Everything You Need to Know About Buying Off-Plan
Buying ‘off-plan’ is becoming increasingly popular amongst investors. Some investors would see buying off-plan as risky, as they would be buying a property before they have seen it. Others are catching on to the many benefits that buying off-plan brings. Especially as the government is pushing for more new-builds to cater to the increasing demand, buying off-plan is becoming more relevant.
What does it mean to buy ‘off-plan’?
Buying off-plan means you are investing in the property before it has been built. Or, in many cases, buying before construction has begun. This means buyers will usually only have the floor plans, specifications, and sometimes the CGI’s to go off. While it may sound risky, buying off-plan can be extremely advantageous. If you are thinking of investing in off-plan property, here is everything you need to know:
The benefits of buying off-plan
- Capital growth
- Cheaper prices
- New-build, modern design
- Choice of specific plot
Cheaper prices and higher returns
The first thing to know about buying off-plan, and the main reason for its popularity, is the fact that it is a much cheaper way to buy. When you buy a property during the planning stages, the value is likely to go up by the time of completion. This means the potential for capital appreciation is much higher than that of a completed property.
Also, some developers can offer discounts for early investors. While the property is under construction, you could secure a cheaper deal. Once the property is fully built, it will begin to get more interest from buyers which will drive up the price. Therefore, not only is buying off-plan a cheaper alternative, but it is also a more profitable alternative as the value of the property is likely to increase over time.
More choice and higher quality design
Another attractive element of buying off-plan is investors will often have the most choice. Whether it is the great views or south-facing gardens, if you buy off-plan you will get the choice of a specific unit. To secure the best unit, developers will work on a first-come, first-serve basis. Buying off-plan puts you in the best possible position. Consequently, securing the best unit in the property will increase tenant demand and reduce the vacancy rate.
On top of this, an off-plan property will have a new-build design. Developers will incorporate modern, high-spec features that will be much more appealing to potential tenants. Not just from a design perspective, but a practical perspective too. New-builds are being built to the latest environmental and safety standards, meaning your property is future-proofed. Modern tenants are putting more value on living in newer and greener properties. Also, buying off-plan makes the role of being a landlord a lot easier too. The newer the property, the less likely it is to encounter issues.
Research the developer
As with any investment, there is going to be some element of risk. A key part of being a successful investor is knowing how to minimise these risks. One way to do this is by conducting thorough and careful research into your investment. When it comes to buying off-plan, the best way to reduce any minor risks is by conducting full due diligence on your developer.
The main risk of buying off-plan comes from failure on the developer’s side. This risk can be reduced if you research your developer. Investigate the history, reputation, and standards of their work. Here at CityRise, when dealing with off-plan developments we make sure to complete full due diligence on any developer we work with. Taking into account everything from the financial stability of the company to the standard of completed projects, no stone is left unturned.
So, should you invest in off-plan property?
The short answer, yes. Buying off-plan has a wide range of benefits. Also, in the current climate, the government are pushing for more new-build properties to cater to the supply and demand imbalance. Currently, there is a huge shortage of houses, but demand is skyrocketing. Therefore, for investors looking to buy off-plan, now is a perfect time.
Although buying off-plan isn’t the right path for every investor, we would say you should never consider it to be ‘too risky’, as this is a property investment myth. As with every investment, there is going to be some element of risk involved. But, buying off-plan is no riskier than buying upon completion. These risks can be controlled by conducting thorough research into the property, location, and developer history. That way, the property investment process can be a smooth and enjoyable one. If you choose to invest with CityRise, our expert advisors will guide you along the process from start to finish.
To find out more about investing off-plan, speak to one of our Investment Consultants.
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