What is an ‘off plan’ property
An off-plan property is an unconstructed property purchased directly from a developer or in some cases a first owner who has done this already. In the case where the buyer is buying directly from the developer at time of purchase the buyer usually pays a 10- 20% down payment and signs SPA (Sales Purchase Agreement). Depending on which developer the rest of payments made can and do vary but are usually linked to construction.
Advantages of buying ‘off plan’
- Save Money – Buying an Off plan property allows investors to get a purchase price at the earliest and lowest possible price. It also allows buyers to choose which the very best apartments in a particular development increasing the chances of gaining the maximum return on their investments.
- Sell before completion – Quite often investors can sell off their off plan property contracts prior to a projects completion. Assuming the market has performed well and the project proved popular this often means selling for a higher then purchase price.
- Lower up front costs – Payment plans for off plan can and do vary from developer to developer. With some developers only requiring a 10% down payment and the rest linked to constructions the outlay required is relatively low.
Potential Risks in buying ‘off plan’
- Delayed completion time – Developments don’t always go according to plan and there have been cases of development being completed well after their scheduled completion dates. It is for this reason very important to do your research on the developer as well as ensure any sale agreement signed ensures you are compensated for any such delays.
- Change in market conditions – A downward move in property prices can result in the property being worth less then what the buyer has paid. This risk is not limited to off plan properties but can affect them more as they may be harder to liquidate then ready properties.
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