Is it worth buying property abroad at the construction stage?

Advantages of purchasing property during the construction phase

Choosing real estate is a responsible and thorough process that requires a serious approach to each unique property. Purchasing a home during its construction offers significant advantages. One of the main factors is the preference for properties that stand out due to their high quality and favorable location.

Such apartments and houses are built using modern, high-quality materials, and a warranty is provided by the developer after the completion of all work and the commissioning of the property. Convenient and well-thought-out layouts, as well as stylish finishes, make these offers even more attractive. Investing in housing at the construction stage opens up extensive opportunities to choose between different options, such as apartments or villas with desired square meters, magnificent views from the windows, and the possibility to adapt the space to one's own needs.

Choosing housing in conditions of scarcity

It is also worth noting that buying a home in a market with a shortage is an important advantage in the search for the perfect living space. Experts point out that among the many nuances, the market conditions in a specific country or city are particularly important criteria for selection.

For example, unique properties offered in megacities like London, Paris, Munich, Vienna, orMilan are in high demand. Such projects are often purchased not only for personal residence but also as long-term investments. This is due to the fact that in these regions, the increase in housing prices during the construction process is often not observed. As in any field, there are exceptions.

Savings when buying real estate

Among the additional advantages, cost savings can be mentioned. For example, in the UK, at the foundation stage, prices can be 10-12% lower compared to similar offers at the final stages of construction. Moreover, in several regions, new builds at the initial stage become the only option for buyers looking for an apartment with the desired parameters: location, size, and view from the window.

This is due to the fact that the offers in the market are often extremely limited. Typically, as the completion of construction approaches, apartments are quickly sold out, and new residential complexes are not built that often.

Reliability of transactions in the primary market

The importance of the reliability of the deal cannot be ignored. The process of purchasing real estate at the initial stage abroad is noticeably different from similar procedures in Russia. Legislative norms and regulations in Europe make this process clearer and more transparent.

• In RussiaDevelopers can demand advance payment for housing that does not actually exist yet.
• In EuropeCompanies most often use a phased payment system.
• In most European countries, independent intermediaries are involved in transactions, maximizing the protection of buyers' interests and ensuring the safety of financial operations.
• For example, in Germany, the law prohibits advance payments, so the buyer is only obligated to pay for the construction stages that have already been completed.

This creates additional guarantees and minimizes risks for all parties involved in the transaction. Thus, purchasing real estate under construction abroad is a safer and more reliable option.

Buying property with installment payments: a modern practice

Today, purchasing property with an installment plan is becoming an increasingly popular choice, especially in countries where foreigners find it difficult to access mortgage loans. This provides an opportunity for many clients who wish to invest in real estate at the early stages of construction. For example, in major cities like Paris andMilan, people often view such investments as quite attractive and profitable. However, this method of acquiring property also has its downsides.

Risks of developer bankruptcy

One of the significant risks is the likelihood of financial bankruptcy of the developer. Buyers often worry that the developer may not withstand the pressure of financial obligations and ultimately fail to complete the project. Unfortunately, such situations occur quite frequently in the construction industry. To minimize potential losses, it is important to familiarize oneself in advance with the terms and options for refunding invested funds, as well as to seek advice from a professional lawyer. Careful examination of all contract clauses is crucial, and in any case, one should not sign a document if there are even the slightest doubts.

Problems with long-term construction

An additional challenge remains unfinished construction projects. In practice, in most European countries, construction projects are financed through borrowed funds. Therefore, builders need to demonstrate certain sales volumes to ensure a stable flow of financing. The experience, naturalized in Spain, shows that if sales fall below the expected level, financing can be sharply reduced, which will negatively affect the further progress of the work.

Mismatch of the object with expectations

There are often situations where the actual characteristics of a property do not match the previously stated expectations. This can manifest in:

• Discrepancies in area;
• Incorrect layouts;
• Disadvantages in engineering systems.

Since buyers cannot see the property until it is completed, there is a chance that they will receive something different from what they wanted. This is especially relevant for countries like Bulgaria, where previously existing construction standards may not have been up to par.

Force majeure circumstances

It is also necessary to take into account the possibility of force majeure circumstances. Not only financial risks can overshadow the expectations of potential property owners. For example, during the construction period, there may be a sharp decline in housing market prices, as happened in Spain and Greece after the global financial crisis of 2008. In such a situation, buyers find themselves in an unfavorable position, as their investments may lose value, and they may end up paying much more for their property than it is actually worth in the current market.

Excess supply in the market

Moreover, in recent years, there has been an oversupply in the real estate sector. In Spain, in fact, the construction of large residential complexes has almost come to a halt due to strong saturation, prompting developers to focus on custom design tailored to the specific needs of individual clients. These changes in the market are also affecting the perception of prices and their variations in the housing sector.

Conclusions

Thus, although buying a home in installments may seem like an attractive prospect, it is essential to consider all possible risks and conduct thorough research before making a final decision to avoid unnecessary troubles in the future. The best option would be to consult experienced lawyers and advisors who can clarify all the nuances of real estate transactions and help you avoid pitfalls.

Decline in interest in new construction properties

Unlike many other countries where the supply of new housing is limited and new developments quickly find their buyers, the interest of Russians in investing in properties under construction in popular resorts such as Spain, Bulgaria, and Cyprus has noticeably decreased. Modern consumers increasingly prefer ready-made properties that can be renovated according to their wishes later on.

