"Off-plan" economy: between the ambition of ownership, risks of collapse

The Syrian real estate market is witnessing a growing trend in investment: off-plan sales. This model involves developers launching residential projects before actual construction, relying on installments paid by buyers (subscribers) to finance the building.

While this model is attractive to investors seeking to protect their capital from inflation and to developers avoiding bank loans, it raises fundamental questions about its economic viability and the risks it poses to national savings.

First: The Nightmare of Default... What if the Dream Ends?

This model often lacks genuine financial backing or bank guarantees. If the project experiences a sales slump or the developer is unable to manage cash flow, buyers find themselves facing disastrous scenarios:

• Loss of Liquidity: In an economy suffering from sharp exchange rate fluctuations, citizens' liquid assets become frozen assets in an unfinished concrete structure, rendering them unable to recover their value when needed.

• Legal Liability: Contracts often offer weak protection for the buyer. If the project is halted for political or economic reasons (such as a sudden surge in building material prices), the buyer finds themselves embroiled in a potentially lengthy litigation process that could last for years, while the real value of their investment erodes.

Second: Draining National Liquidity Instead of Attracting It

Remittances and hard currency are the primary drivers of any recovering economy. However, the current "off-plan sales" model operates in the opposite way:

1. Stifling Domestic Liquidity: This model does not generate new liquidity from abroad; rather, it "absorbs" remaining savings within the country, transforming them from circulating funds in productive or commercial sectors into stagnant "real estate."

2. Disrupting the Economic Cycle: Instead of investing these funds in industrial or agricultural projects that would provide the economy with hard currency and create permanent jobs, they are channeled into long-term real estate investments that may remain unoccupied or unfinished, thus becoming sterile "stores of value" that do not contribute to development.

Third: Real Estate as a Safe Haven… Is It a Trap?

Syrians resort to this type of investment as a “lesser evil” option to protect what remains of their savings from inflation. However, turning the entire society into “real estate investors” creates a real estate bubble unrelated to genuine growth in national income, where property prices are determined by speculation rather than the actual purchasing power of the population.

What is needed is not to prevent investment, but to transform it from “random speculation” into “institutional development” that protects the buyer and ensures that real estate is a tool for housing and growth, not a trap to absorb individuals’ savings and freeze them in unfinished buildings.