Why are so many foreigners buying off-plan?

Of the approximately 700,000 new properties started in Spain during 2004, many of them on the Spanish costas, the vast majority will have been sold off-plan. And a recent study by Barclays Bank found that the British acquired 25% of all new Spanish coastal properties.

Spanish developers like to sell off plan as it reduces their risks and enables them to finance part of the project with someone else’s money. Agents like to sell off-plan Spanish property as developers often pay juicy commissions – though this varies significantly by region – and one professional supplier offers many properties, which reduces costs. Off-plan sales also make it easier for agents to take the commission and run, not having to worry about the irksome needs of a buyer who takes possession many months later. Estate agents in Spain particularly like selling off-plan ‘investments’ to naïve amateur speculators as it’s the easiest sale in the business (make some claims about guaranteed high-returns and bang, your in.)

But what’s in it for the buyer? Why the enormous popularity of buying off-plan property in Spain? There is no doubt that a significant proportion of foreigners buying off-plan property in Spain are amateur speculators looking to make a risk-free, high-return killing by selling on the purchase contract before completion (the game is up on this one by the way). Even so 30% or more of foreigners looking for a holiday home in Spain plan to buy off plan. Though the idea of committing hundreds of thousands of Euros on the basis of plans and specifications will unnerve buyers who would rather see a finished property before handing over the dinero, a large minority are more than happy to do so. For them, it would seem the advantages outweigh the disadvantages.