Buying a block in a large residential complex - why it is more profitable than building it yourself

Participation in construction projects is an active strategy for making money on real estate. Now residential complexes with hotel infrastructure are becoming more and more popular. And the opportunity to become the owner of premium apartments in such a complex with rich infrastructure, and even in a picturesque place, is no longer a dream, but a standard practice.

Reducing project construction costs

If you build a residential complex for 4-8 blocks, then you can provide a richer infrastructure to residents at a lower cost. Thus, the total price of infrastructure is dissolved among all residents. Many apartments use the cost of construction: the price of each apartment includes small infrastructure costs compared to if the same infrastructure is created for one house.

Sauna, hammam, steam room, large outdoor and indoor heated pools, children's pool with water slides, gym, bowling, billiards, massage room, outdoor parking and underground garage, football field, tennis court, volleyball and basketball courts, children's playground with swings, a garden with tropical plants, many flower beds, paths and fountains - such a variety is not inferior to the most luxurious hotels.

In the future, the clients of an investor who buys one block in such a complex receive luxurious infrastructure at a low cost. The major advantage for the investor is a reduction in the cost of building a project with a diverse infrastructure.

Cheaper to buy than build yourself

Consider buying a block from a developer in a large complex of 4...8 blocks. Reasons it is much more profitable than building one block yourself:

1. The cost of construction for a large developer is much less. When the developer builds several projects, he is provided with significant discounts on the purchase of materials and payment for the construction work of contractors. Thus, all prices for a large developer are 20...30% lower than for a small developer building a standard one-block complex.
2. The presence of own construction equipment from a large developer also significantly reduces the cost of construction. A small developer has to rent equipment.
3. Residents of this block will use the infrastructure of the entire complex. Such an infrastructure is more interesting and extensive than in a complex of one house. And its cost is distributed among all blocks and apartments. For example, the price of a swimming pool is divided into 300 apartments or 40 apartments - a big difference. It is possible to make better infrastructure for 300 apartments, and as a result, the investor will receive a block in combination with the best infrastructure at a lower price.

Investments in construction at the off-plan stage

Another advantage for the investor is that there is no need to finance the entire project at once. At the off-plan stage, a down payment of 25-30% is made. Further, sales open, where small investors are the first to purchase apartments in order to resell or rent out more profitably, then retail buyers are pulled up.

At the off-plan stage, for example, an apartment can be rented for 30 thousand euros, when the house is ready - for 45-50 thousand euros. In Turkey, as elsewhere, prices rise as construction progresses. And the developers themselves are guided by the situation: they sold 30-40% of the apartments - they raise prices by another 5-10% to the planned increase.

Minimum price and maximum installment plan - a guarantee of future profitability

Entering the project at the initial stage of construction ensures the minimum price for a block of apartments and the maximum installment payments until the end of construction.

The minimum price for apartments in price lists is fixed at the construction stage. As construction progresses, the price in the price lists rises and by the end of construction it grows by 20-40%. This is the standard return for an “apartment” investor in Turkey.

And the “block” investor, besides the price increase at the construction stage, also receives a completely different cost of apartments at the purchase stage, so its profitability is higher and can be 30-100%.

A "block" investor may not wait for the completion of construction, but starts selling his apartments at a retail price the very next day after purchase through our company Hayat Estate or through the developer. The process of assignment at the construction stage is simple and does not entail additional registration costs.

In addition, if in the future the "block" investor plans to rent out apartments, then here his profitability is higher than that of the "apartment" one, and can reach 12-15% per annum. First, because of the low cost of buying apartments. Second, having an entire block of apartments at your disposal, it is advisable to hire 1-2 employees to manage the rental in the block. This is more profitable than paying for the management of the developer or a third-party management company.

No hassle for the investor

Also, an important advantage for the investor - the developer takes all the trouble:

• Selects and gains land
• Creates a residential complex project with all internal and external infrastructure
• Collects documents and gets a building permit
• Creates a legal base with a local tax specialist
• Manages the construction process
• Sells apartments, paying for advertising, the work of its managers, sightseeing tours

The cost of buying a block in Alanya

The cost of square meters in Alanya depends on the stage of readiness of the complex, its location (and therefore the cost of the land on which the project is located), class, floor and view characteristics (sea view is always more expensive) and other parameters.

For a "block investor", considering the above factors, it can fluctuate between 400 - 1.200 euros per m2.

In pricing for a “block” investor, two options are likely:

• discount from the price list
• calculation of the unit cost, to which the developer adds his margin (this option is often more interesting to the investor, but not all developers agree to it)

In our portfolio, there are options for “block” investments with an entry threshold of 1 million euros.

Investment risks

Of course, when the opportunity to increase (sometimes even double) capital in two or three years is at stake, there are risks. An unforeseen situation may arise, for example, another financial crisis, which will slow down sales. Or the investor miscalculates the choice of a partner - the developer will be unprofessional and cannot organize the process. Or the complex will be unclaimed: there are a lot of factors, from location to design.

The major risk for the investor is the reliability of the developer and the pace of sales. You may need to invest all the money yourself and then wait for transactions. The project will still bring its profit, but perhaps not in one and a half, but in two or three years.

Summary:

Having been cooperating with developers in the Turkish Mediterranean for 8 years and maintaining a trusting relationship, we are among the first to know about the appearance of unique offers and inform our investor clients. Self-construction of one house requires more investments than buying one unit in a large project with extensive infrastructure.

And remember the advantages of investing in the construction of one block:

• cheaper to buy than to build yourself
• no need to deal with the issue yourself and control the process
• profit of 30-100% on invested funds for 1.5-3 years of construction
• A nice bonus: when buying real estate from $ 250,000, an investor can get citizenship for himself and the whole family.