Much of the off-plan property market has been hard hit by the current global recession, in Turkey and across the rest of the world. However, the dream of buying a brand new Turkish property at a low price is still incredibly appealing and there are some particularly good opportunities available now. The main idea behind the off-plan dream has been buying cheap, getting a holiday home for yourself, maybe even making rental income when not using it - all at the same time as seeing the value of your property rise. We give some pointers in this financial climate to be aware of when buying off-plan property in Turkey. There are lots of pros to off-plan purchases but there are risks too. You will need to weigh them up and make your own decisions. It is a very good way of starting out on the property ladder but buyers should be aware of the potential downside in order to buy into the right project.
The greatest risk comes with the buyer not choosing the right developer. With off-plan you are not buying into a building or complex as no building exists at this stage. What you are doing is 'buying into the developer' and you are relying on the development company to fulfil their promises to build the property. Because, at this stage, it is only a project which exists, buyers have the opportunity to buy at low cost. As the project progresses, the anticipation is that the price of the property increases and reaches its maximum when the building is complete. Thus, you buy in low and as the build goes on, your investment grows automatically. This can be particularly appealing for purchasers as the price is fixed at the outset and you don't miss the boat. Staged payments can be good for those who can organise funds in chunks and newly built homes don't have the same costs as resales or renovations. Purchasers who are buying to rent their properties usually find more tenants simply because the building and fittings are new, which holiday makers like.
It all sounds perfect but there are potential risks in off plan. The developer is the key to most potential problems and you need to be sure of how financially sound the builder is. It is not unheard of for developers to have no financial backing at all, simply relying on deposits from the earliest buyers to fund the land purchase and enable him to obtain financing from the bank. If you believe that the developer/builder has no funds in the project at all, then walk away. Often the contracts which are presented to the buyer favour the developer - naturally! You must obtain the services of your own independent lawyer who will investigate this contract and present to you the implications of all the clauses so that you thoroughly understand what you are signing.
Unlike buying a resale property which you can see and touch, buying off plan is buying from architect's plans, drawings and ideas. Additionally, it is likely that there are other developments being built around the complex in which you are interested. Noise can become a problem and further developments can affect the resale value of your own property.
The worst scenario which could happen is that the developer does not complete the build. Your lawyer will assist you with protecting yourself against this happening and put insurances in place which would compensate you if the developer fails to deliver or becomes bankrupt. Choose the location and your developer with care is the best advice we can give, along with obtaining the services of an independent lawyer who will act solely in your interests. The years of never-ending boom for overseas property have gone. However, there is plenty of off plan property available with good long term potential and now is the time to negotiate for a really good deal.
Things to watch for
1. Investigate the developer, particularly their financial circumstances and look at property they have already built
2. Remember, your investment is with the developer, not the apartments or villas
3. Check out all warranties
4. Get your own lawyer before signing or paying anything: do not take the legal recommendation of the developer or agent for obvious reasons
5. Get all details for the quality of finish and furnishings in writing in the contract and check them
6. Organise any mortgage required early on and ask your lawyer to insert a clause into the contract that purchase is dependent upon obtaining this
7. Get professional snagging done before final signature
8. Endeavour to make the last staged payment as big as possible
