Increasing demand for off-plan properties sales seen in KSA
Off-plan developments are currently experiencing some of the highest sales levels in Saudi Arabia notably in residential projects as more developers and homeowners are finding off-plan properties as viable investment options.
“Off-plan sales are beneficial for both potential homeowners and property investors. In addition to guaranteed profit, buying off-plan properties are more affordable and flexible than an existing property. The owner or investor can negotiate excellent discounts, pay a small deposit with staged payments or purchase the property below the market value. Expect high returns and capital growth because the owner can resell the property at a high market price even before the property is built or whilst under construction,” says Mohammad Afifi, Business Development Director of Maximiliano Development Management Services (MDMS), a key player in the growing construction industry in the Kingdom of Saudi Arabia.
However, as confidence in the real estate market gradually returns, developers must continue to regain the buyer’s trust and ensure that off-plan projects will be completed in a timely manner and according to pre-agreed specifications.
“Trust in the developer and in the market is fundamental for off-plan projects. Since stories of poorly treated buyers who have little legal resource and developers who don’t update buyers have occurred in the past, buyers are very cautious now when dealing with off-plan projects. Off-plan sales is vital to the real estate industry because it attracts guaranteed profit so developers must restore the trust of the buyer and be transparent in their transactions to ensure a successful project,” he adds.
Support from local authorities will also contribute to timely completion of projects. Thus, developers would like to see better and faster approvals and no additional charges appearing post design approval such as utility connection charges or interim registration and more expedient default procedures that are actually carried out.
“Developers want to see progress on their developments but need to ensure they hire the right people to make that happen. No longer can they afford to ignore the development manager role. Without an experienced development manager, developers are left to tender contracts through project managers without really understanding what they are buying. Having a non-expert hire an expert is inherently risky, especially when the expert’s incentives are different,” explains Afifi.
MDMS has been working closely with the National Housing Company to develop housing projects for Saudi citizens. The majority of the development projects have shifted to off-plan sales as a result of the coronavirus pandemic which has greatly affected the real estate market.
The Murcia project, one of the largest projects in Riyadh, with more than 5,000 housing villas and apartments, was one of MDMS’ key projects.
Afifi concludes: “Off-plan sales is a proven global concept and if used appropriately can help mitigate the risks that may be faced by real estate developers and will help the real estate industry get back to business.”