Thread Status:
Not open for further replies.

How safe is buying off-plan ??

Discussion in 'Egypt property' started by dave99, May 25, 2008.

  1. dave99

    dave99 New Member

    .
    During my sales campaign over the last year or so it's been very interesting to hear lots of different views on the amount of risk people are willing to take to "bag that bargain", of a property at a big discount.

    Anyone like to share their views on off-plan buying in Egypt.

    How long into the furture do you consider is safe and to buy: -

    - 2 years beore completion
    - 1 year
    - 6 months
    - or what

    .
    .
     
  2. Georgina

    Georgina New Member

    What puzzles me is that are lot of people are talking about buying as 'investments'. Prices can go down as well as up but OK the trend at the moment in Egypt is up, up, up. But everyone seems to be buying off plan to get the bargain. What about looking for resales? A lot of people have been buying off plan for the last few years in Egypt and for various reasons now want to sell now the property is complete. What is going to attract buyers to buy these resales when everyone seems to be taking up the offers of new constructions and all the artists impressions and offers of guaranteed rentals?

    I know in El Gouna there are properties that have been on the market for 2-3 years if they are not in the most desirable area or without views. OK I think they are over priced but surely the owners must be getting desparate and will drop their prices considerably if they are no longer living here and want to do something else.

    Driving from Cairo to Marsa Alam there is endless prime beach locations waiting for development so I don't think we will ever run out of 'off plan' properties coming on the market.

    Just some thoughts!
     
  3. dave99

    dave99 New Member

    Linked with Finance maybe ?

    Do you think that off-plan is more attractive because people have more time to pay ???

    .
    .
     
  4. Georgina

    Georgina New Member

    Not necessarily because you could remortgage your UK property to obtain the cash which you give you as long as you like to pay.
     
  5. Riccal

    Riccal New Member

    Off plan benefits

    When I first got involved in the off plan market in spain it was before mortgages were available and purchasers would make stage payments until completion. Because of the lack of builder finance at the time, builders tended to complete projects a bit more quickly in order to be able to move onto something new. By the same token, an offplan project was usually priced about 20-30% cheaper than a built one because it was implicit that the purchaser was taking a risk and was, in fact, to a certain degree a partner in the construction process enabling the builder to actually build.

    And, the same as in the current market, purchasers would try and unload before the next instalment was due in order to make a quick turn. Then builder finance and mortgages for ex pat end users became widely available and changed the face of the market.

    Over time, at least in Spain, builders began to realise they had actually provided a "financial instrument" for speculators to participate in. Over a short period of time the spread between finished and off plan projects narrowed until, eventually, there was no real advantage, as far as purchase price was concerned, in buying offplan or ready. It became a speculative product and this aspect started to drive the market rather than the desire to provide cheaper property.

    So what are the benefits of offplan property today. I think in Egypt that providing accomodation of a certain standard is one of the issues. Older resale properties generally just dont make the grade for a first world investor so this sort of inventory needs to be provided - and the investor (or even lifestyle buyer) is basically making all this possible by pre buying which allows builders access to levels of finance they would not normally have in order to complete projects. Are they cheaper than buying turnkey. Too early to say in Egypt as very little like for like product has hit the market yet but, like any other marketplace in reality, 3-5 years required and a sensible approach by the government and builders in predicting saturation point.

    Here in Spain at the moment, built properties are generally available cheaper than off plan as either a private seller or developer who wasnt able to sell it off plan would like to get rid of it to free up cash. (not that there are that many new off plan projects by comparison).

    Anyway, just a few thoughts. Doubtless they will open to doors to discussion as by no means covered all pros/cons and driving forces behind the off plan market in this post.

    Cheers

    Rick
     
  6. vix

    vix New Member

    Like most things, its 'horses for courses'. There are many downsides to remortgaging UK property in the current climate. Many people investing abroad for the 1st time are either nearing the end of their mortgage, or are mortgage free and do not wish to comprise their financial status. Younger buyers are mortgaged to the max with little or no equity, whilst others are not even able to get onto the 1st rung of the ladder in the UK, thus looking elswhere. Whilst it would be extremely nice to achieve a beach front property in a desirable area, many of us have chosen to buy exactly what we could afford by the way of off plan purchase. This is the only way I could proceed without selling my UK property,
     
  7. Lsab

    Lsab New Member

    We don't have a UK property to remortgage and stage payments are the only way for us to proceed at the moment.As you say Vix, many other people are in a position of not wanting, or simply unable, to take that route.
     
Loading...
Thread Status:
Not open for further replies.

Share This Page