DEVELOPMENT IN WESTERN ALGARVE, PORTUGAL.
PLEASE GIVE ME YOUR ADVICE ON THE SUITABILITY OF MY IDEA AND JOIN ME IF YOU ARE INTERESTED.
I own 4,200 square meters of urban land in the Western Algarve and I have had a architect draw some basic plans and submit them to the local council to establish what could be built there, a “pedido de informacao previo”, a type of outline planning permission, was accepted by the council to build 16 x 2 bedroom town houses, communal swimming pool and 2 communal rooms, plus parking and gardens, this permission was valid for one year and it has now lapsed as the idea was to establish what I could build on this land.
I do not have the money or know how for such a project and have come up with the following idea, and would like to ask members of this forum if they think this would work, (if anybody is interested in getting involved please get in touch with me)
AS I AM WORKING AND HAVE LITTLE TIME, IF THERE IS SOMEBODY OUT THERE WILLING TO GET THIS PROJECT OF THE GROUND BY GETTING THE JOINT BUYERS I WOULD BE PLEASED TO DISCUSS IT WITH YOU.
AFTER COMPLETION OF THIS PROJECT WE CAN DO THE SAME AGAIN BY BUYING A SUITABLE PIECE OF LAND AND DOING THE SAME ALL OVER AGAIN.
THE IDEA
The aim of this project is for the buyers to become the developers and share some of the profits.
The plan is as follows and in the order outlined below:
(1) I need to obtain 9 buyers. I am keeping one property for myself and will pay the same as everybody else.
2) To reserve a place, a prospective buyer would have to pay 1,000 euros, one thousand euros, non refundable commitment fee (this fee would be refundable if the project could not go ahead on the terms outlined here or, and on request, if after 12 months after paying the fee there were not enough prospective buyers to start the project. For security this money could be held in a solicitors account.)
3) When all the prospective buyers are in place and all the commitment fees have been paid, a Limited Company will be incorporated in Portugal with the 9 buyers plus myself as directors and equal shareholders, the 10 buyers, including me, would then each pay 60,000 euros into the Limited Company, total 600,000, less the 1,000 euros already paid as commitment fee, this money would then be used to purchase the land from me, the land is now owned by the shareholders of the Limited Company. A firm of architects, a firm of solicitors and a firm of accountants will now be employed to represent the project and the buyers and ensure safety of investment
4) Approximately 30,000 euros will now be paid into a secure escrow, solicitors, account by each buyer.
5) As from now, all decisions on building, cost, etc. will be made jointly by the buyers by majority voting. (This project is effectively a self build project.) The buyers to elect 2 of their members as their representatives in negotiations with architects, solicitors, etc.
6) All decisions to be made by unanimous vote, if a unanimous vote fails to be reached, the 2 members, in consultation with architects or solicitors will make the final decision. (THIS MAY NEED TO BE REVISED AND CHANGED)
7) The architect will obtain planning permission.
8) Planning permission is obtained and building starts with the money in the solicitors account.
9) Other stage payments, up to the agreed limit, as previously negotiated with the architect, will be paid until the project is completed.
10) How much will it cost?: Each property, on the plans I have outlined above, was about 120 square meters, total size 1,920 square meters, good quality materials, including tax, I think it would cost about 750 euros per square meter, total building costs 1.440,000 euros. Add another 200,000 euros for fees, pool, etc. I think it could be done for less.
Therefore total costs are: land 600,000, build costs, 1.440,000, other costs 200,000, total 2.240,000 euros, 224,000 for each buyer, BUT, so far we have spent 224,000 euros each, we each own 1 property and jointly we own 6 which we can now sell. I estimate each property will sell for 150,000 to 170,000 euros. If we sell the 6 for the lower figure we will each receive back 90,000 euros once the properties are sold.
I think there is still a bit of work to go into this but I think the idea is sound and it will give each buyer a property for just over 100,000 euros.
The architects would secure planning permission, appoint contractors in agreement with project owners, manage the contractors throughout build and resolve any disputes.
The planning system in Portugal follows the same principles as in the UK, broadly. This site has high development potential and, given the fact that the site is designated urban land, the only difficulties in obtaining planning permission will be on the detail and design.
I feel that the project from start to finish could take up to 2 years.
The main plus financial points for the buyer are as follows:
· Your money is safe at all times, being paid and held in a solicitors account or in the Limited Company, which is partly owned by you.
· Apart from the cost of the land which is fixed, you, the buyer, control how much to spend on building costs.
· You are buying a property with an immediate discount, an immediate profit which you can realise by selling it, when completed or even during construction.
· Because of stage payments you have time to arrange your finances accordingly.
The minus points for the buyer are:
· It might take up to 2 years to wait before building is completed.
· It might take also some additional time, for those who join early, to have to wait before all the buyers are on board.
The above are my opinions and may not be exactly as described.
The unit selling price quoted above is also my opinion, (but there are currently some 2 bedroom townhouses being sold in this same village for 127,500 euros each, these have no swimming pool, have no gardens and the construction is not the same quality I have in mind,) and may not be exact and depends on a number of factors, such as market conditions at the time, type of building, etc.
You are advised to seek independent financial, legal and any other advice before you part with any money or sign a legally binding contract.
THE LOCATION
THE VILLAGE OF: ROGIL
Rogil is situated in the Western Algarve about 22 miles north of the holiday resort of Lagos. It takes approximately 1h 30m from Faro International Airport most of it by motorway, the last 15 miles are “A” type roads with excellent surfaces and good signposts.
Rogil is situated on the edge of the National Park, Costa Vincentina. The coastline here is spectacular with beautiful views over the Atlantic Ocean.
Some of the amenities Rogil has to offer are: a Hotel, Supermarket, Petrol Station, Bakery, selling fresh bread and cakes daily, 3 Restaurants, Fruit, Vegetable and Fish Market and a number of Bars.
Rogil is situated approximately 2 miles from the nearest beach and there are several lovely golden sand beaches within a 15/20 minute drive. Banks, Doctors, Main Post Office, Town Council, Church and the main Meat, Fish and Fruit and Vegetable market is 5 miles away in the town of Aljezur.
Rogil is quiet outside of the main holiday season of July, August and September when the village and local beaches get very busy. For those seeking busy nightlife and busy holiday resorts, Lagos, Portimao, Praia da Rocha, and many more resorts are only a short drive away. There are also a number of golf courses which are easily reached within a 45 minutes drive.
Building planning permission and regulations are very strict in this area. No buildings higher than first floor are permitted to be built in Rogil. Under current planning laws only 45% of any urban land can be used for building. For example in our plot, which is about 4.200 square meters, we can only use 45% for building, infrastructure, etc, the rest must be used for gardens or to be left as it is. Also, no new buildings are allowed in most of the National Park Costa Vincentina, these strict regulations will ensure that this area will not follow a lot of the other areas of the Algarve where buildings are now everywhere.
The attractions of Rogil are:
· Easy driving distance from Faro International Airport with superb access links.
· Integration in the Portuguese away of life, if so wished, but with easy close access to bustling holiday resorts. Easy and quick access to lovely golden sandy beaches, out of the main holiday season, you will have the beach to yourself.
· Quiet most of the year, gets busy in the main 3 months of the summer. Rental potential during this time.
· Unspoilt and likely to remain so.
· Good views of the pine trees and mountains
In this example, the units which we are planning to build, 16, 2 beds, town houses in their own garden and with a communal swimming pool, would probably sell