Buying under-construction property in Turkey, is it safe or not?
We all know that buying a property anywhere in the world during the construction process means obtaining it at a lower price than buying it after the completion of construction. Some residential properties may increase their price by 20% upon delivery of the project compared to the price during construction, and some investment properties can increase their price by a percentage of more than 100% upon delivery compared to the price at the beginning of construction.
This talk is attractive to real estate investors looking for the highest return on investment, but it is necessary to answer the following questions that concern everyone who wants to buy a property under construction in Turkey in general and in Istanbul in particular:
1- How do I guarantee that the property will be delivered on time and within the required specifications?
2- What is the best construction company I can count on when buying a property under construction?
3- What are the specifications of the investment property?
4- At what stage of project establishment should I start investing?
5- What are the stages of establishing any real estate project?
6- What is the optimal investment plan to buy and sell an under-construction property?
And let's start immediately by answering the previous questions in detail:
- How do I guarantee that the property will be delivered on time and within the required specifications?
Real estate investment is characterized by the fact that it needs a relatively large capital, and therefore if we talk about small and medium businessmen, this investment constitutes a financial mass that is not simple for them, and therefore delaying the delivery of the project beyond the specified time means losing time, and time means money for the investor, even if the problem is confined only by delay, that can be accepted, but what if the project is not delivered in the first place!!
Looking at the pictures below, we notice a project under construction in Esenyurt area of Istanbul, with the same condition, despite there is one year between the first and the second picture.
"No one wants to have a losing real estate investment, so we stress the importance of obtaining a real estate consultation from an expert in the market before buying a property, especially if it is under construction."
As for ensuring that the project is delivered within the specified time, it will be done through the contract that you will sign with the construction company during the purchase and the extent of the financial fines that they will have to pay you in case of the delay in the delivery time.
It is worth noting that there is a 6-month permitting period in the case of any disaster that caused this delay (Covid-19 is the most prominent example in 2020 that gave the right to delay the delivery of all under-construction projects for a period of 6 months), but after the expiration of this period, if the project is not delivered, the penal conditions specified in the contract in favour of the buyer will be valid.
As for the delivery within the agreed-upon specifications, the specifications of the apartment and the materials used must be mentioned in the contract that is signed between the buyer and the real estate developer during the purchase.
As is customary in Turkey, an apartment is fully prepared and furnished so that the buyer can identify the quality of the materials used in construction for walls and floors, kitchen and bathroom ceramics, in addition to the heating and cooling system, the smart apartment control system, and finally the tools and electrical appliances that will be delivered upon completion of the project.
The match between the offered apartment that you saw during construction and the apartment that you received upon completion of the project will have a positive relationship with the construction company itself in terms of reputation in the market, the number of projects that have been completed, and the accuracy of their delivery.
Remember that any savings in the price of a property compared to a similar property in terms of location and space is, in fact, at the expense of the quality of the materials used.
2-What is the best construction company I can count on when buying a property under construction?
Before mentioning the names of construction companies with a good reputation in the market, we must first realize that the magnitude of the projects that have been implemented by the construction company or its many is not the correct criterion for evaluating the best construction company, but the extent of commitment and accuracy in delivery with the choice of high-quality materials is the best criterion for evaluation.
Tahincioğlu Real Estate is a corporate group that operates as a real estate development and investment company under Tahincioğlu Holding. One of Turkey’s leading names in the real estate industry, Tahincioğlu Real Estate is directed by Chairman Özcan Tahincioğlu and oversees premium retail, office, residential, and shopping mall projects in addition to the construction and development of luxury hotels.
The total construction area of projects completed by Tahincioğlu covers over 2 million square meters to date. Tahincioğlu’s construction company, Nida Construction, fulfills all the general contracting requirements of these projects. Among the projects that have become symbols of the company are Palladium Tower, Palladium Ataşehir Shopping Mall and Residence, Palladium Antakya Shopping Mall, Nidakule Kozyatağı, Nidakule Göztepe, Swissôtel Büyük Efes, and Congress Center. Tahincioğlu is currently constructing Nidapark Başakşehir and Nidapark Seyrantepe as well as Nidakule Ataşehir and Nidakule Levent, which are candidates for the LEED Gold Certificate.
ARTAŞ Group, which was established in 1977 by Süleyman Çetinsaya, has more than 40 years of knowledge and experience in the construction industry. The Group operates in the real estate, retail, and tourism sectors.
It has been one of the branding pioneers in the housing market through its brand ''Avrupa Konutları''. The company has produced and delivered a total of 18.500 houses with both Avrupa Konutları and other brands created by joint ventures.
ARTAŞ Group has also carried out shopping center and hotel projects in the retail industry and tourism sector. It has completed and commissioned 5 shopping centers and 5 hotel projects including mixed-use and independent projects. The group, which has a successful performance in the fields of business administration and management, carries on business administration in the hotel projects it builds and management in the housing and shopping mall projects within the structure of the company.
ARTAŞ Group maintains its investments that add value to the national economy with its employment capacity and mobilization provided to the sub-sectors. The Group, which has become the symbol of quality and trust with its experience over 40 years and completed works, continues to realize qualified, high-quality, and peaceful places with its environment and facilities.
Emlak Konut is one of the largest real estate development companies in Turkey. It was founded in 1953 as a subsidiary of Emlak Bank. Emlak Konut is trying to take a future step depending on the needs of the consumer and it is seeking to fill its real estate portfolio and develop it continuously by buying lands on a large scale.
