Many of our clients who are looking to make investments, their main priority is to buy (Off Plan).
Buying (Off Plan) means reserving a property on a new development before the property is built and completed. When buying (Off Plan) the property is at a much lower price.
The developer is very keen to sell as many properties at the early stage of development, to obtain better interest rates on their development loans from banks and investors.
For investors the main element is, that on reserving a property on a new development only a deposit is payable (usually 30-40%%) and the rest, will ,either be paid in cash in stages, or can be financed through a mortgage up to 2 years later, on completion of the development. In this case the investor starts paying interest after the completion of the property. So if property prices on a new development rise by 30%, the investors have made an 80-100% gross return on there initial deposit.
Another option is for the clients to pay the deposit to secure the property and then stage payments during the development of the project.

Example for a new development near Rethymnon in Crete

Purchase price (Sept 2006): € 120,000

Investors Outlay:

Deposit € 40,000
Lawyer, Notary, Taxes
Plus extras € 10,000

Total €50,000

Mortgage amount € 80,000 yearly interest rate at 5% currently,
(payments starting after completion).

Selling Price (July 2008): € 155,000

1) Release: Lower than 'Market' Prices offered by the Developer initially.

The developer is keen to sell as many properties in the early stages. To acquire the best interest rates on their development loans from banks and investors, so because of this, prices are much lower.

2) Final Completion (total property increase between 20-30% in up to 2 years)
Once the development is finished the purchaser will be the owner of a brand new property in a brand new development with all building works completed. The purchaser, who wants to buy now, will have to be prepared to pay considerably more for a property that they can move into or rent out immediately. When the development was just a drawing on a piece of paper and a site location. After this stage, the majority of prospective purchasers' are usually clients looking to buy a holiday home or looking at 'buy to let' properties. The investors, who bought at the early stages, will have picked the properties with the best views and positions, giving the investor the better opportunity to sell their property.
The reasons listed above explain why prices should normally increase as a development is built. It is not unusual for a property to have been bought and sold, before a brick has been laid.