Buying Off-Plan Properties: The Pros and Cons
ESV Olujimi Ayoola Kalejaiye
All over the World, buying off-plan properties has become one of the most economically viable options for real estate investors. In Nigeria and other developing economies, off-plan properties are becoming a cheap option for home buyers, both in the rural and urban areas. Here, the home buyers buy below the open market rate, given the fact that the houses are still under construction, and the market value will definitely appreciate upon completion, and over time.
Professionally defined, off-plan property is a property that is available for purchase before completion. In some cases, it is called off-plan real estate purchasing. The prices are often relatively low when compared to the completed property. When a property investor subscribes to the concept of off-plan property, the investor is buying into the concepts, designs, and other things that are associated with the property as originally planned by the property developer.
Buying an off-plan property comes with a lot of advantages. Besides the fact that the investor is buying below the market rate, strong capital growth as the property appreciates over time is assured. It also has the market potential of being resold to another investor before completion, and gives room for installment payments at an agreed rate, and period. Giving the average Nigerian access to affordable housing is another advantage that comes with buying off-plan properties, irrespective of the location.
As juicy as investing in off-plan properties may look, it has some disadvantages that could be very damaging to all the parties involved. The risk associated in off-plan property transactions is huge .The standard and structure of the property may not meet the global standard for a modern property. The developers may not tell the investor the major reason why the property is being sold before completion. In most cases, investors in this market segment of the real estate space may lose their investment due to a number of factors like a pending court case, fraud related cases with government agencies like the Economic and Financial Crimes Commission (EFCC).
Another disadvantage associated with buying off-plan properties is the fact that the building materials used may be substandard, and stand the risk of building collapse. In a bid to make quick money, most developers deploy the services of non-professionals, and deliver poorly executed jobs to investors who have paid for the properties as off-plan investors.
In mitigating the risks that are associated with the purchase of off-plan properties, due diligence must be adequately carried out before an investor can part with his money in this regard.
Tested and known real estate brands should be patronized when investing in off-plan properties. When you buy from a known brand, the risk is reduced, and excellent delivery is assured to the investors, and the final property consumers.
Buying off-plan properties is a real estate market segment that is not only profitable, but it has come to stay. The onus is on all professionals in the real estate space to deploy their best to making it work for our common good.
ESV Olujimi Ayoola Kalejaiye is a Registered Estate Surveyor and Valuer, and the Team Lead at Jimi Kalejaiye + Associates, a registered Firm of Estate Surveyors and Valuers.
