Property for Investment

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This topic contains 24 replies, has 7 voices, and was last updated by Profile photo of Anonymous Anonymous 11 years, 2 months ago.

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  • #51235
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    Anonymous
    Participant

    Hi

    Does anybody have any advice for buying a property in Spain purely for investment purposes?

    Thanks

  • #58755
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    Anonymous
    Participant

    Hi Radley

    I looked into buying a property on Polaris World purely for investment purposes. In fact I placed a 3000€ deposit on a two bed two bath town house at the la Torre development.

    In the end I decided not to proceed for several reasons. The claims made by agents regarding the prospects for capital growth seemed to me wildly optimistic. Even worse are the claims made about buying off plan and selling before completion and making a quick profit. Basically it is very difficult to sell off plan contracts as there will always be a ready supply of new off plan contracts to tempt your prospective purchaser.

    Eventually, the law of supply and demand has to come into play here. For example PW are building 30,000 new properties over the next 10 years in addition to 30 plus other golf course based developments from other builders in Costa Calida alone.

    Eventually there will not be any more Costa’s in Spain that are “the next big thing” and most will follow the demise of Costa Del Sol as a property market.

    The other investment consideration is rentals. Once again agents hype comes to the fore here. I was assured it would be no problem to rent out my property for 30 to 40 weeks per year with weekly rentals up to 1000€ per week. Well with thousands of other similar/identical properties on PW, competion will be fierce to say the least.

    The considered wisdom on this forum is that Spain is a great place to buy a second home, but not an investment property.

    Regards

    Kevin

  • #58761
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    Anonymous
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    As kpw4v says, don’t look for investment in Spain at the moment unless you find an untapped new area.

    Many of us fell for, and some are still falling for Estate Agents’ spiel most of which is complete lies, and steer well away fro the likes of ‘Awful’ Estates who are the worst of a bad bunch. They are similar to time-share with their pressure, and once you are hooked, they dump you and are not interested in re-selling for you.

    Don’t be tempted by their exhibitions and roadshows which will start in earnest soon in the UK.

    There are far too many similar developments along the coast which has been spoilt too. Lots of money is now moving from Spain to countries with better prospects.

  • #58763
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    Anonymous
    Participant

    Thanks for the advice kpw4 and Paul just for future reference Paul could you please tell me who Awful Estates are so i can make a note to avoid them

    Thanks.

  • #58766
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    Anonymous
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    They are often discussed on this site, based in P. Banus, have a large ‘sail’ on their logo, begins with ‘O’ and create ‘waves’.

  • #58769
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    Anonymous
    Participant

    Often
    Caught
    Enticing
    Angry
    Natives

    😀 😉

  • #58770
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    Anonymous
    Participant

    VERY CLEVER !!!

  • #58790
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    Anonymous
    Participant

    Radley….Let’s be clear…if you are looking for a low cash exposure investment that you would hope to liquidate before having to place the final funds…..then this in reality is not investment…but rather speculation. Any investment vehicle offering potentially high returns in a short period is inherently a risk. Live with it. Dont get cauight out by being clouded by greed.This in itself is a flawed philosophy and contrary to Paul’s comments….geography does not really have anything to do with it. Spain is still an excellent property market to invest in if done correctly. There is also no requirement to go looking in the “unchartered” areas either if the client is prepared to adopt a mid to long term oultook. After all we are talking about property here and not a release of shares from a large multi national!

  • #58800
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    Anonymous
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    🙄
    Basically Radley, Guest is not suggesting that the Agent is also being greedy which is a load of Boloney, don’t trust any agent who is currently pushing off-plan investments in this market, you’ll get your fingers burnt as many do, and it will be very ‘long-term’, plus you’ll probably not rent out to cover mortgage payments, even that market is saturated. This site is the only unbiased site on the C. del Sol so be guided by people’s experiences here, and please read the previous Sunday Times links here, before venturing further.

