Demand For Off-Plan Homes Returns As Stock Runs Out

6 June 2016 – El Economista

The purchase of off-plan homes has returned to the stage after years of lethargy, driven by: the absorption of residential stock in many areas of Spain; the need for new homes; the improvement in the economy and in future employment; and the clear recovery of the real estate sector.

According to the President of the property developers’ association APCE, Juan Antonio Gómez-Pintado, the “stock” of homes, which has weighed down (on the sector) since the crisis, has been gradually absorbed and in certain areas, such as Madrid, Barcelona and the Costa del Sol, it is practically non-existent. (…).

The market, in general, has a view that residential stock has disappeared in many areas, leading to the activation of prices and the construction of new homes, said the CEO of Quabit, Javier M. Prieta. He added that housing permits soared by 42.5% in 2015, whereby confirming the need for new homes.

Exponential growth

Since 2013, the number of off-plan purchases has grown exponentially, especially in the medium-high and high end residential segment, according to the Director of the Development at Gilmar, Óscar Ochoa, who highlighted that after many years of crisis, there is a latent demand for newly built homes.

At present, buyers are looking to purchase homes to reposition themselves, say sources at Tinsa, who consider that one of the major challenges in the residential market will be to achieve the recovery of the employment market and the conditions that allow for that pent-up demand to become solvent.

Sources at Neinor Homes have also observed a significant revitalisation of the market in the last year and assure that off-plan buyers are looking for a type of home that has not been built yet or that was hard to find until now. Clients are very demanding and well-informed about what their homes should be like.

The property developer Vía Célere has also detected a substantial increase in off-plan sales, both in Madrid, where 90% of Residencial Célere Adelgas II has been sold with still a year to go before it is completed, and in Barcelona, where half of Residencial Célere Magoria, which was launched at the end of 2015, has already been sold.

These are clients who do not need a home in the short term and who are able to invest more in exchange for a new home in which they will not have to invest anything over the long term, said the Director of Gilmar. (…).

Clients who buy off-plan should always verify that the project has a building licence, that the contract includes a delivery date and that the amounts paid during the construction process are guaranteed by some kind of insurance policy or aval, say sources at APCE.

In terms of the benefits of buying off-plan, price is a fundamental aspect, as well as the possibility of customising the home, say sources in the sector.

Sources at Tinsa, APCE, Quabit, Gilmar, Vía Célere and Neinor all agree that off-plan buyers should only purchase from transparent and solvent firms with experience in the sector, and they recommend steering clear of apparent bargains. Off-plan buyers should also check that the property developer in question already owns the land on which the property is going to be built or that an aval has been constituted for the entire development.

Off-plan buyers should also demand a guaranteed individual aval to allow them to recover monies paid in the event that their homes are not handed over in the end.

Original story: El Economista

Translation: Carmel Drake

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