Mar Yapi, especially in Istanbul in the past five years, has signed buildings with modern architectural style in harmony with the neighboring nature, and always works on the philosophy of appreciating the collective spirit of the working group with the development and access to perfection in all its work.
Mar Yapi is known for the luxury of its residential and investment projects; with the modern concept of architectural design the company builds projects with recreational facilities to increase the standards of quality and luxury.
Keleşoğlu is one of the leading real estate companies in Turkey with more than 35 years of experience. The company's projects are characterized by providing profit to the investor, high quality of life, and architectural designs that maintain the beauty and cleanliness of the environment.
Karden Construction Inc. Was established in 2002 in Istanbul and has become a well-known and leading brand in the construction sector with the successful projects it has implemented. The activities started with industrial buildings and then diversified to a wide area such as housing projects, business centers, shopping centers, factories, schools, hospitals, industrial facilities, mass housing, villas, steel structures, power plants, infrastructure, and landscaping works. It spreads.
Karden Construction Inc. aims to bring together the concept of comfortable and modern life with aesthetic architecture with the projects developed for the future. Karden Construction, which constantly renews itself in the constantly developing world, is always aiming further.
These are among the most prominent names currently in the field of construction in Turkey in general and in Istanbul in particular, and there are always new companies emerging in the market that prove their worth. It is better to get a free consultation from our specialized team about them.
3-What are the specifications of the investment property?
A- That the price of the property is lower than the prices of neighboring properties in the same area.
B- That the possibility of selling it after the investment period ends is possible and easy.
C- To have specifications desired by the local market as well, which constitutes more than 96% of the sale and purchase of the real estate in Istanbul.
D- That the operating plan is feasible if it is ready or the amount of the expected capital increase is high if it is under construction.
E- To be in a strategic location that contributes to increasing the feasibility of investment and facilitates the process of ending the investment in a timely manner.
4-At what stage of project creation should I start investing?
If your goal is a pure investment and you got a deep real estate consultation detailing the history of the construction company and its level of commitment on the one hand, and on the other hand, the advantages of the investment project were detailed according to the criteria that we mentioned in the previous question, we can say that you can start investing as early as possible.
In general, every project needs from two to 4 years to be fully constructed, and this varies according to the number of buildings and apartments in each building, and also depends on the area of the project and the variety of entertainment facilities in it, including parks, swimming pools, sports clubs and water pools for decoration.
We recommend early investment in investment projects under construction because the investment return ranges between 25% to 50% in some projects, and therefore early investment in a project that needs two years to be fully completed means a return that may reach 100% within two years and this is the secret of investment in the inflation of the property price tremendously close to delivery,
and even the weakest growth of investment projects, which we mentioned is estimated at 25%, which is at least 3 times higher than the highest rental income for a ready-made property, which averages 4% or 5%, and in the best case ever, may reach 8%.
Thus, this is the concept of correct investment: buying a property in the early stages of construction, selling it when the delivery date approaches, reaping high profits, and then starting over.
All these wonderful plans that we are talking about are subject to the selection of the right property by old experts in the real estate market, otherwise, your investment plan and your awaited profits will turn into a nightmare.
5-What are the stages of building any real estate project?
We will address these steps from a simplified point of view that helps the investor understand the project at any stage. We will not address the engineering stages in a specialized way.
- The stage of allocating space for the project and surrounding the place with iron barriers in preparation for the next stage.
- The stage of digging the foundations and this stage varies according to the number of buildings or towers that will be constructed in addition to the number of floors that each building will contain and also varies according to the shape of the building if it is a regular tower or a building with customized specifications such as a hospital or a car showroom. This stage does not take a relatively long time.
- The stage of establishing the external structure of the buildings or towers and at its end we can see the structure of the building completed without starting the cladding processes, whether external or internal, as in the drawing below in the back buildings, and this stage takes approximately one-third of the entire project completion period and it also depends on the number of towers required and the quality of the materials used.
- The external cladding stage and includes the cladding of each floor in terms of walls and insulation materials that will be used as well as the external structure of the building, whether it is glass or cement resistant to weather factors, as in the picture below, and this stage requires approximately one-third of the project construction period. The structure-building stage, but this strategy is often not used in Turkey:
- After that, the internal cladding phase begins and includes the interior finishes of the apartment, including floors, wallpaper, bathrooms, and the kitchen. This phase takes the remainder of the project’s construction and is often accompanied by the following phase:
- The stage of establishing entertainment facilities, gardens, and swimming pools in the residential complex, which also depends on the percentage of these areas from the total area of the project. They are often established after the completion of the external construction works to avoid their obsolescence upon delivery of the project.
Of course, knowing these stages precisely requires a specialized engineer and also depends on the project plan that is required to be performed, and most important of all is the construction company that establishes the project, as the investor can be comfortable with an ancient company even in the first stages of construction and is also possible as we saw at the beginning of the article that we reach advanced stages of the project and construction is stopped. Therefore, we always emphasize the importance of not being hasty and being tempted by attractive prices in projects under construction before obtaining advice from a company with long experience in the field.
6-What is the best investment plan to buy and sell an under-construction property?
As we mentioned previously, the purchase is in the early stages of establishing the project, keeping the property until the delivery period, and then selling the property and moving to a new property under construction.
The main objective of this plan is that the growth of the property price under construction is much higher than any rental return for a ready-made property, and therefore instead of obtaining a low rental return, we get high annual returns before the project is delivered.
For investors with a 10-year long-term plan, for example, every two or three years can complete the buying and selling process and move to the next process, and so on, with the result of ten years, the investor in projects under construction will get a return more than 3 times up to 5 times from the investor who bought a ready property and get a continuous rental return.