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OFF-PLAN Investment in the future

03/07/2008

It appears that the 'good days' are passing by as the 'balance' tips towards 'even' and the market looks to be levelling off. We'll all have seen and heard of those 'wise after the event' who criticise marketing agents for letting buyers invest more than they could afford. At the time of the investment two years ago all the evidence will have showed that people had made substantial short-term gains in the two or three years before. The agents had been instructed to sell the properties for the developers who were paying their commission on success. Nobody could say for sure that the market would not continue to rise, but all would be wary of saying it would fall, as those predictions had been false in the past. So if a buyer was there with his/her money, could they justify saying "NO"? And when it comes down to it, most buyers then will still have made money when they sell now. It just won't be as much as they had anticipated. As 'the market' can't be hit out at, there must be someone to 'blame' and so the marketing agent becomes the easy target. They should have known what everybody else did not - that the market was going to level out and the investor could be left having to complete on the contract that the investor had signed. It's as if the agent as a company had promised to pay a profit to the investor and is reneging on that promises. That of course is not the case at all.

A UK Chartered Surveyor who had seen an adverse newspaper article and was worried about the ethics of advising people to invest here has just contacted me. I told him of much inaccuracy, the negotiators personal 'over enthusiastic selling' and buyer's recklessness. Profits will probably not be as high as before and its best to look at off-plan as a cheap price longer-term purchase rather than the speculative short-term 'in-out' profit machine that it had been for some. On the evidence of the market now, if the location and product is right, profits can still be made. But who knows what will be happening in 18 month's time when the keys are to be handed over? There will undoubtedly be more properties built as developments underway now are completed. Will there be another wave under construction? Will there be a continuation of the stream of buyers from UK and the rest of Northern Europe? Will the world economy be carrying on as before? Who knows for certain the answers to any of these questions? Nobody. And that's what property speculation, as that's what it is, is all about. If it were as certain a return as money in the bank, the margins would be much lower. But it's not at all certain and it's dependent upon many variables, so the profit margin has to be higher to attract the 'gambler'. However, it's not like a game of cards as, if you 'lose', you will at least have a property and the probability that another 'wave' will come along and you'll be able to sell on the crest of that one.

So what can we advise the potential property investor now? The sun will always shine and the balmy evening breezes will still come off a sparkling sea. Beautiful high spec. buildings will still be there looking over the glorious mountain landscapes of a land of 'milk and honey'. The people and their culture will still be romantic and the wine and gastronomy able to satisfy all tastes. So, unless peoples' attitude to physical pleasures changes completely, there will still be a demand for living here. And that demand will have to be met by properties and the best, at every level of the market, will always sell. Aim for the best in location and quality and there will always be buyers there. As for the future price, that depends upon a world full of uncertainties and 'events', and nobody can promise anything.

P.S. It just shows that the newspaper experience of one agency reflects upon the whole market on coast and us all working here, justly or not. For centuries Spain has had a 'black' image in northern Europe. For generations it has been an easy target for the media. It's only by scrupulous emphasis on standards that more unsavoury stories won't be available. And that is the responsibility of us all here. A hit at one is a hit at us all.

Submitted to 'Property World' and 'The Property Advertiser' for October 2004

Copyright
Campbell D Ferguson
F.R.I.C.S. Chartered Surveyor
Survey Spain

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