developer will have a bank guarantee that protects any buyer in the event that a developer runs into trouble. That is all well and good….unless the bank itself runs into even bigger trouble – whoever would have thought THAT could happen! So as well as checking out the Spanish developer, you will also need to ask your lawyer to check out the bank that will be issuing the bank guarantee.
DEMAND
Secondly, you need to assess the feasibility of the project that you are investing in. Check to see how many units have already been sold and how active the developer is in marketing the product. The success of their sales activity is paramount to the security of your investment. However appealing it may sound to have the entire development to yourself at completion, this would be an absolute disaster for the developers, and to be honest, the project would be abandoned long before completion if there were no client funds pouring in to finance the build.
More to follow in the next article…
commentsGareth
said
Hi I am an agent on the Costa Blanca, and the sales of off-plan properties has fallen off a cliff. Firstly, no client wants to fix their price and wait for 2 years for completion in a market that may still have further to fall, and secondly, very few developers are brave anough to embark on a project at the moment, without the certainty of cashflow from sales.
share your opinion 
