Published on 15th November 2019
While house prices keep rising, investors are looking to purchase properties at significantly reduced prices, whilst also wanting to receive regular returns. Off-plan property investments are becoming increasingly popular due to being much cheaper than buying a second-hand house.
What is an off-plan property?
An off-plan property is a house that is still either under construction, in the process of renovation or it can be a completely new build project that hasn’t yet been drawn up.
In Portugal, when you are purchasing an off-plan property, you usually pay a percentage of the deposit and only pay the rest when the house is finished and handed over to you.
How is buying off-plan property beneficial?
Buying off-plan property might require some imagination as the house is still not finished, but there are several benefits to make this choice:
Paying a short percentage upfront and have the rest of the payments spread over the construction period, or at the end;
You are able to secure purchase below market value;
By the time the construction is finished, it is possible that its value has increased, resulting into profit;
You may be able to customise the property during the construction process. Our After Sales Department along with the Lisbon Furniture Packs will help you turn your property into a good return of investment - read more here;
Some developers offer guaranteed rental yields from the purchased property;
Being newly built, maintenance and renovation costs are expected to be minimal;
Being one of the first investors usually gives the opportunity to select among the best properties in terms of location, sun orientation and other specific features.
Concerning the disadvantages, it is evident that buying off-plan is uncomfortable itself, due to reasons such as construction deadlines slipping, the property not looking like as expected, or the market value falling.
The main thing for the client is to find someone completely trustworthy who will assist them in all the steps of the process and these difficulties - ultimately arriving at a completely refurbished building with amazing apartments.
There are a lot of milestones to cover, from developing the architectural project, the engineering project, following up with the submission project and Construction License from the City Hall, to managing the construction process and completion of every single unit.
Portugal Homes has developed very good partnerships with Architects and Engineering Companies to provide an excellent service and following up on the refurbishment processes. Although advising and notifying the client is our main job and keeping track of the timeline established previously, Portugal Homes is also highly interested in the reselling of the refurbished units.
Thus, the After Sales Department will assist the investors in every step, monthly updating them about the construction process and whether the building specifications report is being respected, so when the investor visits the properties, isn’t surprised with a different plan than it was first established.
The After Sales staff also performs a snagging report, which is a detailed inspection to the property, before the final deed, and writes down all the construction faults there might exist, to assure clients get the quality that was promised.
Before you purchase an off-plan property consider the following
Research the area and market you’re looking to invest in to make sure it is a strategic location and you’re getting the best deal possible;
Meet with the developer or agent to ensure a trustworthy investment, making sure they carry all the legal paperwork, including planning permission and building permits, and that they will give you the requisite documents after it is completed, including the Land Registry Certificate (Certidão do Registo Predial) and the Energy Performance Certificate (Certificado Energético);
Check the services around the property, such as transports, supermarkets and other amenities so that you’re not investing in the middle of nowhere;
Make sure the deposit you put down is safe by getting a bank guarantee and make sure the property developer has their own one, as well as insurance to cover incompletion or late delivery of the property.
Ultimately, off-plan investment is an opportunity for prospective investors however it should only be entered into if the buyer understands the market and is prepared to conduct their own due diligence. Check out the available developments we have in Portugal Homes here.
About Portugal Homes
PortugalHomes.com specializes in investments through Real Estate and Golden Visa. We help buyers find the right property overseas, whether it be for Golden Visa, NHR, Investment or simply a place in the sun. Our properties are selected with great thought in mind to give our clients the best opportunities. We offer the complete service from introducing them to the Legal Representatives, Currency Exchange, Mortgage Advisors, Property Management, Rental and Furniture Packages along with making sure all our staff are trained to fully understand the buying process and taxes for every scenario. Portugal Homes provides the complete service to anyone looking to buy a new or resale property overseas for holiday use or as a short or long-term investment.
Phone: +351 213 471 603