On Plan vs. Off Plan
Buying Property On Plan (Fully Built)
Buying real estate on plan is when a buyer purchases a property after completion of the building stage.
- Because the property is already completed you can actually see what you are buying.
- You take no risk at all with the developer.
- The surroundings are completed, and landscaping is already in place.
- You get the immediate benefit of your purchase, be it by being able to live in the property yourself, or by having it generate rental returns.
- You pay about 30-40% more for the property than you would have if you’d bought off plan.
- You may need to pay the balance in one go if mortgages are not available for foreigners.
- Almost impossible to make changes to the layout and finishes.
- You may have difficulties tracking down the developer if anything is wrong with the property.
- You are limited to what is still available because most likely the best plots or units will have been taken by people who purchased off plan or in the very early stages of construction.
Buying Property Off Plan (New Construction)
Buying real estate off plan is when a buyer purchases a property while it’s still in the planning or construction stages. This means that the buyer can only see how the property will look through computer generated imagery and other technology.
- You are buying at the current price which can be least 30-35% cheaper than buying a finished property. Some people find themselves priced out of the market if they wait until a project is completed before committing themselves.
- Payment plans are often available, allowing the possibility of having to pay just a reasonably low deposit when committing, and having staged payments according to construction progress.
- There is the possibility to re-sell the property for a profit prior to completion. Some buyers purchase off plan never intending to wait until it is completed. They take advantage of the staged payment plan, and put the property back onto the market just before it is completed or almost sold out. By doing so, they take the profit from the natural increase in the property value.
- You can have input into things like the interior design, floor type, kitchen and bathroom finishes, etc.
- Get the best choice of land plots, locations and views, instead of waiting until completion to choose from what is left.
- As off plan buyers are technically funding the project, they sometimes can negotiate extras into the deal such as upgraded finishes, furniture packages, discounted pricing, etc.
- Having one of the earliest finished properties in the development, the early buyer has the possibility to stay in contact with the developer while he is still finishing the rest of the development. If something should go wrong, this makes it easier to get the problem solved.
- There is nothing to see. You are depending on the renderings and other marketing material that the developer offers to make your decision on committing to the property.
- Potential risks are involved – You should check what the consumer protections are in the area of you purchase, and the reputation of the developer for delivering the product as advertised.
- A lawyer is recommended to maximize your protection as a buyer by writing or amending the contracts to be as much in your favor as possible, and to perform the right checks to ensure a sound purchase.
- If buying off plan with intentions of re-selling the property when it is completed or nearing completion, there is the risk that prices could fall instead of rise.
- When buying in the first phase of a development project which has multiple phases, it may feel like you are living on a construction site for some time. This could affect your quality of life and/or rental potential.
- You will be paying for something before being able to benefit from it by living in or renting out the new property.
Off plan property investing offers buyers unique opportunities to own their dream house, while making manageable payments. For those who have some time to wait, this is a viable means of buying real estate in Africa that is worth the consideration. With the proper protections in place to ensure a sound purchase from a reputable builder, buying off plan is often an ideal fit.