Key Ready Or Off-Plan Istanbul Property? Which Is Best?

key ready or off planBack in 2007 I worked for a property investment firm that would only deal with off-plan property in Eastern Europe. This was what investors used to buying off-plan in the UK wanted. The relatively low price of property and high capital growth potential ensured that they saw little risk in this approach.

They thought that cities like Prague would just keep on growing, unfortunately like any party, there always come a time when the music stops and the lights go out.

Soon, as with any property boom, the fun in Eastern Europe ended rather abruptly as some developers failed to deliver on time and delays meant that many investors couldn’t get the most out of their properties before the door to profit eventually slammed shut a year later.

One of the dangers of buying off-plan property, particularly in an emerging market such as the one we have in Istanbul is if there is a change in market conditions or a municipality decides to pull its planning permission, investors could end up waiting a long time for completion of the property take place.

What was once so exciting about buying off-plan (and still is) is the potential return you will make as the value of the property rises on completion. In theory, you can invest in a property and then sell it in the window of opportunity that lies between the start of construction and completion and a large return made.

Investors made (and lost) a lot of money doing this in the boom years and there are still opportunities to do this today, but it is a high stakes game that could just as easily be lost as won.

If you want to make it easy for yourself as a property investor, my advice is get rid of anything that looks and feels like a gamble in these market conditions.

People who are not prepared to take a risk on their property investment in emerging overseas markets like Turkey can invest in key-ready property, which still has the potential to rise in value by 10% a year.

The old argument that buying off-plan is the most profitable route may not stack up when external factors come into play. The most recent of these is the new KDV tax rise which now applies to apartments that are less than 150 square metres in size.

For those who are investing in key ready Istanbul property, KDV tax is unlikely to be an issue as plans would have been submitted in 2012.

Buy off-plan now, however, and you will need to check the details or get a Turkish lawyer to check the details very carefully to see if the 18% tax increase has not been added on to the price of your property.

With key ready property on the other hand, you are unlikely to encounter any sleepless nights as the building is ready for immediate use. If you want to throw a party to celebrate your purchase you can because you are in control rather than having to wait around for developer deadlines to be met.

Another bonus and one that I am very fond of is you can start collecting your rental income and profits earlier with a key ready property. So what you sacrifice in a higher price, you gain back through the return you get on the property

Remember, property investment is for the long term and Istanbul is an emerging location, so if you’re not a gambler my advice is take the key-ready route to beat the odds.

Are you key-ready or off-plan investor? Please leave your thoughts below:

Kind regards

Brett Tudor
Property Expert