There are a number of reasons why you can expect above average returns on your investment by investing in off-plan properties:
- because the property is still at the planning stage it will be priced well below the current market value.
- the equity can be as low as 20% of the price of the property required to secure the property.
- at any time during construction the property can be sold for its current market value
Depending on payment terms your return on investment can be as follows:
This example shows what happens if you sell after the full 15% increase. According to the best scenario with a
20-80% payment terms your investment can achieve over 65% return.
This example hasn’t shown any overall growth in the property market. Based on current market conditions,
prices look set to continue to rise, which means you can expect gains to increase by a further 7-15% per annum
depending on location.
By-to-let
If you buy the property with the purpose of letting it, investing in off-plan property will give you further
advantages:
- based on current law developers must give 3 years warranty on every newly built property;
- the maintenance cost are relevantly lower than in case of used properties;
- depending on location and the quality of the apartment you can expect an annual rental yield of ca 5-
7%
- banks generally offer better mortgage terms (APR 6-8%) in case of newly built, off-plan properties
therefore should you purchase your property with a mortgage, your investment can even be self
financing
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