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In today's dynamic real estate market, all investors are constantly seeking opportunities to maximize their returns and build a diverse property portfolio. One strategy that has gained considerable attention is investing in off-plan properties. These pre-construction projects, also known as off-plan or pre-sale properties, offer an enticing prospect of securing a property before it's completed, potentially reaping financial rewards in the process.
Are you interested in buying off-plan property? In this article, we’ll address some of the most common questions property buyers have about the process of buying an apartment before it’s ready to move into.
What is off-plan property?
off-plan properties refer to real estate projects that are sold before they are completed or constructed. These properties are marketed based on architectural plans, renderings, and other project details provided by the developer.
Overall, off-plan properties can be an opportunity for investors to enter the real estate market at a potentially lower cost with customization options.
In Turkey...!
In the Turkish property market, properties on the market fall into three major categories. Renovated properties, ready-to-move properties, and off-plan properties.
The concept of off-plan property sales has been present in Turkey for several decades. However, it gained significant popularity and momentum in the early 2000s, following a series of legal reforms and changes in the real estate sector which underwent a major shift in its market with the enactment of the Foreign Direct Investment Law in 2003.
Since then, off-plan property sales have continued to grow in popularity across Turkey, not only in Istanbul but also in other cities and popular tourist destinations such as Antalya, Bodrum, and Alanya. These projects often include residential apartments, villas, or mixed-use developments with various amenities such as swimming pools, fitness centers, and landscaped gardens.
Since you are reading this article, this means you are interested in buying off-plan property, but you still hesitate to. Let me introduce you to this concept as a simple equation.
What Does “Buying Off-Plan” Mean?
Buying off-plan property means purchasing property – typically an apartment – in advance of its completion. Off-plan property is typically sold prior to construction beginning at a significant discount, often with a small deposit requirement.
Let us have a look at the prices of recent projects that were purchased as off-plan properties from investors and let us compare their prices nowadays:
1-Rotana tower, when it was under construction 4 years ago, had prices of $250,000 and now $650,000 when it is ready.
2- Piyale Pasha, the first phase was 3 years ago, 1+1 option cost 220 000$, and now it is 600 000$.
See?
Profits from this investment might be really huge.
Why invest in Off-Plan Property?
1* Lower cost
Off-plan properties often come with the advantage of being priced lower than neighboring properties within the same area.
2* properties will be going with the preferences of the local market, which accounts for over 96% of real estate transactions in Istanbul. This ensures that the properties have the desired specifications that align with the demands of buyers.
So, it does offer buyers the opportunity to choose their own fixtures and fittings and to design their own interiors as they wish.
An investor once said: "We were able to pick the kitchen, the bathroom, the floors, and some of the tiles for the bathroom as well,".
-BBC Quotation-
3* Higher appreciation
The feasibility of the operating plan is high for ready off-plan properties, while for those still under construction, the potential for significant capital appreciation is substantial.
better opportunities for selling it after the investment period concludes.
4* your properties will be strategically located, enhancing the feasibility of investment, and streamlining the process of concluding the investment within the desired timeframe.
All those advantages are interesting, but would you buy a house or a flat without actually seeing it first?
The answer is YES but with a good calculation.
What are the risks Should I avoid?
* Warning1: delay in delivery. Your property may not be delivered on time.
Real estate investment typically requires a substantial capital investment, making it challenging for small and medium-sized business owners. Thus, any delay in the project's completion beyond the specified timeframe translates to lost time for the investor, losing time means losing money.
While a minor delay might be tolerable, the situation becomes much more concerning if the project is not delivered at all.
You should address construction companies with a good reputation in the market.
Such as Tahincioğlu, ARTAŞ Group, Emlak Konut, Mar Yapi, Keleşoğlu, Karden İnşaat...
* Warning2: you may find results not the same as expected.
To ensure that the property is delivered according to the agreed-upon specifications, it is crucial to include detailed descriptions of the apartment's specifications and the materials to be used in the contract between the buyer and the real estate developer during the purchase process.
* Warning3: (ROI)
There’s also the possibility that the property you purchase doesn’t increase in value as much as you expected, or at all, during its construction.
To maximize return on investment (ROI), it is advisable to analyze well. seek off-plan properties constructed by reputable developers, ideally located in areas experiencing increasing investor demand and make sure it is the right location in the right timing.
* Warning4: you might find yourself unable to sell the property If a contract includes a "no sell" obligation, it restricts the possibility of selling the property in the short term. Therefore, it is crucial to thoroughly review the contract if you intend to sell the property quickly.
To avoid making unprofitable real estate investments, it is better to seek expert real estate consultation before purchasing a property, particularly if it is still under construction.
The safest and smartest plan to invest in off-plan property in Turkey?
Important to say:
As first step to take is to contact a real estate agency so they make sure to avoid all the risks we already mentioned above.
We highly recommend early investment in under-construction projects due to the potential investment returns ranging from 25% to 50% in certain projects. Investing early in a project that requires a two-year completion period can yield a return that may even reach 100% within that timeframe. This is primarily due to the substantial property price inflation that occurs close to project delivery.
Even in the case of conservative growth estimates for investment projects, which we mentioned at 25%, the returns are at least three times higher than the highest rental income for a ready-made property, typically averaging around 4% to 5%. In the best-case scenario, rental income might reach 8%, but it still falls significantly short compared to the potential returns from investment projects under construction.
Conclusion:
Off-plan investments in Turkey offer a return up to 40% within 2 or 3 years! The benefits of an off-plan investment in Turkey are excellent: this form of investing in real estate in Turkey offers a very high yield of about 20-30% within 2 to 3 years... highlighting the risk associated with investing in unfinished projects. Consequently, many individuals tend to avoid such investments to prioritize safety. Nevertheless, achieving the highest profits often entails taking calculated risks, doesn't it?
If you would like to be informed about new projects and / or extraordinary opportunities to make an excellent investment in Turkey, we suggest you contact us to access crucial information and details. We provide insights into the current state of the market, future trends, and essential guidelines to follow when navigating the process of buying, owning, and investing in real estate.
