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Buying a new build appartment a good investment?

Posted: Fri Mar 17, 2023 8:18am
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Joined: 17 Mar 2023


New member here. A few years back we had a villa in Calpe but sold it because it was right next to a (for us) too busy road. This was about 9 yrs ago, we have been on the look for a new house ever since but waited a bit too long to jump on opportunities and with rising prices in the Costa Blanca North we now are focussing more on the more southern regions. We also consider an appartment instead of a house since this is mainly a vacation place for us, not something where we will live permanently. We would rent it out a bit too to cover costs.

Now, we visited the Costa Calida a few days back and found two appartments with 3 bedrooms that interest us a lot. Prices for both are around 280K without VAT/costs. This fits our budget (just). Pretty convinced they're both a good buy (one is close to the sea, one is about 7km away in a golf resort). Will be ready somewhere in 2024.

Question is : is buying an appartment in this price-range a good buy? I know it'll probably rent out pretty well, but that's not our main concern. My main concern is what the resale value would be in about 5-10 years time. I'm 50 now, but when I'm 60 I do plan on buying a villa again to live in Spain permamenently or for a few months a year at least. So I'm a bit worried that buying a new, very nice 310K (costs including) appartment will sell for way less. Or am I wrong and are appartments still getting more expensive each year. There's a lot of building going on in the area, so maybe people will rather buy new than second hand?

All opinions welcome. Really looking into this with an open view. We don't know the area well, it's very different from Calpe/Benissa but also a bit more lively in the winter (Calpe is pretty much dead then).


Posted: Fri Mar 17, 2023 2:19pm


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Posted: Fri Mar 17, 2023 2:19pm

Overall, I think it's a personal decision based on your appetite for risk...

Buying off-plan (particularly) or a new build used to be a potential way to make money on a property. Developers commonly needed the money to fund the development, so were happy to sell for reasonable prices and purchasers expected that, as the development became established and other purchasers who were nervous about buying off-plan started to buy, then prices would rise.

However, in the property market crash of 2007/8 onwards, purchasers who bought off-plan, or very early in the life of a development found that the promised hotel, bars, shops & restaurants that were going to be built, were not built, so they were left with an apartment or villa in a complex, with not much more going on. Plus (especially for golf complexes), if not enough properties are sold (or even built), then there is insufficient income from maintenance / community fees to adequately maintain the complex, golf course, etc. so property prices spiral downwards.

To counter this, do some good research - are the new builds an extension to an already well-established, successful complex with all the amenities you want? How many of the existing properties are unoccupied or for sale?

Renting out a property is not as easy as some people think. You need a licence and then add the costs of advertising, cleaners, key-holders, insurance, commission if using an agency, tax payable on the rental income. You need to get a good estimate of occupancy rates and then also consider that the times of year when you will earn the highest rent are probably the times of year when you want to use the property yourself. Also, some developments don't allow properties to be rented out.

Re-sale, etc. As you know, you need to allow 12%-13% on top of the initial purchase price for costs; and you also need to pay capital gains tax and potentially plusvalia municipal on the price of the sale of the property, plus legal costs, estate agents commission (which is around 3%-5% in Spain) - then the 12%-13% costs for the purchase of your next property. You could easily spend €90k in costs.

An alternative is to spend some time finding your 'forever' villa and then purchase that. This way you avoid 2 x purchase costs and 1 x selling costs, so your €90k costs become, say, €40k (assuming you spend a bit more on the villa than the apartment. You are also 'locking in' the price of the villa, as, if apartment prices go up, it's likely villa prices will too, so would you actually realise any profits? Plus, it kind of doesn't matter if the price of that villa changes as you're not planning on selling it.

It's a nice conundrum to have!

Hope this helps and happy to answer / discuss any other questions...

Good Luck!

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