If you’re thinking of investing in residential real estate on the Costa del Sol, it’s worthwhile weighing up the advantages (and disadvantages) of resale, as compared to new-build or off-plan, properties
2021 was an exceptional year for the Costa del Sol property market, with estate agents along the coast, including us at Terra Meridiana, reporting record sales for the 12-month period. Demand for almost every kind of property, from plots of land to turnkey villas and from brand-new apartments to townhouses for renovation, has outstripped supply, leaving more and more buyers with less and less stock to choose from, particularly at the high and lower ends of the marketplace.
One trend we’ve noticed over the last year is an increasing number of overseas buyers who, at least in theory, are only interested in buying brand-new properties. I am going to let you into a little secret: in my opinion, you are better off buying a resale property in most cases. While we have no aversion to selling off-plan homes – we currently have over 300 new properties on our books, out of a total of around 850 listings – we always advise clients to weigh up the pros and cons of each, before making a decision and signing on the dotted line. However, unlike many agents on the Costa del Sol, just three of the 50+ deals we did in 2021 involved new properties.
There are, undoubtedly, lots of pros to buying a new property on the Costa del Sol. Like with a car, you get to experience that ‘new home feeling’; you might have your heart set on a contemporary design; you’ll likely benefit from the latest technology; and, if you get in early enough in the development process and buy off-plan, you may even get to adapt the layout of your new home and change fitments and finishings to suit your tastes. These advantages can be hard to find in a resale property, unless it has been renovated to modern standards.
But the biggest problem with new properties is location. Because of the lack of availability and high price of building land in prime locations on the Costa del Sol, many new developments are located farfrom services and transport connections or have no infrastructure in place at all. Second, new homes tend to be smaller and priced higher, in terms of price per square metre, than comparable resale properties. Third, brand-new doesn’t necessarily mean perfect, as even the most recently completed properties can have issues. And, finally, we always advise clients that they are buying a community first and an apartment second; if you buy in a new development, you are buying into an untried community.
What most estate agents will never tell you is that it is harder to sell resale properties and much less profitable. In the first place, you really need to know the market well to sell resale properties. You have to understand the pros and cons of, and potential issues with, different urbanisations, such as community fees, debtors, and how well the community is managed. It’s much easier to sell a new property in a community that does not exist, where fees are not fixed and management is untested. And, in a resale property, you can see where the sun will be at 7 pm in the summer and, more importantly,5 pm in the winter months.
However, if you can find a property you like in a new development, which is in a good location and selling for a reasonable price, it may be preferable to buying resale property. The problem is that too many buyers sacrifice location for new and, when the market softens, maybe unable to sell and eventually lose money. What some people fail to realise is, when they come to sell in 10 years’ time, they will not be selling the new home they bought, but a resale property in a less desirable location.
Many of the pros of buying a resale property are obvious: you can see – and even get a survey done to check, if you wish – exactly what you’re getting; you can also see what’s around you, so you won’t be surprised by any new development once you move in; you may want to live in an area where there simply are no new-builds for sale nor any building land left for new construction; and you might even walk into a sellers’ home on a viewing and think to yourself, “I’d love to live here”.
There are other advantages to purchasing a resale property too. Gardens in existing developments will be mature, communities of owners will be up and running smoothly, and you can see exactly how long it will take you to walk or drive to local services because they’re already there. Then, there’s the cost. As a general rule, you get more space for the same price in a resale property, because buyers and sellers both expect to have to spend a little extra, maybe to redo a kitchen or bathrooms, in an older place.
But the best reason for buying a resale property is location. With very few exceptions, prime development land has already been built upon. There’s a good reason for that; the best locations always get developed first. When you buy a villa, the land is more important than the villa itself, because you can always change the building, but you cannot change the plot. Likewise, with an apartment, you can renovate to contemporary standards, upgrade installations and even alter the distribution if you wish, but you can’t change its location.
The bottom line is: properties in good locations always sell better. And a resale property is more likely to be in a good location than a new one. The mantra of location, location, location is just as important for buyers as it is for sellers.
Since May 2000, all new properties in Spain that are built by a developer or builder for sale to third-party buyers are legally required to be covered by a 10-year warranty that protects the safety of its occupants against structural defects. This is usually provided by an insurance policy taken out by the builder or developer. Buyers, however, do need to know their rights to make the most of this coverage, as generally the sooner you can get any problems fixed, the better.
Buyers of resale properties in Spain are also protected by Spanish law against hidden defects, although the requisites for proving the seller is liable are more demanding. The defect in question must be serious enough to put the stability of the property at risk, it cannot be visible, and it has to prevent the buyer from living in the property in normal conditions. In addition, buyers only have five years to address claims and have to prove the defect already existed at the time of purchase.
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