This is because waiting for the completion of construction may not be the most profitable investment.

Problems with real estate in Spain

In Spain, there have indeed been numerous cases related to issues in the real estate market during times of economic downturns. To date, all construction projects carried out in this country are protected by a special bank guarantee known asbankingThis serves as an additional protection for investors and buyers against the risks associated with the potential bankruptcy of construction companies.

Completion deadlines for construction

As for the timelines for completing construction work, there is a common practice in Europe of making payments in stages for purchased real estate. This can be beneficial for buyers, as a large portion of the money is transferred to the developer only after the official commissioning of the property. Thus, buyers do not risk tying up all their finances in unfinished housing.

It is also important to understand that many European banking institutions providing financing to developers require them to complete the work within seven months. If the property is not put into operation within the specified timeframe, there may be a change in the interest rate on the mortgage loan.

Construction in Bulgaria

It should be noted that just ten years ago, the construction time for new residential buildings in Bulgaria was only 9-10 months. However, such a high pace of work negatively affected the quality of the housing being built.

It's important to consider the characteristics of local markets.

• In Bulgaria, there are restrictions on carrying out any construction work from mid-May to mid-October.
• If the project is not completed by May 15, work will only resume in October.

In modern conditions, the construction of a five-story residential building usually takes about 18 months. Typically, the processes are initiated in March so that by the summer tourist season, when the influx of tourists is significant, the laid foundation and possibly some constructed floors can already be seen.

The summer period on construction sites is often characterized by a lull, while in the autumn months, before the first frosts arrive, the framework work is completed. Spring is when the finishing processes take place, and ultimately, by the second tourist season, optimal conditions are created for selling real estate at the stage of completing the interior finishing. By autumn, before the winter cold sets in, builders fully complete their work, and the housing is put into operation.

Average construction timelines in Spain

According to statistical data, the average construction time in Spain ranges from 14 to 18 months. Potential buyers should be cautious about both very short and very long timelines. The former may indicate a deliberate attempt to deceive by the developer or low quality of the property itself, while long timelines may suggest financial difficulties or legal issues faced by the construction company.

Introduction

Undoubtedly, a successful transfer of real estate is an important step, but it is not a 100% guarantee that everything will go smoothly. The commissioning of a new home is the moment when all construction work has been completed, and the relevant government authorities have confirmed that the property is ready for habitation.

Hidden defects and warranties

Nevertheless, even after that, they may still appear.hidden defects...which only manifest during the operation process. To minimize risks and expand the responsibility of developers, certain guarantees have been established for specific periods. These periodic guarantees can vary significantly depending on the region and the specifics of the work performed. For example:

• In Bulgaria, the warranty for internal communications is five years, while for the building structure itself, it is ten years.
• In the UK, 80% of new builds also come with a similar ten-year warranty.

Actions of the buyer in case of a delay in delivery

If, for any reason, the developer fails to deliver the property on time, the buyer has several alternatives to address this issue:

• Agreement on a new deadline, which will be documented in the form of an addendum.
• Submission of a compensation claim.
• The possibility of terminating the sales contract.

To minimize the risks associated with investing in potentially unreliable construction, it is helpful to understand the legal aspects of interacting with the developer.

Payment systems

In countries like Bulgaria, Spain, the UAE, and Cyprus, there is a payment processing system in place throughdeposited accountEscrow, belonging to a third party, usually a banking institution. In Germany and Austria, financial transactions are carried out through trust managers. Funds received from the buyer are placed in an escrow account and transferred to the construction company only after certain milestones in the construction work are achieved. In case the developer fails to fulfill their obligations, the buyer is protected from the risk of losing both their money and the property itself.

Reliability of countries for real estate transactions

Countries, including Germany, France, the United Kingdom, Austria, Switzerland, and the USA, offer reliable payment schemes and building permit issuance, making them the safest for real estate transactions, especially for new constructions.

Issues during operation

If problems arise during operation, it is better to avoid trying to solve them on your own. There is a special provision for new buildings.warranty periodduring which the developer is obligated to correct any defects at their own expense and using their own resources.

Independent expertise

Before accepting real estate purchased during the construction phase, it is important to conduct an independent inspection. An appraiser or inspector should carefully check the property for hidden defects. It is also crucial to ensure that the developer has strictly fulfilled all their obligations as stated in the contract.

Conclusion

Paying attention to these aspects will help avoid many undesirable situations in the future and ensure the safety of your real estate investments.

Conclusion

In conclusion, I want to emphasize that purchasing real estate at the construction stage is an important and exciting, albeit risky, endeavor. This process requires the buyer to be attentive and take a thoughtful approach. On one hand, buying at the foundation stage offers unique opportunities:

• Housing selectionto suit your preferences;
• The opportunity to save money;
• More transparent deal conditions.

We are dealing with attractive properties that could become real gems in the real estate market.

However, as cases have shown, it is important not to forget about the risks, such as:

• Possibility of bankruptcydeveloper;
• Discrepancy of the real objectto the stated specifications.

Studying the documents in advance and involving a professional lawyer can significantly reduce the level of risk.

So, if you have decided to invest in new construction, it is important to weigh all the pros and cons, thoroughly research the market, and choose a reliable developer. In my opinion, a thoughtful approach and careful research will not only help you avoid negative consequences but also make a successful investment in your future life.

Ultimately, the approach to purchasing at the foundation stage involves both dreams of the perfect home and serious financial decisions that can change your life for the better.