Investment Potential of Pre-Construction Projects in Tenerife As a result of the moratorium on building in Tenerife, there are a limited number of
new properties for sale in Tenerife; however this will have the effect of causing prices to increase, as demand will outstrip supply. Consequently, for people investing now, there are very substantial gains to be made. Basically the way it works is that building companies sell apartments or houses at the early stages of the project, at significantly discounted prices - about 20% less than market value. They take deposits from non-residents of 20% of the selling price, which is fixed for the duration of the contract (even less for those with residential status). The purpose of this is to minimize the amount of bank lending needed by the building company to finance the project. However the big benefit needs to be explained arithmetically Taking a theoretical, but typical scenario, say at the beginning of a two year project, a property is for sale for €150,000 and the builder asks for 20% initial payment. In twelve months he asks for a second payment, also of 20%. So in the first 12 months you invested €30,000 euros (20% of 150,000), and the following 12 months another €30,000 euros. However the property, as it is being built, will increase in value by at least 10% per year on the total value of the property so after two years by the time the buyer takes title to the property, it has increased in value by 30,000 euros plus another 30,000 euros that was discounted off the price in the first instance. The likely selling price is now around €210,000. In broad terms, you should double your investment in two years. So what’s the downside? Well the only way you could lose is if property values dropped by more than 20%, but with the aforementioned moratorium on building, and the huge level of demand, there is not one property professional in Tenerife who is predicting anything other than continued steady increases. The example given above uses a very conservative annual increase in value of 10%, (ask anyone who owns property in Tenerife how much it has risen in value in the last ten years.) And don’t forget, as soon as the building company sells a percentage of the properties, some increase the prices by 5% or more. So why not follow the Top Ten Tips for Tenerife Property Investment and invest your way into property ownership and profit. Related Articles: Tenerife Property - Better Than A Pension Top Ten Tips for Tenerife Property Investment | 
