Is the Costa del Sol Returning to an Off-Plan Market?

The Property Doctor

 

Is the Costa del Sol Returning to an Off-Plan Market?

 

By Sean Woolley

 

If you’re partial to reading the overseas press, you could be forgiven for thinking that the only cranes on the Costa del Sol are those that litter the skyline from days gone by when the building boom came to an abrupt halt, leaving developers bankrupt and building sites deserted.

While there are indeed a handful of unsightly examples of the madness of the last construction frenzy, what’s now emerging are the green shoots of a recovery in the development of new, quality housing here on the Coast.

Sensing that the appetite for Spanish property is returning from foreign buyers, developers who had previously downed tools at the first whiff of recession, or those who simply land-banked hoping for better times to come, are now starting to build again. Wherever you go along the Costa del Sol, you will see land being prepared by earth-moving machines, sales offices being erected on previously empty plots of land, and the cranes finally moving in again.

But hang on a minute! Let’s just take stock. I’ve just checked the agents’ shared database of properties and found that there are almost 20,000 resale properties advertised for sale in the area. This indicates that there must surely still be an over-supply of stock. So what hope do these developers realistically have of shifting their off-plan properties when faced with this huge amount of competition?

The painful truth for the vendors of those 20,000 resales out there is that most buyers prefer to buy something new. Something shiny, clean and untainted. We are all suckers for a seductive show home. The three advantages that developers have are price, quality and marketing power.

Let’s start with the issue of price. Bear in mind that a lot of developers have been sitting on their building plots since way before the recession kicked in, and some plots were even purchased for rock-bottom prices when the market crashed. Developers are acutely aware of prices in neighbouring developments and areas, and so they ensure that their prices are more than competitive in today’s market.

Developers are now able to build using the latest materials, kitting out their homes with modern kitchens, bathrooms and flooring. Therefore, when it comes to quality, the new developments will likely be more appealing than the vast majority of those 20,000 resales.

The third major factor in favour of the developers is their marketing power and sales process. Using billboards, networks of agents and plenty of media advertising mean that these developments get noticed and stimulate plenty of interest from international buyers. The sales formula is simple: see the show home, look at the plans, select your unit, stand on the plot, imagine the view, sign the reservation. Done. No viewing of dodgy second-hand kitchens and bathrooms in near darkness, no screaming kids and barking dogs, no vendors to negotiate with, no vendors who can change their minds. Simple.

But why would buyers wait two years when there’s so much stock available right now? Well, in most cases, buyers ARE prepared to wait. Remember, everyone who visits the Costa del Sol to look at property would LIKE to buy a place, but the vast majority don’t actually NEED to do so. Why not rent a nice place in the summer holidays for two years while they’re waiting for their perfect home to be built? They’ll probably save money in the long run anyway.

I can only see a sustained and steady recovery in the Costa del Sol housing market, particularly in the key areas along the Coast. This recovery will be led by these new, off-plan opportunities. It’s absolutely vital that private vendors are aware of them. This is their new competition, whether they like it or not.

 

Sean Woolley, our resident property expert, can be contacted at Cloud Nine Spain: Centro Comercial Guadalmina 4, Local 88, San Pedro de Alcántara; Tel. (+34) 692 254 432; sean@cloudninespain.com; www.cloudninespain.com

 

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