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Many investors are buying off-plan, but what are the benefits?
The term ‘off-plan property’ refers to a development that is available to purchase before construction. The development is typically sold before or during construction. Therefore, it is sold at a lower price point than a completed new-build.
When diving into property investment, it is vital to consider the key factors to maximise the potential of your purchase. This includes the ROI, capital growth and percentage yields of a property. To determine capital growth, investors often look at the surrounding area. Is the development close to universities and local amenities? Are there strong connectivity and transportation links?
These questions allow investors to paint a picture of the potential pool of tenants in the area. Are there any future city regeneration plans in the pipeline? Cities undergoing regeneration are more likely to have a booming economy.
Off-plan properties give the investor more flexibility and freedom to hand-pick the units of choice. Ultimately, there are no previous owners as investors are buying directly from the developer. Therefore, the buyer will never be placed in a housing chain.
How Can an Investor Benefit from Buying Off-Plan?
Purchasing off-plan is an incredibly viable investment option with many benefits.
Below Market Value Price
Developers position the off-plan purchases below market value. Therefore, investors can secure the property at a much lower price. This enables developers to sell as many units as possible before the completion of the property.
Strong Capital Growth
Investors who purchase off-plan typically see a rise in price growth overtime. On completion, the price is much higher. Off-plan properties are set below market value due to the inconvenience of not being able to move in immediately. There is also the risk of paying for something not yet built. However, property prices grow in value each year and are affected by the economic growth in the area.
Sell for Profit on Completion
Investors who purchase at the early stages of an off-plan development may also choose to sell on completion. Consequently, generating a profit. As the value of the property increases overtime, the investor can sell for a higher value. However, many seasoned investors will tenant the property quickly to benefit from regular rental income. In the long-term, the value of the purchase will continue to increase and add to capital growth.
Flexibility to Pick Preferred Units
Upon finalising the property, investors will have the freedom to pick the units they prefer. Investors will have the option to pick rooms with certain features or across different storeys.
Off-plan properties include newly built developments or refurbished properties. New builds now adhere to green specifications to ensure a sustainable and environmentally friendly property. Therefore, the properties are much more energy efficient with higher EPC ratings. Consequently, higher EPC ratings result in cheaper bills for tenants. For investors this is a huge selling point and will increase tenant demand. On the contrary, investors can charge higher rental rates due to sustainable specifications.
We Partner with Reputable Developers
It is crucial to research the developer when buying off-plan. At CityRise, all our developments undergo a careful selection process. We consider the overall reputability of the developer, security, desirable locations, price and potential returns. Each investment undergoes a complete vetting process. A thorough due diligence report also analyses the investment. This ensures that you will benefit from a lucrative investment with minimal risk.
Why not expand your portfolio – To find out more about investing off-plan, speak to one of our Investment Consultants today.
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