  • #58804
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    Anonymous
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    Hang on! I thought ‘Guest’ made a perfectly valid point that goes to the heart of the confusion surrounding property investing in Spain.

    Too many people, at least until recently, have confused ‘investing in Spanish property’ with ‘speculating in Spanish property’. Speculation is inherently short term and based on nothing but the belief that property values will rise tomorrow, and that someone else will be there to buy at the higher price (also known as ‘greater fool theory’). Investing, on the other hand, is a longer-term business that involves allocating funds across asset classes according to a formula that takes account of risks, expected returns, diversification and maturity. Anyone buying Spanish property off-plan to sell on before completion is not an investor, but a speculator.

    If you are an informed investor, with a sensible investment strategy and goals, then Spanish property can play a role in your diversified investment portfolio, especially if you are better informed than the average punter and know what type of property to buy, and where in Spain to invest (most foreigners haven’t a clue on this front by the way, and just follow the herd). Spanish Property values may fall tomorrow (or fall in certain regions or by types of property) but in the long-term they are likely to deliver reasonable risk-adjusted returns. Property booms and busts will come and go, as they always have done, but over the long term the trend has always been upwards, and is likely to continue to be so.

    However I should say that in my opinion, as one of the very few specialists analysing the residential property market in Spain, Spanish property is not a particularly good investment per se, as holding and transaction costs are too high. If I were a pure investor, and therefore didn’t care whether my funds were tied up in US treasuries or beach-front apartments on the Golden Mile so long as the risk-adjusted returns were sufficient, then I wouldn’t go near Spanish property. For a start British and Irish property has delivered higher returns over the last decade than Spanish property, whilst not suffering from the onerous holding and transaction costs you have to pay Spain. Even so it may pay for a pure investor to have a bit of Spanish residential property in a broad portfolio – just to spread the geographical risk– but then again I doubt it. So if you are a pure investor, not someone looking for a holiday home or principal home in the sun that you also hope will be a good “investment”, then don’t bother with residential property in Spain (this advice is specifically for foreigners, not Spaniards, but that’s another story).

    But if you are someone looking to buy a home in the sunshine and beautiful surroundings of Spain, which you will hold for the medium to long-term and hope will be a good “investment”, then I would certainly encourage you to buy in Spain. In this scenario what does “investment” mean? In my experience, for most people it means buying a property that at the very least won’t lose value, which means they won’t end up out of pocket in real terms (taking into account inflation and transaction costs) when they sell. What do I base this claim on? On the many comments that buyers have made to me, on the surveys I have run, and on the fact that most buyers are in their 50’s, which means their investment priorities are changing from capital accumulation to capital conservation. Of course they will all be delighted if they net 20% p.a., but this is not the overriding concern for most of the British and other foreign buyers who are driving the foreign buyers market in Spain. What they want most of all is home to enjoy living in, coming a close second they don’t want to lose money in the process, and trailing in third place is the desire to make money from the property.

    To sum up, homebuyers get value from their Spanish properties as a home, and though this ‘return on investment’ is difficult to quantify, it will be real and substantial. In my opinion home buyers will also find that the real monetary value of their Spanish properties increase over the long term, and if you put the two together you get a good long-term return on the money invested. Of course this kind of an investment won’t make you a millionaire, but if your goal is to make a million, then you would be rather foolish to try and do it on the back of Spanish property.

    The fact that greedy agents charging obscene commissions are pushing so called investments is irrelevant to this debate. It is true that if you buy through one of these agents you are more likely to pay too much for a poor investment both as a home and as an asset, but that doesn’t undermine the fact that Spanish property can be a good investment if you are buying both as a home and an investment. Anyway, between us, the days of those agents are numbered. Many will go to the wall and commission will drop – it’s just a matter of time.

    Mark

  • #58815
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    Anonymous
    Participant

    Mark…Many thanks for a well composed summary.

