A New Build Property Bargain … Or A Lonely Place In The Sun?

Today I was en route to the supermarket when I found myself viewing a show home on a housing development in Fuerteventura (Canary Islands, Spain) where I am currently on holiday. Admittedly, it hadn’t been on the shopping list, however…

Given the mess which is our current financial economy – I couldn’t help but wonder – just how much of a reduction could you get on these new build property developments? Are there any new build property bargains to be had?

The Corralejo Golden Park development is located in what was heralded to be a new “premium” urbanisation area. It is situated 1.5 miles from the main resort of Corralejo, close to the golf course and the protected national sand dunes park and, benefits from a panoramic view of the town, sea and surrounding islands.

The property is a three storey, three bedroom semi-detached house with a private swimming pool and garden.

The spacious hallway has a downstairs cloakroom off it, a separate kitchen and utility room and at the rear of the property a large lounge/diner.

Outside there is a patio terraced area, a small private swimming pool and an enclosed garden.

On the second floor there are 3 bedrooms (2 with small terraces), one family bathroom and a master bedroom with a large en-suite.

On the third floor is a roof terrace with distant sea views.

The spec and finishes of the property are of a high quality and I was impressed by the spacious layout – which had obviously been built with the British market in mind.

The price?

Well, when this was built 5 years ago (yes 5 years ago, but has never been lived in!) the price was 260,000e. But, times have changed. The bank have repossessed the entire estate from the developer and are now selling these repossessed houses themselves. The price for this house is now 144,000e. With today’s exchange rate of around 1.2 you’re talking a sales price of £120,000.

Is that a new build property bargain?

How do you judge a bargain in the current market?

Comparables are hard to come by: there are no accessible land registry records – and even if there were – the illegal, but widely used method in Spain, of undervaluing properties for tax – would skew the prices. Estate agent particulars are unreliable due to the wide variation between asking price and selling price. And as for estate agents themselves… well, you have to take their opinion with a pinch of salt. Plus, you have to factor in the slowness of the market – it can take years to sell a property. Which means the only tool you can really use, is local knowledge – trying to understand, from locals, what else has actually been bought and sold, at what price, in comparable areas.

And then when you have your price comparables, you have to work out how optimistic you feel. Is this still a falling market – or have we reached the bottom? What is the “hope” value you put on this development? What is the likely future potential you see for this area? How many other empty properties are there in the area? What are the signs of future investment?

It’s difficult trying to make a science out of so many unknowns – and so again, the risk needs to be priced in. But then, what is a bargain price?

At what price do you buy, feeling confident you have bagged a new build property bargain? And will the seller even sell to you at that price?

And it’s about feeling comfortable with the risks.

For myself, I liked the house itself and had some belief in the long term future of the surrounding area – the golf course is still open, the premium gated complex opposite shows healthy occupancy, a new large supermarket chain has recently opened and there are murmurings of further private investment in the area…but, did I like it enough?

AND…

Will anybody else actually join me in my optimism?

For when I stood on the roof terrace with the distant sea views…all I could see was row upon row of empty, uninhabited houses. And the risk of no neighbours…and potentially never having any neighbours? That was a risk which was too much for me to bear.