Introduction
Off-plan projects have become a popular investment option among real estate investment options. But are they the best choice? In this article, we will be looking at the pros and cons of buying property off-plan. By definition, off-plan is when a buyer purchases a property before it is built. Those properties are sold before they are completed or even before construction has started. Investors can usually make payments in stages as the project moves forward. Though this may seem risky, many have found it to be very profitable. Here are some advantages and disadvantages to consider before investing in an off-plan project.
Pros of Buying Off-Plan In Kenya
1. Privilege of Getting the First Pick
At this early stage, since only a few people have committed, you have the opportunity to select the best floors with the most favorable view as well as choosing either the high or lower floors on the basis of your suitability.
2. Access to the Best Price
Generally, when a project breaks ground, properties are lower in cost than when the project is finished. When you invest off-plan, you are able to purchase the property at a lower cost today that will hopefully rise when the development is finished, giving you a better return.
3. Customization Options
You have the special privilege of tailoring your apartment to your demands while the construction is ongoing. The flexibility means you can have the layout or change one or two things in the layout exactly the way you want it.
4. Flexible Payment Plans
For off-plan projects, you can usually pay in installments spread over the amount of time it takes to complete the construction while only making a deposit of approximately 20%. This payment structure offers financial convenience and can make the investment more accessible to a broader range of buyers.
5. Potential for High Appreciation
Off-plan projects offer a potentially high appreciation rate over others if invested correctly. The value of the property rises as the project progresses, from the groundbreaking phase to completion. Acquiring the property early on will allow you to capitalize on this appreciation and ultimately maximize your investment returns. Nevertheless, it is crucial to note that projects in progress have a set of disadvantages, too. So, let’s look at the cons of buying an off-plan property.
Cons of Buying Off-Plan In Kenya
1. Risk of Delayed Construction or Project Stall
One of the biggest problems with off-plan projects is that they can be delayed or even stalled at the construction point. There are several reasons this might happen, including fraudulent developers or mismanagement of funds meant to be spent on construction. Prior to investing in an off-plan property, it’s extremely important to thoroughly research and evaluate the track record and reputation of the developer.
2. Potential Discrepancies with Architectural Designs
Chances are, the final design could lack the attention to detail, or the house could turn out to be different from what was anticipated by the developer. Such discrepancies are often minor, but it’s something to keep in mind and consider when managing your expectations.
3. Occupation or Rental Returns Waiting Period
Off-plan investment means you’ll have to be patient and wait for the house to be completed before you can move in or get rental returns. However, how long this waiting period will be depends on factors such as the size and complexity of the project, and there may be unforeseen delays.
4. Legal and Regulatory Issues: The legal process is a concern for investors to make sure that the documentation and compliance are in line.
Above are the pros and cons of this kind of investment, so you should consider the facts before considering an off-plan investment. Engage legal professionals to review contracts and verify property documentation. Consider investing in insurance to protect the investment against project delays or cancellations, and seek professional advice to mitigate risks, which is necessary to ensure a successful investment of your money.
At Austine Realtors, we offer detailed guidance on our listed off-plan and ongoing projects. Our goal is to help investors make more informed decisions by providing the tools needed to select the right investment in relation to their goals and preferences. Look out for our features on off-plan projects in Lavington, Westlands, Kilimani, and Kileleshwa.
Conclusion
Off-plan projects represent an attractive investment opportunity with affordability, flexible payment options, and the potential to bring high returns. They do, however, come with inherent risks that need to be carefully considered and properly vetted. Off-plan projects can pay large dividends in the long term for those willing to take these associated risks.