    Paul…I understand where you are coming from but unfortunately due to your personal experiences you are I am afraid tainting a lot of good people with the same brush which is totally incorrect for you to do so.

    Not everyone was selling La Reserva de Marbella for a 10% fee and ignoring other better products merely because they would earn less. Not every agency has an incremented commission agreement in place with a developer that sees even higher fees earned the more units they sell.Commissions are how agents pay their bills of course but there are those that will genuinely give a balanced appraisal of several options for the client to consider.
    I am not defending anyone I just believe that this generalisation is somewhat unfair and unwarranted. I have my own reasons for what it’s worth…not to have anything but bad feelings toward your favourite agency in Puerto Banus…but I would not take those out on other people.

  • #58817
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    Anonymous
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    As another victim of the same agents in puerto banus, I can understand why Paul continues to beat the drum. We were told by our developer through one of the horrendous lawyers in Marbella, that the awful agents were being paid 48,000 euros in commission out of our 96,000 euro deposit. 😯 Therefore, IF they were to return our deposit, which they are refusing to do at this point in time, we would only get the balance back!…even though the apartments will never be built. We are only one of many caught up in this situation. As this forum is here for people like us to give our experiences, among other things, I think Paul, myself and others have a right to keep the situation “at the top of the page” so as to speak. There are new people coming on to the Forum all the time. They have a right to know. I wish we had had the benefit if it two years ago. I’m sure we would not be in the situation we are in now. ie. The developers have 96,000+euros of ours and the lawyers have decided to “swallow up 7,000+ euros of ours “in expenses” 😯 😯 😯 They have done almost nothing for their money as the building was never started. I will keep the momentum up on the topic of horrendous agents AND lawyers in SPAIN, however fed up you might feel on hearing it. We are sick about it too! WHEN our situation changes, and we are given back what is rightfully ours, We will be only too delighted to post on here how brilliant our new lawyers (Spanish) have been and that the developers have returned our deposit after 2 years. We live in hope!

  • #58818
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    Anonymous
    Participant

    Sorry to disagree again Mark and Guest, but much of the confusion in the Spanish market is caused by many of the ‘same’ estate agents continually misleading new purchasers which they are still doing.

    I’d love to see the good agents get more exposure and credit but they are being undermined by the big bad boys all the time, and worse still they are not being properly regulated as in the UK. If they were many of the problems caused would go away.

    As for the Coast being a good investment, not at the moment it’s not so my advice is still to look elsewhere which Mark I believe you were saying too in your latest article in the S. Times.

    So, I will re-phrase, not all agents are bad but let them be known to save others falling into the same trap, but the bad ones are still misleading people big time, including Awful.

  • #58823
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    Anonymous
    Participant

    Claire you have a valid point and it really annoys me to read about such cases. I can’t believe that you are having such difficulty over your funds with the developer? I say this as it has been intimated to me that several disgruntled buyers in Los Lagos have received their monies back! This was due to complaints about blocks being built closer than was indicated etc. Yours is not to even be built and still people procrastinate over your money? That is unbelieveable! My sympathies with you and anyone else caught up in that.

  • #58829
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    Anonymous
    Participant

    Claire, I think you are right to keep on the case however others view it. The agent involved and his lawyer have led you down the garden path as they did with us and many others, yet no-one in Spain reprimands them and they continually use the same tactics, it’s a dirty business and it ‘taints’ other agents and lawyers so you would think they could act together more promoting the good side of things.

    The only agents I go on about are Awful Estates and a few of the other big boys who, and their recommended lawyers, and these are the ones for ‘new’ buyers to beware of and learn by ‘our’ experiences.

    It’s frightening that their exhibitions are now beginning to ‘roll’ again in the UK and many more ‘naive’ people will be caught again.

    API nos and motor manufacturer awards mean nothing in the case of Awful, their after-sales stinks too, as I’ve said before, there’s too much money involved for Spain for the boat to be rocked seriously.

