Unique Advantages when Investing in Off-Plan Developments

South Africa’s property market continues to adapt to new social and economic pressures that are changing the way in-which we purchase properties. Financial constraints have resulted in many home-buyers finding it increasingly difficult to buy completed properties, and as a result, are turning to unconventional ways to secure a home. This narrative has given rise to off-plan developments, whereby, home-buyers have the option of buying properties that are still in developmental stages.

 

When buying off-plan, the only way to “view” a property is through available plans, computer graphics and elevations. For many, this sounds like a daunting prospect especially when considering that buying a home is a significant investment. However, like any other property purchase, risks do exist, and therefore, before signing on the dotted line, it will require research and careful consideration. Unfortunately,  off-plan developments have come to receive a somewhat bad reputation due to international isolated cases where buyers discovered defects in their property upon moving in. Thankfully, in South Africa, these occurrences are few and far between due to tight legislation that is well in favour of the buyer.

 

 

Buyers are protected from the start to the end of an off-plan development owing to a stringent processes and requirements. All payments received from buyers are held by a designated attorney in an interest bearing account. These funds are strictly released once transfer takes place and bonds are only paid over at the time of transfer. This ensures that the purchaser is protected in the event that a developer is not delivering  in accordance to their contract. If this occurs, all funds will be returned to the purchaser by the attorney holding the account.

Benefits of Buying Off-Plan

 

Those deciding to purchase an off-plan property will benefit from several factors that are unique to its design, implementation and overall structure.

 

 

Buying off-plan means massive savings particularly if its purchased in the initial phase before or at the start of construction as this is when it is at its lowest price. Prices are directly linked to the stage of development, and this means that when it nears completion, prices will inflate as the risk of investment decreases and buyers are no longer solely relying on a sketch.

 

 

Since off-plan developments are brand new properties, buyers have the advantage of being the first occupants. In this way, they avoid large transfer fees, which on average, can cost up to 8 – 10 percent of the purchase price.

 

 

Off-plan developments are not only affordable, especially when buying at the initial stage, it also offers attractive deposit requirements amounting to 10 percent with the rest of the payment due upon completion. Additionally, the deposit can be arranged through a home loan.  

 

 

Off-plan purchases make for lucrative investments that can be used as buy-to-sell or buy-to-let options. If you snap up a property when it is at the lowest price, you can later sell it and generate a significant return on the investment. The sale can take place close to completion or when completed. If you are looking for a long-term investment plan, you can let out your property and receive a steady income each month, which if managed correctly, will lead to good profit margins in the future.

 

As with all property purchases, it is integral to do your research before making the decision to buy. Off-plan purchases are no exception to this rule, and as such, requires you to be proactive. Ensure that you research the developer and development so you understand exactly what you are getting into. Once this is done and you are positive about your decision to buy, you can enjoy the benefits that accompany this type of development, from its legislative safeguards and saving factors to its investment potential.