Off-plan property purchases in Spain were often viewed as the optimum way to gain 18 months of capital appreciation without so much as applying for a mortgage. In the early years of this millennium when capital appreciation was 15 or 20 per cent per annum, off-plan development was a very attractive proposition, but with the recent property downturn in Spain is there still any point in buying off-plan?

Iain Crozier, Sales Manager for Costa del Sol agent Duchy Estates , can certainly see the positive side of off-plan for both developers and buyers: "The developer likes early-bird purchasers as their deposits not only provide a bit of cash to get the heavy plant digging but also reassure the bank manager that his financial stake is safe," he says.

"In return for your 'support', patience and willingness to take a 'risk' in buying something you cannot physically see, the developer will discount maybe 10 per cent or so from the market value. This, of course, means at completion stage you have a minimum 10 per cent profit already built in, yours for the taking upon resale."

Crozier continues, "Price aside, off-plan purchase gives you the chance to cherry-pick the best unit. Precedent confirms that penthouses, corners and those with the best views sell faster and resale better and as a pioneer you can take your pick.  Additionally, an off-plan property in Spain should display the latest in building techniques and materials from sound-insulation to durable flooring. And, that ten-year construction guarantee, compulsory under Spanish law for structural defects, is yours for the full decade, which can't be said for a resale.  Lastly, many developers allow you to get involved in the closing stages of build and stamp your personality on the product.  Whether that may be choosing tiles, paint colour or appliances, it is a luxury only afforded by off-plan purchasers."

Mark Stucklin, head of website Spanish Property Insight   believes that off-plan property development in Spain still has its place and that the recent downturn in the country's property market is making the option a more attractive proposition. "Buying off-plan property is no longer as attractive as it was when prices were rising in Spain, but it will still suit some buyers who like stage payments spread over many months, and want a brand new property," he says. "Developers are now bending over backwards to attract buyers with incentives such as furniture packages and mortgage payments, so in a funny way buying off plan is starting to look more attractive than at any time in recent years."

There are, however, potential downfalls when purchasing off-plan property in Spain. For example, the completion date cannot be taken as gospel, town planning officials may put the stops on the development if all official paperwork is incomplete or illegal and design features or qualities can be modified along the way without your agreement. 

Spanish property experts advise that buyers of off-plan property in Spain do their homework, look at examples of the developer's previous work and make sure both they and their lawyer are clear on which features or qualities were promised contractually, including square metre  build sizes.

With little certainty in the current market, Stucklin also advises that "in the coming property downturn some developers are likely to go out of business, so off-plan property buyers in Spain should be careful who they deal with."

Many thanks to Sarah Drane for her contribution to this article.

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Article published 26th September 2007