{"id":79691,"date":"2025-06-24T12:22:18","date_gmt":"2025-06-24T09:22:18","guid":{"rendered":"https:\/\/amlak.net.sa\/?p=79691"},"modified":"2025-11-25T21:24:34","modified_gmt":"2025-11-25T21:24:34","slug":"%d8%a7%d9%84%d8%aa%d8%b3%d9%88%d9%8a%d9%82-%d9%82%d8%a8%d9%84-%d8%a7%d9%84%d8%a8%d9%86%d8%a7%d8%a1-%d9%84%d9%85%d8%a7%d8%b0%d8%a7-%d9%8a%d9%81%d8%b6%d9%84-%d8%a7%d9%84%d9%85%d8%b7%d9%88%d8%b1%d9%88","status":"publish","type":"post","link":"https:\/\/amlak.net.sa\/en\/79691\/","title":{"rendered":"Marketing before building: Why do real estate developers prefer off-plan sales?"},"content":{"rendered":"

Real estate markets in the region are featuring residential units displayed in elegant showrooms and 3D renderings, even though the land remains empty and the concrete has not yet been poured. Despite this, waiting lists are forming, and payments are being made to reserve apartments that have not yet been built. It is a phenomenon \u201cOff-plan sales<\/a><\/strong>\u201c, which has evolved from a mere marketing tactic into a key financing mechanism relied upon by real estate developers, not only in the Gulf countries and Egypt, but also in most emerging markets.<\/p>\n

But why do developers prefer this model? And what makes investors risk their money on projects that are still only on paper? This report sheds light on the economic motivations of developers, the regulatory framework governing this type of sale, and the challenges facing buyers.<\/p>\n

Marketing the Dream Before Construction Begins<\/strong><\/span><\/h4>\n

\u201dMeans\"Off-plan sales<\/a><\/strong>\u201dA customer purchases a real estate unit that has not yet been built, based on architectural drawings, designs, and promotional materials. In some cases, these transactions begin even before the final permits for the project have been issued. Under this model, the buyer pays an initial sum in advance and then makes the remaining payments according to a schedule typically linked to stages of completion, with the understanding that they will take possession of their unit upon the project\u2019s completion.<\/p>\n

In many countries, this type of sale is subject to regulatory controls, under which payments are deposited into designated escrow accounts and are released to the developer only as construction progresses, in an effort to protect buyers\u2019 funds from default or fraud.<\/p>\n

Flexible Financing and Lower Risk<\/strong><\/span><\/h4>\n

Developers prefer Off-plan sales<\/a> <\/strong>For a variety of reasons, chief among them being self-financing. This model helps finance the project through the cash flow generated by the buyers themselves, thereby reducing the developer\u2019s reliance on high-cost bank loans. In many cases, advance payments are sufficient to cover a significant portion of construction costs, which gives the developer greater ability to manage cash flow and reduce financial risk.<\/p>\n

In addition, early sales allow developers to test the project\u2019s viability in the market. If the units see strong demand from the very first announcement, this is considered a positive indicator that supports the decision to continue or expand the project and gives the developer greater bargaining power with banks and lenders.<\/p>\n

From a marketing perspective, selling a large portion of the project before construction begins enhances the developer\u2019s reputation and gives it a boost in the market, especially when it is announced that most of the units have been sold before construction actually begins.<\/p>\n

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Nahaah Off-Plan Sales Projects<\/span><\/h4>\n

The Saudi market has seen significant growth in this type of project, particularly in Riyadh and Jeddah, where the number of pre-construction project permits sold has increased by more than 1,30% over the past three years.<\/p>\n

Furthermore, in Dubai, for example, official data indicates that more than 70% of the residential units launched between 2021 and 2024 were sold off-plan, in a trend that has prompted many developers to adopt this model as their primary option. In Saudi Arabia, the \u201cWafi\u201d program oversees the regulation of off-plan sales,<\/p>\n

In Egypt, despite the absence of a strict regulatory framework similar to that of the Gulf states, developers are increasingly offering units with long-term payment plans (sometimes up to 8 years), relying on \u201coff-plan sales\u201d to finance their projects amid inflationary challenges and a shortage of bank financing.<\/p>\n

Strict regulations to protect buyers\u00a0<\/strong><\/span><\/h4>\n

To reduce Risks of Off-Plan Sales<\/a><\/strong> that buyers may face, several Arab countries have issued strict regulations requiring developers to open escrow accounts, tie fund withdrawals to completion milestones, submit periodic reports to regulatory authorities, and provide warranties against technical defects in finishes and the concrete structure.<\/p>\n

These measures have increased transparency in the market and led more investors to place their trust in this model, although concerns remain in some markets that lack robust legislation, where there have been cases of delayed delivery or delivery of units that fall short of promised specifications.<\/p>\n

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Real Estate Developer's Profits\u00a0<\/strong><\/span><\/h4>\n