MC Property - Press release

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Buying Off the Plan - potential versus pitfalls

In these uncertain economic times, developers are put under significant pressure to secure a large level of off-plan presales should they require bank financing for construction – sometimes as high as 80 per cent of the gross revenue. This presents great opportunities for those looking to capitalise on the benefits of buying residential off-plan apartments.

While buying a property before it has been built by simply studying a set of architectural plans and a list of internal finishes may be daunting, those who do their homework have the potential to enjoy substantial rewards.

MC Property Director, Marios Constantinides, who is currently selling his Seaside on the Park development in Marcoola's Town of Seaside off the plan, says it's generally easier for developers to sell a finished product so buyers are offered a number of incentives to commit at this early stage of the development.

“We generally see the price of properties escalate from the off the plan price to when construction starts, to when a display unit is available and then again on completion. Buyers therefore have the opportunity to buy at a very competitive price and usually only have to commit to a 10 per cent deposit.”

“You're really buying a product at today's prices which will be delivered in the future, by which time it has usually increased in value. Another advantage is that stamp duty is calculated on the purchase price, not the value of the property on completion.”

While many have capitalised on such opportunities there are pitfalls buyers should be aware of when buying off the plan. Considerations such as the quality of finishes, view corridors, noise levels and the general aesthetics of the project can not be inspected before purchase. The developer may also take longer than expected or worse still, be declare bankrupt before the project is completed, in which case the deposit that is held in trust would be refunded.

A recent survey conducted by Colliers International Research, found that 39 per cent of investors surveyed would not buy off plan due to the questions surrounding the financial stability of builders.

“The developer's reputation is a very important factor when buying off plan. You need to know who you are buying from and what they have delivered in the past to ensure you are dealing with a quality operator,” Mr Constantinides said.

“Developers also often attempt to sweeten the deal by offering incentives such as furniture packages or a rental guarantee of 5 or 6 per cent return for the first two years. We recommend buyers are very wary of such offers as this cost is usually built into the purchase price.”

Seaside on the Park provides affordable beachside living with apartments from $465,000 and is due for completion in July 2011. For further information on the project please call 07 5302 7079 or visit www.seasideonthepark.com.au.

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