During the times when the Turkish real estate market was snowballing, roughly from 2002 to 2010, purchasing property ‘off-plan’ was extremely common and trendsetting. This is because the prices spiked 20-30% post-completion and there were slim possibilities of finding newly-built projects with exact specifications.
All this was true whilst the market spiralled sharply, however, buyers still felt hesitant in investing their hard-earned cash on ‘under-construction’ projects. While properties under the development phase have its own values, let’s debunk the myths and explore the benefits of purchasing an off-plan Turkish real estate.
What is an off-plan property?
In the Turkish property market, houses for sale fall into four major categories.
Renovated property: An old building that is revamped, repaired, and renovated.
Resale property: Refers to houses that already had one or more owners.
Ready-to-move property: A newly-built house with no previous owners.
Off-plan property: A project that is still under construction.
The significant difference between an off-plan project and other properties is that it is uninhabitable. Buyers can not move-in right after the purchase but rather they have to wait for a period of six months to two years before availing title deeds.
Benefits of buying off-plan property in Turkey
A majority of second-home buyers in Turkey buy an off-plan project. At the development stage, builders often begin to market their project at discounted prices to real estate investors, which are below the average market rates. The cost of other properties left in the project is elevated at different stages of the development until the estimated market values are reached and the project is finished. The additional increase in the prices is secured because of the market growth of at least one year during the construction period of apartments or villas.
The crux of buying off-plan properties in Turkey are:
The price of the project
The search process
The time scale of the purchase
Here are the main advantages of buying under-construction projects:
Securing Profits from Property Resale
It is obvious that residential and commercial properties grow up in value before completion. Financiers can put their properties for resale and sell it at an advanced market price. Buying off-plan properties is often a great investment strategy considering the possibility of earning quick profits. Higher ROIs and capital progress benefits can be obtained by renting real estate and raking in profits from the steady rental income, totalling to capital growth.
Make purchase below the market rate
A prominent advantage of purchasing real estate ‘off-plan’ is the ability to secure acquisition at lower market values. Developers propose additional deductions for early bidders and financiers as an extra enticement. They provide property buyers with optimum reductions owing to their ability to vend maximum units rapidly and professionally.
Extends time to plan and save
Properties that are under-construction may take several months to complete, offering adequate time to buyers to plan ahead. If the purpose is to inhabit the forthcoming home, it gives ample time to establish auction of the existing property or completion of tenancy agreements. Off-plan projects further enable investors to fund money reserves and seek financial aid against investments. There are also different payment schemes such as no account advancement payments where the balance of agreement values are remunerated at settlement.
Beat the government taxes away
Off-the-plan procurements are exceedingly valuable for real estate investors eyeing to steer the tax system to their advantages.
To boost real estate development and encourage international property buyers, the Turkish government has rolled out innovative strategies. It permits foreigners and Turk residents living abroad to buy projects straight from the developers that are free from VAT charges under the following conditions:
The investment is made in foreign currency.
It applies to the first property for each owner.
The significant benefit of purchasing an off-plan property is capital appreciation. As values tend to line with the progress and development of the project, off-plan property owners are rewarded for their patience by benefiting from the highest market growth possible. Early investors reap an average profit of 30-40% price growth from start to finish.
Offer personal inputs into interiors, decors, and fittings
When striding into an off-plan real estate, buyers have an added bonus of putting their personal touch to the house. Being able to select a range of high-quality materials and internal finishings, facilitate property owners to create a home of their own taste.
Off-plan properties in Turkey offer many advantages to national and foreign investors. The authenticity of investing in such real estate projects bring forth quick capital growth and investment profitability. Unlike resale homes where sellers demand full payment upfront, properties under construction have flexible payment plans staggered over a period of 6 to 60 months. .
A recent study shows that approximately 80% of residential properties in Turkey are sold at an off-plan stage. To find out more about high ROI projects and investment opportunities in Turkey, connect with the real estate experts at Extra Property here.