Buying off-plan ‘still offers investment opportunities’

Amanda Jarvis

February 3, 2006

The survey of experienced investors reveals that over 90% have previously bought property off-plan or are seriously considering it for the immediate future. It also reveals that over 70% firmly believe that buying off-plan can represent a good investment opportunity in the current market as long as thorough research is undertaken.

Additionally, canny investors are increasingly looking further afield to benefit from the high capital growth occurring in emerging markets. In fact, over 15% of investors think buying off-plan overseas is a good idea, compared with just 9% last year. Eastern Europe and South East Asia are firm favourites, with some investors even buying new homes off-plan in countries they have never actually visited as they provide solid investment opportunities.

Claire Brown, managing director of Claire Brown Realty comments: “Thailand, Malaysia, Indonesia and the Philippines really are booming at the moment. Capital growth starts at 15% per year and can reach up to 30% in some places, with rental income realistically between 8 and 15%. The return on investment is high enough to make even short term investment worthwhile.”

As buying off-plan involves buying brand new property before it has been built, in a booming market investors benefit from any capital growth that occurs between buying at a reduced rate from the developer and selling it on or after completion. Experts at The Homebuyer Show agree that even in a slowing market there are many good deals to be had.

“Buying off-plan has become popular with many investors and for good reason,” comments Adam Woolley, Marketing Manager at Property for Life, an investment specialist exhibiting at The Homebuyer Show. “Such investments can often yield large returns in a relatively short time, often without the need for huge sums of money up-front. Even in a slowing market it offers good opportunities. Developers still need to sell the properties so are keen to offer incentives in the form of pre-paid stamp duty and inclusive furniture packages. This all helps to ease the pressure and costs faced by the investor.”

Nick Clark, manager director of The Homebuyer Show, comments: “As our survey results show, experienced investors still view buying off-plan property as a shrewd investment, both in the UK and overseas. Even though growth in the UK market has slowed, investors can still secure good deals from developers, minimising their initial outlay. For any investors who want to look further afield however, buying off-plan overseas can offer even greater returns. Despite arguments to the contrary property is still a safe investment in the long term, but investors need to ensure they carry out thorough research before they commit.”

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