    Unfortunately even one of the advertisers now on this site is not ‘squeaky’ clean either, I know of a few who have been misled by them.

    I hope this site truly stays independent and does not begin to rely mainly on advertisers pushing their wares.

  • #58832
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    Anonymous
    Participant

    @paul wrote:

    Unfortunately even one of the advertisers now on this site is not ‘squeaky’ clean either, I know of a few who have been misled by them.

    Come again? Advertisers on this site???? But there aren’t any!

    The only advertising at this website to date has been the typical Google ad-boxes, which are managed by Google – not me – so I have no control over who appears and who doesn’t.

    Please send me a PM with the name of the company you are referring to as not being squeaky clean.

    Mark

  • #58838
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    Anonymous
    Participant

    Guest

    Whilst you have every right to be “annonymous”, I suspect you are in the property business/agency realm. ❓ I say this because how else would you be privy to information about the LOS Lagos situation? 😉 Not that it matters, and, any (adverse ) information about the developers that I can glean is helpful. I spoke to our lawyer yesterday (confirmed by e-mail) and was told that they had spoken to the developers lawyer who reiterated that they would not return our deposit as of the 31st October 2005. Also he stated:

    As you Know there has been a suspension of the licence of block 1-5 because they were trying to build the houses in a form that was not approved by law or by the council (this was passed by the High Court of Andalucía)

    (MY NOTE. Why did our lawyers sign the contract without this approval? They told us they would only sign if everything was OK!!)

    2.-) All this information above was made knowledgeable to Direct Lawyers a year ago.

    (MY NOTE ❗ )

    If we don’t like it, even though the developers are acting illegally under the 1999 Spanish Building Law, our only option is to sue them or wait until October 31st 2006, a year after our contract expires, and hope the bank honours the Bank Guarantee. 🙄

    I am sure NO amount of research would have unearthed a situation such as ours. We are very unfortunate. Hence , I will say again…Spain needs to protect the people who bring a massive revenue to their country by much tighter laws, both in the legal and real estate business. I don’t think that is an unreasonable expectation or comment.

  • #58840
    Profile photo of Anonymous
    Anonymous
    Participant

    Claire…Please don’t hate me but yes I am in the business! Most of your problem I believe stems from the License granted for the Green Hills project being issued…shall I say incorrectly? It was a complete flouting of the 1986 planning act to begin with. A legacy I am afraid from the jesus Gil regime where blind eye and many a back hander were the norm. In fact they were so corrupt that despite the masive amounts of new residents paying in to the local council kitty, the town hall is almost broke! How can that be?However no-one could have expected a license to be revoked.
    Quite early on there was a blip due to the refusal of a license for the proposed golf course in front of the development. The authorities had in recent years spent a lot of money in other areas of Elviria to replace trees that were damaged by hill fires. It would be somewhat odd for the same authorities to grant for other trees to be removed.

    Your situation is a complete nightmare which seems to get worse at evry turn.I do hope you get full satisfaction and before too long.
    Have you tried visiting Leonardo of Eralia and kicking up a fuss in his
    office?

  • #58841
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    Anonymous
    Participant

    Yup, done all of that! In fact it was not Leonardo but the sales director, female, can’t remember her name, that we went to see. Total waste of time! When we went out in May, to try and get to the bottom of all this, we were taken to another development. Whilst we were there, a number of people were roaming about. It was immediately prior to the launch of Eralias latest development. The guy from Ocean Estates that was showing us around, chatted to one chap. ONLY after he had gone did he tell us who he was. Leonardo……… had we known, we would have had a word …or two.. with him!!!!!!!!!!!!

    We did know about the golf course situation before we bought into Greenhills. At the time, we asked many questions regarding this but were told everything else was OK! There was just 1 bunker completed. But you know, there were no trees on the land where the first blocks were to be built, just gorse bushes…and they hadn’t been cut down from the hillside. Maybe around the perimeter ??All the roads were mapped out, but not tarmacked. We also know that the problem stemmed from the Jesus Gil regime. Anyway ..it’s history now.

