Most people are aware that buying into an off-plan development invariably means acquiring a property at very attractive price. You can normally expect to pay at the very least 20% less for an off-plan property compared to a similar property that is already built and ready to move into. Wherever you choose to buy off-plan, there will be a number of things you need to take into account before signing on the dotted line. Obviously, you will want some idea of when the development will be completed. What is more, it is important to know that the developer has a good track record of finishing projects on time and to a good standard of workmanship. Our investment experts at Propertyshowrooms.com’s International Property Investment Network (IPIN) address these concerns and only choose developers after subjecting them to IPIN’s Due Diligence procedures which entail a series of vital background checks.
Higher Risks
Typically, buying off-plan in up-and-coming markets offers investors the best return on their outlay. However, these higher returns come with additional risks. This means that there are a number of specific factors to consider when buying off-plan in emerging property markets. So before choosing a country in which to invest, it is advisable to ask yourself a few questions:
• How economically stable is the country?
• How politically stable is the country?
• How prevalent is corruption?
• Are language issues likely to cause problems with the transaction?
• Does the developer have experience with off-plan projects?
• What are building standards like in emerging countries?
• How transparent are the property ownership laws?
Economic StabilityIt is important that your chosen country has a relatively stable economy. Economic aberrations such as: high inflation, wide-scale industrial unrest or an untrustworthy or archaic banking system have the potential to effect not only the property transaction itself, but also reduce the attractiveness of the country as a place to live, and of course, reduce the future salability of your investment.
Political StabilityPolitical stability is another major consideration. Many emerging markets are places where democratic governments are a relatively recent phenomenon. It is important to assess whether new democracies are likely to stay that way and not revert to an oppressive dictatorship. At this point it is worth saying that because of the stringent acceptance conditions and tough convergence criteria laid down by the EC prior to the accession of the new former Soviet Bloc member states, it is most unlikely that they will slip back to their previous political status.
CorruptionWidespread corruption can make doing business in a country almost impossible. Although corruption happens in every part of the world, it is worth conducting as much research as possible to try to establish that the degree of corruption in your chosen country isn’t serious enough to impinge on the investment potential of your property.
Language IssuesThere are hundreds of thousands of people who have bought overseas properties. Only a small proportion of these are fluent in the language of their chosen country. English is understood and spoken widely in countries such as Spain and France and usually isn’t a major factor affecting the success of property transactions. However, in many emerging property markets, the number of people who can converse in English is likely to be substantially less. English speaking lawyers are much thinner on the ground in Bulgaria and Hungary for instance, compared to say, Denmark or Holland. Obviously, this could present potentially costly delays and misunderstandings.
Choosing the Right DeveloperWhether you choose an emerging or an established property market, it is important that the developer has a previous track record in building off-plan projects. That is why IPIN check to make sure the developer has the degree of experience needed to push the development forward and has the systems in place to handle the various stages of the buying process. We also endeavour to ascertain that the developer has a past record of completing developments within the stated timeframe and to the highest of standards.
Build QualityAcross the world, standards of workmanship can vary enormously. Many people have stayed in hotels abroad where the plumbing has been less than satisfactory or the general finish of their hotel or holiday letting has not been up to standard. With this in mind, IPIN choose developers who have a reputation for producing well-built properties.
Legal MattersOne of the most important aspects to consider when buying in emerging property markets is the respective property laws of the country. In this regard there is no substitute for a good local property lawyer. While it is up to the buyer to make their legal appointment, IPIN advocates using its recommended legal advisors who are selected to represent the client, not the developer. This approach ensures that buyers receive excellent service from qualified vetted professionals. Attempting to cut corners with legal advice could prove to be a very expensive mistake.
High GainsAll or any of the above issues have the potential to impinge on the successful outcome of an off-plan property transaction. Knowing some of the pitfalls that could beset those investing in emerging property markets, many people might feel daunted at the prospect of taking the plunge. At this stage it is worth mentioning that tens of thousands of investors have bought property in up-and-coming property markets without any problems. Admittedly, the risks are higher than buying in more established markets, but so are the expected gains. It is possible to mitigate most of the potential hazards by spending time carefully researching your chosen location. It is also vital that you enlist the help of a good local lawyer, and the choice of developer is extremely important. IPIN’s Due Diligence criteria are in place to help you make the right decision. The dedicated team at IPIN go to great lengths to ensure that the off-plan developments offered by Propertyshowrooms.com are from developers who have a good reputation within the industry.
In ConclusionThere is a continuing demand for off-plan properties in the emerging markets which is not surprising considering the attractiveness of their prices compared to similar properties in Western Europe. Nevertheless, it is important that you do not allow the prospect of picking up a property at an amazingly low price deflect you from taking into account the possible mishaps that can go with the territory. However careful you are, there is always a chance that things can go wrong, but by taking a few prudent precautions you can substantially reduce the chances of making poor decisions and substantially increase your chances of making a healthy return on your investment.
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