Purchasing a home before it is finished is known as “off-plan buying.” By using this method, you may be able to purchase a home for less than the going market rate, creating a possible opportunity for profit with the prospect of rising home values. In Kenya, first-time homebuyers and seasoned investors are choosing to buy off-plan due to the challenges in obtaining traditional finance for the purchase of properties.
“Off-plan selling” is a strategy used by developers to entice buyers early on and guarantee that they will generate sales once the project is complete. They can also raise funds to partially finance the project using this selling strategy, which will minimize the financing costs related to completing it.
The choice to purchase off-plan is frequently made based on the developer’s project implementation plans, visual representations, and market track record, where purchasers evaluate prior projects completed by the developer.
Benefits of buying off-plan property in Kenya.
- Lower prices: When compared to purchasing a finished home, purchasing off-plan is frequently less expensive since developers frequently give incentives to early investors to get them to invest in the project.
- Potential for capital appreciation: The value of the property could increase dramatically between the time it is purchased and when it is finished if it is located in a region with strong demand and little supply. Your investment grows as the property’s market value does. You can therefore profit from possible capital growth and possibly increase your rental revenue.
- Better payment plans: Off-plan properties generally have flexible payment schedules that are better for the buyer. To help buyers better manage their money, this may involve making payments in stages over time.
- Customization: The chance for buyers to personalize a property according to their tastes may exist. For instance, buyers may select the finishes, such as flooring, kitchen and bathroom fittings, and paint colors. Because of this, you are able to customize your home to suit your interests and tastes..
Before buying off-plan, it is important to consider the following:
- Reputation of the developer: Research the reputation of the developer and ensure that they have a history of delivering quality projects on time.
- Location: Consider the location of the property and ensure that it is in an area that is in demand and has good potential for capital appreciation.
- Contract terms: Carefully review the contract terms and conditions to ensure that you understand the responsibilities of both parties.
- Timing: Be aware of the expected completion date and ensure that you have the necessary funds to complete the purchase.
Challenges of buying off plan property.
- Delays in completion: Projects may be delayed for a number of reasons, including finance constraints, market conditions, and construction challenges. This can result in a longer wait period before the property is finished as planned.
- Changes in specification: The finished product might not be exactly as planned and might not live up to customer expectations. Also, buyers might not have the chance to evaluate the property’s quality in its whole until it is finished, which could lead to unforeseen problems or deficiencies.
- Difficulty in obtaining finance: Banks could be reluctant to finance off-plan acquisitions and might have more stringent loan requirements.
- Unforeseen costs: The total cost of the property may rise as a result of hidden expenses including developer fees, legal fees, and stamp duty.
- Market fluctuations: An off-plan property’s value might not rise as anticipated or might even drop due to the unpredictability of the real estate market.
- No rental income: For investors, off-plan purchases could not immediately provide rental income.
- Difficulty in reselling: If market conditions change or if the development is not finished on schedule, it could be challenging to sell an off-plan property.
- Risk of developer insolvency: If the developer experiences financial difficulties, the project may be postponed or even abandoned, causing substantial financial losses to the customers.
How to carry out due diligence before committing to an off-plan developments.
- Research the developer: Verify the track record, reputation, and industry experience of the developer.
- Verify the location: Be sure the area is secure, well-connected, and close to amenities.
- Review the plans and specifications: Check to see if the specifications are accurate and the plans meet your expectations.
- Check the approvals: Verify that the appropriate authorities have granted the necessary approvals.
- Assess the market: Check to see if the property is priced fairly and if the market is trending in the right direction.
- Seek legal advice: Get a legal professional to analyze the contract and make sure it is reasonable and in accordance with industry standards.
- Consider the payment terms: Ensure sure the payment terms are flexible, safe, and ensure that your money is safe.
- Look for guarantees: Check whether any guarantees or warranties are being given by the developer and whether they are sufficient.
- Consult with professionals: Consult with real estate agents, lawyers, and other professionals before making a final decision.
In conclusion, there are more advantages to buying off-plan developments than disadvantages. But before purchasing an off-the-plan property, a buyer should carefully weigh the benefits and hazards, as well as his or her individual financial status, investment objectives, and risk tolerance.
Before making a purchase, buyers should ensure that they are properly informed by learning more about the developer and the particular property in question as well as by consulting an expert.
Why choose us?
Axis Assets Ltd. is the perfect companion to walk with you along your journey of investing. Being experts in Kenya’s real estate market, notably in Nairobi and its environs, our staff will offer the best analysis for your investment. We also conduct in-depth research on the real estate developers with whom we partner to guarantee that we are offering our clients reliable investment opportunities.
We have investment opportunities in Ruiru (Kiambu) and Nakuru on off-plan stages and other completed projects in Nairobi, Ruaka (Kiambu) and Ongata Rongai (Kajiado).
If you have any questions about real estate, speak to one of our representatives. We promise to provide you with satisfied service.