Hi Bryant,
All! Always have always will. As Markets develop its gets worse. From France, Spain and now Bulgaria and Romania. They say beware of Salesmen bearing gifts. In a new 'developing' market it?s hard to benchmark both the 'market rate' for and the costs associated with the 'purchase and ownership' of property in that country. As the market develops and therefore sucks in 'new mugs in the form of El-Gringo Anglo Saxon' the secondary market i.e. the market to 'rich' foreigners set its own bench marks which are disconnected from the local/real market.
In any case in the Off-Plan new build aimed at Foreigners market, the disconnect is probably at its greatest.
Florida (obviously not EU) is a mature market where Brits buy off plan. New mugs would say in a self congratulatory smug way:
?I?ve bought a phase 1 villa, 12 months ago for $300k. Phase 2 is being advertised for $340k, I?ve made $40k, aren?t I smart??
The fact is the people paying $340k are fresh new mugs, off the plane and they are in a ?process?, which has been perfected over 200 years to extract maximum $ out of the unsuspecting.
In reality the 12 month old ?second hand villa? will only sell at a 10% lower price than that of the new build phase 2 villas.
$340 ? 10% = $306k, ah well, they?ve still made $6k profit? Yes, well no!
When you add the none recoverable costs of purchase at circa $12k and the none recoverable costs of selling at circa $23k. The disconnect between what the new mug thinks he?s made, + 40k and his real position which is a loss of $35k is substantial.
The trouble with the emerging new markets in Europe is that over the next 2 to 5 years they are going to be competing against virtually free apartments/villas in Spain.
A combination of over building, na?ve buyers borrowing too much money to pay too higher price and rising global interest rates topped by oil at historically highs, Spain will provide a source of below cost properties for the foreseeable future. In Spain forget entering the disconnected ?processes of off plan new build?. You can walk into any EA office and negotiate 30% discounts off the prices (of second hand) and were only at the beginning of the buyers market.
So you need to factor in the ?risk premium? of buying property in emerging European countries, having first considered all the factors.
Just my opinion of course
Keep in touch
Cade