A new apartment does not automatically mean a good investment.
In Madeira, new developments are really in high demand. Contemporary architecture, new utilities, parking, a pool, nice common areas, beautiful renderings, the opportunity to buy a unit at the construction stage.
All of this looks attractive.
But if we’re talking specifically about an investment, I would never make a decision just because the property is new.
I always break a project down into several components.
- Entry price
The first thing you need to understand is: at what price are you entering the project relative to the market?
You can buy an apartment at the start of construction and get a good increase by the time it’s completed.
But you can also pay such a premium to the developer at the start that all the future growth is already priced in today.
That’s why I don’t compare only new builds with each other.
I look at:
— price per square meter;
— the resale (secondary) market in this same location;
— other projects under construction;
— the quality of the building itself;
— floor, view, orientation, parking, terrace;
— the real advantage of this particular apartment.
An investor must understand exactly what they are paying above the market for.
- Completion dates
If the property will be ready in two or three years, your money is tied up in the project all that time.
So the completion date is also part of the investment model.
It’s important to look not only at the nice date in the presentation, but also at:
— the current construction stage;
— the developer’s track record;
— whether they met deadlines on previous projects;
— the contract terms;
— the payment schedule.
Sometimes an apartment with a slightly higher price but a clear completion date and a reliable developer can make more sense than a project that looks cheaper but has much more uncertainty.
- Who the developer is
I always look not only at the project, but also at who is building it.
What properties has the company already delivered?
What do they look like after a few years?
What is the construction quality?
How are the common areas maintained?
Does the final result match the initial concept?
Because you can make a rendering look perfect.
But the investment value of the property shows itself only after the building is completed.
- Layout
This is one of the most underrated factors.
Sometimes a person looks at the specs:
T2, 120 m², new building, good area — so it must be an excellent option.
But then we open the floor plan and see a huge amount of wasted space, awkward bedrooms, a small kitchen, strange corridors or a terrace that is almost impossible to use.
On paper, apartments can have the same size.
In practice, one sells and rents easily, and the other sits on the market for years waiting for a buyer.
I always ask a simple question:
If we had to sell this apartment tomorrow, would its layout appeal to the majority of buyers?
- What will happen to the property after completion
This is where it gets really interesting.
A lot of people buy a new build thinking:
“When the building is finished, the apartment will automatically become more expensive.”
Possibly.
But the next question is much more important:
Who will buy it from you at this higher price?
So even before purchasing I look at the exit scenario:
— who this property could be sold to;
— how strong demand is for this format;
— who it could be rented to;
— what rental level is realistic;
— how easy it will be to exit the investment in 3–5 years.
An increase in paper value does not yet mean liquidity.
- Future competition
This is a factor buyers often don’t consider at all.
Imagine a neighborhood where several large residential complexes are being built at the same time.
In two years, hundreds of apartments are completed simultaneously.
Dozens of similar T1 and T2 units hit the sales and rental market.
And at that point your apartment is no longer competing with older stock.
It’s competing with other new apartments.
And the buyer starts choosing:
who has the higher floor,
where the view is better,
who has the larger terrace,
a better layout,
two parking spaces instead of one,
a more favorable orientation,
better infrastructure in the complex.
That’s why I always look not only at what’s being built today, but also at how much property will come onto the market tomorrow.
This is exactly why, for me, the concept of a “new build” and the concept of a “good investment” are not the same thing.
A new build can be an excellent investment tool.
But only if the following are chosen correctly:
entry price + project + developer + specific apartment + location + timing of purchase + future demand.
I always tell my clients:
you shouldn’t just buy an apartment. You need to understand what kind of asset you will end up with.
Because an investor should not only ask themselves:
“Do I like this property today?”
But also:
“What will I be able to do with it in a few years?”
And this is exactly where real investment analysis of property in Madeira begins.
Viktoria Pavlovskaya
Real estate and investment expert on the island of Madeira