What is the meaning off-plan property?

Off-plan investment is simply property that is bought before its completion and picked up at the initial stage of the launch by the developer. You buy the property looking at the elevation of the building, the floor plan and the layout plan of the complex and that gives you a rough idea. A lot of developers also make a Sample Flat with near exact dimensions of the rooms, living rooms etc. and suggesting the kind of flooring, bathroom fittings, sizes etc.  and what the apartment will look like when the same is ready and hence the term ‘off-plan' which is more popular abroad. In India the term still remains buying an Under Construction Home or apartment.

Investment in off-plan property – the advantages

There are many advantages to investment in off-plan property, including:

Potential for capital growth

Off-plan property investment allows you to secure a property at the market price today. However, by the time the property is finished prices may well have gone up, and so you will make an immediate profit on your investment once the property is finished. The unique part of the Under Construction Property is that it is both Friendly to the property investor as well as the actual user and with staggered payment approach both the parties enjoy the ease of payment and also at the same time the benefit of appreciation.

Pay with instalments

Many developers allow you to pay the cost of the property with installments throughout the build. This means your investment in off-plan property does not cost you a large sum of money in one go. You can secure a high value asset for very little initial outlay. Also, the balance part can be secured via a home loan and the EMI there also increases with the outflow and the burden is not immediate and during the last leg of the apartment getting ready you can decide to sell and encash the same as well.

Sell before you buy

One good idea or an option from investment in off-plan property is to sell the property before you even finished paying for it. With off-plan property you can sell on to someone else before everything is completed, meaning you don't have to finish all your payments, but can take advantage of any increase in housing prices since your initial outlay. Although investment in off-plan property solely for this purpose can be risky because the market can go down as well as up, if you are confident in the property you are buying then it can work out well.

Investment in off-plan property – the disadvantages

As well as there being many advantages to investment in off-plan property, there are also many disadvantages, including:

Risk of development

Investment in off-plan property can be risky, because you are buying something that is unfinished. You are essentially taking a risk on that particular developer, so you have to be sure that they are trustworthy. You need to know that they have the finances and expertise in place to complete the project. Before your investment in off-plan property you should view other examples of properties that the developer has completed, and speak to other consumers who have bought off of them. You should also get a guarantee about the builder's financial status written into your contract.

Lack of security

Before you go ahead and commit to your off-plan investment property, you need to know how secure your investment will be. The contract you sign needs to be watertight, and it is a good idea to get independent legal representation throughout the building process. You need to know that if anything happens to the builder, that you will still have your property or get your money back.  

No guarantee of quality

Although the building may look great, it is important to have legal assurances of the build quality written into your contract, covering both the internal and structural elements of the building. As previously mentioned you should also look at previous properties built by the developer to get an idea of quality.

Uncertainty regarding area

If your investment in off-plan property is in an area where there is a lot of development, you need to be certain that once everything is finished the area is going to look good. If you later find out that all the surrounding development work is industrial complexes or factories, the value of your property could be severely reduced. If you see other developments in the area, go and check them out to see what they are building.

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