Buying off-plan has been on realtors' tongues for a hot minute, so what exactly is an off-plan property? An off-plan property is sold before it is entirely constructed. These properties are sold at lower costs than the actual market value of completed homes. This is the real estate version of ''trust the process''.
Off-plan investing is not only a current trend in the Kenyan real estate market but is here to stay. The market is experiencing growth driven by urbanization, population growth, and increasing demand for affordable housing solutions.
Recent statistics from the last quarter of 2024 suggest land prices have gained significant traction in the suburbs. There has been a 1.6% increase in land prices, with parklands leading with a 3.4% rise, Langata with a 2.9% rise, and Kileleshwa with a 2.8% rise.
Timing is crucial, with areas undergoing infrastructure projects experiencing significant growth. This is the best time to invest in real estate, especially off-plan properties; let's delve into the benefits of buying an off-plan apartment.
In off-plan investing, you are not just buying a house but a vision. It is about trust, the ultimate leap of faith, but it is worth every moment of suspense when done right.
With any leap of faith, you might wonder if off-plan investing is too good to be true. Well, the off-plan property has two sides, just like any other investment, but today, let's start with the goodness of off-plan property investment and why it could be your ticket to a dream home or a smart investment.
Here are the key benefits of investing in the off-plan property market ;
The saying "early bird catches the worm" could not be more appropriate for this scenario. Property prices often come lower than completed units when buying off-plan properties, as developers offer discounted 'early bird rates' to attract buyers.
This situation allows you to make those 'silent moves' as buyers typically enjoy staggered payment schedules, making it easier to manage finances. You can see it as a pay now, brag later. However, it is better to pay milestone payments than monthly payments for off-plan property types.
A milestone payment is a type of payment where funds are released in stages based on the completion of project sections, known as "milestones." Each milestone marks a significant phase or deliverable in the project. This ensures that both parties maintain progress and accountability throughout the project.
If the real estate market appreciates during the ongoing construction, buyers may benefit from a rise in property value when the property is completed. However, it is wise to do thorough due diligence and find a reputable developer to avoid scenarios of construction delays and other risks involved.
Developers allow buyers to have a say in completing projects. Buyers often have the chance for customization options to personalize certain aspects of their new home, such as interior finishes, layouts, or fittings.
Off-plan properties are usually designed with the latest technology and amenities, offering energy efficiency and improved infrastructure like modern layouts. However, the amenities come with maintenance costs or service fee charges. It is wise to ask for additional costs that the project has besides the amount to purchase properties.
Early buyers get first pick on the best units, such as those with better views, more favorable locations within the development, or larger spaces. The rental income generated for a space with amazing views and location is higher, allowing investors to reach their financial goals for the off-plan investments as more people are more likely to pay more rental income for a space with better views.
When choosing the right off-plan property, research the developer’s track record and previous projects to ensure quality and reliability. Look for reputable developers with a proven track record.
Verify all legal documentation and ownership, including title deeds, planning permissions, and agreements between the developer and you, to ensure your investment is secure and legally protected.
Understanding flexible payment plans is important for both residential and commercial properties. Developers offer flexible payment plans that allow buyers to spread payments over the construction period, making them an enticing option for those seeking long-term investment prospects.
First-time buyers should explore financing options for real estate investment. Options for financing off-plan properties include mortgages and government-backed schemes for affordable housing, and it’s essential to secure financing before purchasing.
Popular areas for off-plan projects in Nairobi are areas like Kilimani, Kileleshwa, Westlands, and Upper Hill, which offer good infrastructure, proximity to essential services, and potential for future growth.
The Kenyan real estate market is shifting towards more affordable housing options, driven by government initiatives and rising demand for middle-income housing.
Off-plan properties offer several advantages, including personalization and potential appreciation. However, they also come with risks, such as potential construction delays and changes in market conditions.
Defining investment goals and objectives, whether you want to generate rental income or appreciate the property, is critical before entering the market. Having a clear long-term strategy is also important. A clear vision for the future is key to success in real estate investing. If you plan to sell, consider renovating to increase resale value.
Planning and research are essential when investing in off-plan properties. When deciding, consider location, timing, and financing options. An off-plan property investment is a great start for first-time buyers. Contact us today for your first off-plan investment.
Off-plan property refers to real estate sold before it is built or completed. Buyers purchase the property based on plans, drawings, and projected timelines, often at a lower price than completed properties.
Buying off-plan can offer several advantages, such as properties that are often sold at a discount during the pre-construction phase. Flexible Payment Plans: Developers may offer staggered payment plans, making it easier to manage finances. Early buyers may have the chance to choose finishes or make design choices.
While there are benefits, there are risks, including project delays: construction may take longer than expected, which may delay possession. Developer Reliability: Ensure the developer has a good track record; poorly managed projects can lead to losses.
Research the developer's reputation, previous projects, and financial stability to mitigate risks. Review Contracts Carefully: ensure you understand the terms, payment schedule, and any penalties for delays. Consult with a real estate lawyer to review agreements and protect your interests
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Buying off-plan: How to do it in 2024 and pitfalls to avoid. HomeOwners Alliance. (2024, October 21). https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/buying-off-plan/
How investors can secure viable off-plan purchase: DLA Piper Africa, Kenya: IKM advocates. DLA Piper Africa. (n.d.). https://www.dlapiperafrica.com/en/kenya/insights/2021/how-investors-can-secure-viable-off-plan-purchase.html
Ndungu, D. (2024, January 22). A lawyer’s guide on how to secure an off-plan investment. Diana & Jacklyne Partners Advocates. https://www.dnjlaw.co.ke/blog/uncategorized/a-lawyers-guide-on-how-to-secure-an-off-plan-investment/