    There is another lady who recently posted here, and she is in a worse situation, as her and her partner/husband have no Bank Guarantee. They were with another firm of Marbella lawyers.

    Hopefully you are not from the above mentioned agent., who knows??…. but I think I can hazard a guess, if not. If you ARE an agent,does the company name have 4 letters.? 😉 I like to solve mysteries 😀 I don’t expect you to tell me..of course. 😆

  • #58884
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    Anonymous
    Participant

    from Radley

    I am looking to invest in Spanish property rather than speculate in Spanish property. I have chosen to look at property in Spain rather than the currently popular Croatia and Bulgaria as it seems to have a more solid infrastructure and although I may not make the quick buck (which is never guaranteed anyway) I am hoping that it will be a lower risk investment.

    I am looking for a bargain to invest in but is there any way of knowing the good Estate Agents from the bad ones? The market does not seem to be well regulated.

  • #58893
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    Radley, that is what is needed, some way to distinguish the good from the ‘too’ many bad, and as mentioned on another posting, it appears that API nos are no proof of a good agent.

    Of course, I think if there was proper regulation and punishment then the ‘bad’ would be booted out leaving only the good agents but Spain and it’s regulators seems to ignore this aspect.

  • #58902
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    Anonymous
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    I am looking for a bargain and hoping that I manage to find a good agent.
    I read and article in the Telegraph which I have been unable to find the link for which was saying that there was a glut in the market, how a lot of people who were speculating in Spanish property are now unable to complete. This was leading to people putting their properties on the market quite heavily discounted, meaning there were some real bargains to be had.

    Did you happen to catch the article or know any further information about such bargains?

  • #58903
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    Anonymous
    Participant

    Have you looked on the “Private Sales ” part of this forum? Someone was selling a show house on the Duquesa development . Worth a look.

  • #58915
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    Anonymous
    Participant

    I am new to the site and have been reading the posts with interest. I must say the site is really informative.

    We are further up the coast in Almeria. Same type of agents up there as well.
    We were looking for a holiday home and was persuaded to buy off plan. We bought a 3 bed place (for our use) still waiting for completion 2 years on. We also bought another 2 bed apartment for rental/income, the figures given by the agent were so good he was so enthusiatic about the area etc so with our brains left at home went ahead and put a deposit down.We have since found out the area is saturated with holiday rentals and some are finding it difficult to get bookings for 2 months let alone figures quoted in a previous post. Again 2 years on not a brick laid in our so called investment and unlikely in the near furture. We asked the agent to assist in the return of our deposit along with our solicitor, as the builders have broken the contract. The agent just wasn’t interested and was off with us for backing out and now is not helpful at all with our other purchase. All he wanted to get another sale!!!!

    It just goes to show that “some” are only interested when things are going their way and they are earning nice commission.

    I agree with Mark Spain is a great place for a holiday home and long term investment, but to risk all on agents hearsay on letting your property is risky. Do some research don’t just follow the so called £ signs in front of your eyes which is easy to do. Its still not all bad and we’re not put off , just now more causious.

    Axwhale

  • #58917
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    Anonymous
    Participant

    You say you have paid a deposit on a property and after nearly 2 years, not a brick has been laid. Is your contract only for a two year term, as most are? If that is the case you are in the same position as we are. Contract due to expire, no property. Are you going to get a refund? Our developers are refusing to reimburse us, and our lawyers are now advising us to sue them,. Previously, they said not to. We do have a Bank Guarantee, which is dated for October 2006. We only got that in April this year after asking for it to be sent to us. It should have been granted in Oct,2003, when we paid our deposit. Our then lawyers failed to secure it for us at the contract signing, as we were assured they would do.! Trust no one!

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