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It is believed that the method of successful property buying can be defined in just 1 sentence:
"Buy in the right place, at the right time, below market price!"
Well, if you buy an off-plan property, all 3 aspects are likely to be met, and the profit realised on the property will be much higher than if you buy a finished building. In this article we will tell you all about the advantages of buying a property off-plan.
Table of Contents
What is an off-plan property purchase?
An off-plan property purchase is when a buyer buys a property that is only on the drawing board exists or the developer has not finished building it.
What do we have at this stage?
In general all the components needed to start construction are available, i.e.
- the building plot
- the visualisation plans
- all construction plans
- the official authorisations
- the construction plans and timetable
Who can I buy off-plan property from?
Typically this is a professional real estate development company that handles the entire construction process, e.g. the selection and purchase of the optimal site, the planning, the permits, the construction itself and of course the sale.
The benefits of buying off-plan
Lower purchase price
At this stage, investors can buy at below market value. The discount available compared to the price of the finished building is usually around 5-15%. This represents savings in the tens of thousands of euros.
Scheduled instalments
Another advantage is that the full price of the property does not have to be paid at the time of signing the contract, but is usually requested in 4-5 instalments: the first instalment is paid at the time of signing the contract, and the others are paid at the completion of certain construction milestones.
Increase in the value of the property on completion
In addition to the lower price of the purchase itself, the value of the property often increases dramatically on completion. Our partners have reported an increase of between 10-30%, which is a considerable ROI over a 12-24 month construction period, which can be realised immediately.
Customizability
The advantage of buying off-plan is that you can choose from the best positioned apartments or villas, which can make it more valueable and/or better suit the buyer's tastes and needs, and you can also customise the furniture and layout (within certain limits).
The risks of buying off-plan
There are undoubtedly risks involved in buying off-plan. Let's look at what they might be:
Delayed handover
In tourism real estate investment, every day of delay results in a precisely measurable loss of revenue - this risk does not exist with the purchase of a finished building. Professional property developers therefore indemnify their buyers against the risk of delay by setting a penalty.
The project fails
Unfortunately, there have been plenty of examples of this in the recent past: the island was closed for two years due to COVID, and the crisis has taken its toll on the construction industry. All over Bali you can see half-constructed buildings abandoned... Whether the construction stopped because investors withdrew or because the property developer could not cope with the crisis, I have no information, but we hope that the healing of these "wounds" will begin once the pandemic is over. At the same time, there has been a cleansing of the market, with weak and financially unstable companies failing and quality ones gaining strength. And the good news is that we only work with them.
Poor quality workmanship, deviation from plan
The 3D presentation was beautiful, but the finished building barely resembles it? Crooked walls, dripping taps, bad engineering? It's every buyer's nightmare - fortunately, you don't have to worry about it. Our partners' portfolio speaks for itself, they have a proven track record of high quality work. And of course, they guarantee the property for decades.