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Guide to Investing in Polaris World Off Plan Property

I honestly believe that the Polaris World resorts offer excellent value for both investors and holiday home purchasers alike. When compared to other more established areas of Spain like the Costa del Sol and Costa Blanca, the Costa Calida where the Polaris World resorts are situated offers far more property for your money.

In the long term there is no reason why this should not continue to be the case. The huge investment in infrastructure such as motorways', airports, commercial centres and leisure facilities that both the Spanish Government and the private sector is very quickly bringing the Costa Calida up to the levels enjoyed in other Costa's.

More people including myself now see Murcia as the place to be in Spain, the beaches are far nicer than the Costa del Sol, its not a concrete jungle and never will be due to very strict planning laws, the restaurant and bars offer great value and good friendly service again something often missing on the Costa del Sol in particular.

The suggestions below can't guarantee that every property investment you make will be a resounding success but trust me if you don't follow them I know it is far more likely you will run into problems.

1. Buy at stage one price release.

Polaris World like most Spanish developers release their properties for sale long before they are built, the price when a development is initially released is always far lower than the price the developer will want 2 years down the line when the resort is nearly finished. The prices are normally increased in stages throughout the build process. Therefore it is extremely important that you buy at stage one price release or as close to stage one as possible.

This is so important because as Polaris World only require 40% of the value of the properties during construction, any price increase you pay over the original stage one price massively reduces your return on capital invested (R.O.C.I) Let's look at the example below

Polaris World La Torre 2 bed apartment.

Stage one price - €152,600

Stage Payments 25% +15% - €61,040 = 40%

7% IVA (VAT) - €4272.80

Total Capital Invested - €65,312.80

Eight months after the launch of La Torre some people were investing in exactly the same apartments at €168,241 this equates to Polaris World increasing the original price by only 5% on two occasions.

Now if you had bought at stage one you would have already made on paper ROCI of 24%! i.e. the gain made so far, divided by the capital invested so far, so €15641divided by €65312.80 = 24%.

So the investor buying just eight short months later has thrown away a possible 24% gain before they have even started! Not a good way to maximise profit I am sure you'll agree.

2. Location of the property within the resort

Only a few weeks ago I was with some clients who have initially been talking to another estate agent who had recommended a certain apartment to them within Terrazas de la Torre, priced at stage 1 prices, southwest facing terrace, so all seemed good except for two things that concerned me.

1. The apartment was in a block tucked right at the furthest end of the resort away from all the sports facilities and owners' clubhouse, restaurants and bars. Now you may enjoy a 20 minute walk to everything but most people don't!
   
   Never buy an apartment for pure investment right overlooking the restaurants and bars, again you might love music and noise at 2am but again most people don't! Choose a property that is located within 5 or so minutes walk and you will be appealing to what most people want, peace and quiet but everything close by.



2. The second problem was that whilst the apartment did have a terrace that has a south west orientation if you wanted to look in this direction you would end up staring at the back of an adjacent block! Not what most people want!
   
   The clients did not have this explained to them and were extremely grateful that I took the time to go through in great depths how important location was, in the end for exactly the same money they reserved an apartment with views over the pool, communal gardens and out over the golf course with a south west orientation. The property was also located equally between all the great facilities offered on Terrazas de la Torre. You can read the clients testimonial by clicking here.

3 Orientation of the actual property.

As mentioned above, orientation of the property is extremely important, you might like getting up at 7.30am whilst on holiday to enjoy your breakfast on your terrace bathed in Sun but again most people don't. They are on holiday and would much rather have the sun at the end of the day so they can enjoy a drink or dinner on their terrace after a lazy day of sunbathing or playing golf. Therefore it is important to make sure that the orientation of your property is south east to west facing.

The Spanish might love a north facing apartment as they live in the sun all year but 99% of the residential tourism market loves the sun and can't get enough of it whilst on holiday.

4 Time to completion

If you buy at stage 1 prices than this is not an issue but if not then make sure that your Polaris World property has at least 16 months to go before completion, this allows you to enjoy 12 month capital growth and give you 4 months to find a buyer when you come to sell on before completion.

5 Only deal with an estate agent with investment experience

The Spanish property market is NOT regulated at all and sadly this has led to numerous people writing a web site and purporting to be a Polaris World property expert often whilst working from their back bedroom or kitchen table.

Read our guide called '10 questions you must ask your Spanish Estate Agent' by clicking here. This will give you a detailed list of important questions to ask any Real Estate Agent before entrusting your business to them but below is a brief summary of the main points.

1. Do they own on Polaris themselves?
2. Have they bought and sold off plan property in Spain themselves as an investment?
3. What is their investment background?
4. Do they have proper bricks and mortar offices both in the UK and Spain? Local knowledge is very important with property investment.
5. Why are they recommending a particular development?

6 Never be swayed by ridiculous incentives on offer.

As mentioned in the previous point the Spanish property market is not regulated and with Polaris World being Spain's number 1 developer it means there is an awful lot of unprofessional and sometimes unbelievably misleading agents out there.

Please remember you are buying a property NOT a washing machine or TV where rightly so, you can play one shop off against another to get the best deal. This is an important purchase and you need a company that has experience and will be around in the future when you come to sell on or complete, you need a company with proper bricks and mortar offices and an established after sales programme.

The sums of money involved in buying a property are large and so are the potential gains, entrusting your business to an agent who obviously doesn't do very much business so that he has to offer nearly all his income in freebies doesn't make sense.

There is one agent who we have seen offering €10,000 Euro furniture pack to every client who buys through him at Polaris World!

Even if you don't run your own business you will understand it is very difficult to give away more than you earn!! People have asked me why they do this, the obvious answer is, it's a scam, if they sell 50 properties and generate €500,000 of furniture packs it is extremely unlikely that 2 years down the road at completion the company will still be around. They will have folded their Spanish Limited Company and be operating with a different website and under a different name.

What will happen to the clients who are expecting their furniture packs?

In the best case they will get loads of cheap rubbish furniture worth probably €1000 euros or so and in the worst case they will get nothing. They also won't be able to do anything as the company will have shut down!

We have proof and so do Polaris World that these people often blatantly do not tell the truth as we have both 'mystery shopped' them. Only last month a Polaris World member of staff was told there were only 2 properties left on a resort where there were approx 200 available.

Please be careful, deal with professionals, ask Polaris World to confirm the company is a Golden Partner and ask the agent for testimonials from existing clients, even better ask for references from satisfied clients, we have clients ourselves who we have dealt with for years who are only to happy to recommend us to other people.

As I said at the beginning this guide doesn't guarantee successful investing but it is designed to stop you making some of the most common mistakes when it comes to buying off plan.

Polaris World is an excellent company and one that we are proud to be associated with; buy well and with the help of a good agent I believe you will make money if you stick to the above principles.

If you would like to discuss investing in Polaris World further then please feel free to contact me at anytime and I will be delighted to discuss your personal requirements in more detail.

Happy and profitable investing.

Mike Knivett
Managing Director
Lighthouse SL