Off Plan Property Investment: Benefits and Potential Risk

Off plan property investment are becoming very popular among top investors interested in real estate properties, especially in fast growing markets like Lagos and Abuja, Nigeria. But we all know investment opportunities like buying off plan isn’t without its own risk.

What exactly are off plan properties, and why should you consider it as an investment opportunity? In this blog post, I will break down everything you need to know about off plan property, its benefits, and risk to watch out for.

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What Is Off Plan Property?

Simply put, off plan property is real estate that is purchased before completion or in some cases, before construction kicks off. Investors invest based on the developer’s blue print, architectural drawings, and 3D tours of the property.

It is essentially buying of the property at the planning stage before or when it’s still under construction. It is mostly common with residential and commercial apartments.

Benefits of Investing in Off Plan Properties

Buying a property off plan offers several potential benefits, but not without it’s own risk. Here are five benefits of buying off plan:

1. Flexible plan payment:

Instead of paying the full amount of the property upfront, buyers can spread payments over the construction period. A good off plan property investment plan is the Highbury heights phase 1 and Highbury heights phase 2 project.

It offers a payment plan of 0-6 months, twelve months and eighteen months respectively which makes it affordable and cost effective for you to save up and pay to own your property in instalment without disrupting other investment plans you have.

2. You Purchase at a Lower Cost:

One of the huge benefits of buying a property off plan is that it allows you to purchase it at a low price compared to when the property has been completed.

When the property has been fully completed, the advantage is that you can resell at a higher value compared to when you bought it at the construction stage.

3. You get Higher Capital Appreciation:

In major cities like Lagos and Abuja, where real estate is a huge investment opportunity, off-plan properties see a significant increase in value by the time it is completed. Properties selling off-plan like the Cornerstone apartment in a developing area like Ajah, Lagos will see a market value increase by the time the project is fully developed, giving you instant equity.

4. YOu get the best unit:

It’s a no brainer that when you buy early in an off-plan development, you will most likely get the best unit available. You will get a unit with a better view, larger layouts, and more desirable locations within the area of purchase.

5. Customization & Low Maintenance:

When you buy an off plan property, you have the liberty of telling the developer to customize certain aspect of your own unit to your taste such as the layouts, and finishes. This means you can make the space truly yours.

You also will likely not carry out any maintenance while moving into your newly acquired property because it will be a brand new one built with quality and modern construction materials.

Potential Risk of Buying Off Plan Properties

While off-plan properties can be a great investment opportunity, it also has it own risk. It’s important to carry out due diligence and be aware of the following potential pitfalls:

1. Delay in Construction:

This is one of the most common issues in off plan property development. Factors like limited funding, bad weather, and construction disputes can push back the stipulated date of completion. This can be a huge barrier if you are thinking of moving in immediately or reselling to make profit.

2. Developer Bankruptcy:

To mitigate this risk, it is advised you carry out a thorough check on the developers profile which include track record in completing projects and financial standing. Most developers offer insurance or guarantee at the initial stage of the buying process to protect your investment incase such scenario occurs.

3. Changes to the Design/Layout:

I’m sure you are familiar with the phrase “What I ordered Vs. What I got“. In this case, the final build might not exactly as it was on the plan when you purchased it. Developers might need to make adjustments due to practical constraints, and this could result in changes to the layout or finishes of your property.

4. Market Fluctuations:

We all know the real estate market is subject to fluctuations because of the present state of the economy. The market might be booming when you invest but could drop when your property is completed. If the prices fall, it means your off plan property purchase is worth less than expected and on the other hand, if prices go higher, it means your off plan property purchase will appreciate in value.

Conclusion

If you are considering investing in high yield returns, you should consider buying an off plan property. However, this process has its own challenges, so its very vital that you make a thorough research before embarking on this journey to protect your investment.

Make sure to work with a trusted real estate developer like facibushousing to help secure a flexible payment plan to minimize risk.