Off-Line Properties Opportunities: Advantages and Disadvantages
ESV Daniels Yakubu Ogwu
The real estate landscape is fast changing, and buying off-plan properties is one of the game changing dynamics, buying off-plan properties has become one of the most economically viable options for real estate investors.
In most developing African countries, including Nigeria, off-plan properties are becoming economically viable option for home buyers in rural and urban areas. The deal here is simple, the home buyers buy below the open market rate, given that the houses are still under construction, and the market value will definitely appreciate upon completion, and over time. The appreciation becomes so high when the house is tastefully completed.
Real estate professionals have variously defined this type of transaction in property purchase 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 buys into the concepts, designs, and other things that are associated with the property as originally planned by the property developer.
Investing in 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), Independent Corrupt Practices and Other Related Offences Commission (ICPC).
Another demerit 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. This due diligence must be carried out by real estate professionals like Estate Surveyors and Valuers.
Also, 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.
Off-plan property buying is a value-chain in the real estate market that is being embraced by many investors. This market trend 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 make it work for our common good.
ESV Daniels Yakubu Ogwu, is a Nigerian businessman, real estate professional, and a member of the Nigerian Institution of Estate Surveyors and Valuers.
