The real estate market in Africa has experienced tremendous growth over the last decade.
The housing deficit in Nigeria has made the real estate industry very attractive for investors. And interestingly, the growth of the Nigerian real estate industry has also brought about the increasing popularity of off-plan properties.
Off-plan properties refer to properties that are still in the planning or development phase. This means that investors make their decisions based on the location and development plans of the property.
This is quite different from the traditional approach to real estate investment where investors subscribe to already existing properties.
In today’s post, we share some important details about off-plan investments, as well as key reasons why you should invest in off-plan properties.
Let’s get to it.
1. Capital Appreciation
One major advantage of investing in off-plan properties is the fact that investors have the opportunity to acquire properties for an amount that is less than the actual market value.
Of course, this is due to the fact that properties are valued at lesser amounts before they are built. Investing off plan also means that investors can share risks with the developer, as their investment is deployed towards the construction of the property. Thereby, hedging against a higher investment amount accrued due to the cost of borrowing.
This provides investors with the opportunity to enjoy capital gains either before or after the project is completed. Consequently, it is not uncommon for investors to invest in off-plan properties with the intention of selling them off at completion, with the sole aim of getting returns on the capital investment.
This method has proven to yield varying percentages of returns, depending on the duration of the project amidst other factors.
On the other hand, for investors who acquire properties to live in, the capital appreciation is endless.
2. Flexibility with Payments
Unlike most existing properties that require a one off investment, off-plan properties come with payment flexibilities that allow investors to spread the investment amount for up to 12months (or more, depending on the nature of the project) and make payments in installments.
This flexibility takes away the pressure of needing to have the total investment amount before subscribing to fantastic investment opportunities.
Of course, this flexibility has created room for more investors across a wide income bracket to get on board with the world of real estate investments.
As is with most development companies, a down payment is usually around 30 – 50% of the total value of the property.
3. Brand New Homes
Whether you intend to invest in an off-plan property for residence or strictly for ROI, off-plan properties avail you the opportunity of acquiring a newly built home.
This means that you are acquiring a new property with contemporary architectural provisions and newly installed fixtures, thereby saving you costs on property maintenance in the nearest future.
Also, if you intend to generate rental income with your property, it would interest you to know that brand new homes attract clients who are willing to pay a premium to live in new spaces.
Of course, this guarantees a higher return on investment overtime.
4. Opportunity to Alter Floor Plans
Investing in off-plan properties comes with lots of flexibility, and one of them is the privilege of making inputs or altering the floor plan to suit your investment goals.
Of course, this flexibility does not come with buying already existing properties.
Being able to alter floor plans before or while construction is ongoing helps investors to eliminate costs on renovations, as is the case with buying already existing properties.
In other words, investors get to enjoy the benefit of acquiring a property that is functional, coupled with its modern architecture.
5. Freedom of Choice of Specific Units
Do you have preferences regarding the position of your housing unit(s) in an estate?
Then off-plan is perfect for you.
Investing in off-plan properties avails you the liberty of choosing your preferred location within the estate.
This means that you also get to decide the view from your home. This opportunity could come as a premium, or an early bird reward.
Fantastic, isn’t it?
Investing in off-plan properties comes with lots of advantages. However, some investors have become skeptical about investing in off-plan properties due to bad experiences that they have had in the past with property developers.