Off Plan Investment in Tenerife

Edit Feb 2013: This post was originally published in 2005, long before the economic crisis. Nowadays there are certainly bargain properties to be found in Tenerife because of the number of houses and apartments that are up for a quick sale  but there is far less construction going on so off plan investments are not such a hot topic. No matter what type of property you are considering, please ensure you seek good professional advice from an established and reputable Tenerife estate agent.

Many people looking for a property in Tenerife find buying off plan a great investment. Buying off plan means investing in a property on a new development before that property is built and often before any construction work has started. In certain cases, a property can be sold even before the developer has been granted a Licencia de obra (licence to build).

Buying a property in Tenerife during the pre-construction period ensures a fantastic return for your money. Properties are priced very competitively at this time because the developer is eager to minimise his risk factor and to negotiate decreased interest rates from investors by selling as many units as possible.

Potential investors are being asked to buy an architect’s drawing and an empty plot of land, so it’s not surprising to find that the earlier you make your purchase, the less expensive it will be.

Usually, investors are asked to pay approximately 30 per cent of the total purchase price as a deposit. The remaining 70 per cent is paid after completion and can be financed by a mortgage.

Once construction begins and the new development starts to take shape, it’s much easier to get an idea of what the property will look like once it’s finished, which is why the purchase price increases at this stage. Once the development is completed, buyers are willing to pay even more for the final product. Many people invest in off plan properties in Tenerife only to resell them for a hefty profit once they’re finished. As a bonus, the seller is not required to pay Capital Gains Tax if the property is sold before the owner takes possession of the escritura (title deeds).

New Development Opportunities – Palm Mar

If you are interested in seeking new development opportunities in Tenerife, you would do well to start your research with Palm-Mar, an urbanisation in the South of Tenerife. The sheltered bay has been earmarked for high quality development by the government and a number of construction projects are under way there now.

With a mountain on one side and a nature preserve on the other, Palm-mar is geographically protected from rampant over-development – an important point to consider when seeking a solid investment. The government plans for a dry dock and marina, seafront promenade, beach improvements and the beauty of the natural surroundings all add to the area’s desirability – a characteristic that will grow as each phase of Palm-mar’s development is completed.