There is no doubt that Australia is currently experiencing a boom in apartment construction within the major capital cities, and according to recent data from BIS Shrapnel, much of the activity is being driven by demand for off the plan properties. Figures suggest that, just in Sydney alone, there have been an unprecedented number of new apartment developments four stories and above approved for construction[i]. It also seems that the growth in prices is unlikely to end any time soon, with low interest rates, attractive yields and an increasing population based in the high-density inner city areas continuing for the next two years at least.
So what makes off the plan apartments so attractive to people looking for their first property investment or for someone looking to build a property portfolio? It’s simple. With the right planning and long term strategy an off the plan property can be an affordable, stress free and low maintenance asset that provides regular income and capital growth. One of the main benefits of purchasing an off the plan property is the ability to “lock in ownership” of a property with only a small deposit (usually around 10% of the purchase price), without having to settle on the full amount for a period of time. This puts investors in the “box seat”, with the ability to take their time, get their finances in order, save money and look for the best possible mortgage. They are also essentially buying a share in a future property at today’s prices, meaning that savvy investors may even find that their initial deposit is more valuable if the property is worth more when it is completed.
Other benefits include:
- Because the time to completion of a property is normally between 1 to 2 years (and sometimes longer) investors can avoid having to find tenants and property managers straight away. Buying any property can be stressful because of the level of administrative and financial details you have to take care of – an off the plan property helps buy yourself time.
- By getting in early at the first release of an off the plan property you may be able to take advantage of cheaper prices as developers look to sell as many apartments as possible to meet their financial goals. Don’t forget also that using a professional property investment company to help find investment grade opportunities can also give you access to special pre-public and pre-negotiated offers.
- The ability to pick the best apartments can also be a critical step in securing a successful property investment – for example, choosing a great floor plan or a quieter apartment at the back of the development. When faced with a choice of new properties tenants will generally prefer those with such advantages and even be happy to pay extra in rent.
Off the plan properties are ideal for anyone investing in property with a long-term strategic outlook and financial goals. Doing due diligence and conducting research with any property purchase is recommended, as is getting the assistance of professional property investment experts to help guide your decisions.