Posted on 15 May 2009
I cannot believe what I just read! In an article in Quest magazine on investing in Turkish property, it says:
“Many people associate buying off-plan with the purchase of an apartment however it is also villas and townhouses that are sold in this way. It represents a great way for developers to raise income to build and for the purchaser it provides the opportunity to buy in at a lower cost than were the property to be sold on completion.”
A great way for developers to raise income to build: this is exactly why so many people have been left out of pocket having paid for an off plan property that will never be completed.
I have always said that off plan property can be one of the most lucrative investments, but that the buyer must carry out extensive due-diligence before putting any real money in.
One of the things I insist that they must find out is whether the developer has sufficient funds to complete the development, be it a mortgage in place, or an existing balance made up of profits from previously successful projects, but never should people invest in a development that is being funded with payments from off plan purchases — even partly funded.
This is because these purchases can dry up very suddenly, as we have seen in the last year, when buyers all but disappeared from investment havens, perhaps most notably Dubai. When the sales dry up, that portion of the funding for the building work is removed. But confidence is also lost, and this more often than not leads to the other funding also drying up and the development ultimately being cancelled.
This leaves anyone who has bought into the development in a bad place; trying frantically to get their money back. These people are often left with very negative feelings about off plan property investment. This is why we should only invest in off plan property if the development can be built without the income from off plan sales.
There are many off plan properties for sale in Turkey at the moment, many of them being built by long-standing developers, and with all funding in place. Find out more by paying a visit to spotblue.com.