The vital considerations of investing in an off-the-plan apartment.
There are so many reasons you might choose to purchase property that is yet to be built. You can move into a brand-new, high-quality apartment with your choice of finishes and colours; you can act early and choose an ideal apartment configuration with the best views; and you may well be eligible for off-the-plan concessions on stamp duty. A typical 10% initial deposit also gives you the chance to save more during the building process, therefore minimising any loans.
But how do you ensure you’re making the right decision when it comes to a property you can’t yet walk into and see? These five vital tips will help you identify a true off-the-plan opportunity.
Look to location
The first golden rule for property is always location, whether you’re looking at buying a new or existing apartment. Consider whether the property is close to shopping and health services, quality education options and public transport stations that connect to areas of work in the city.
Consider surrounding infrastructure
There are several key location-based questions to ask yourself before you commit to an off-the-plan apartment:
- How far away are the nearest train, light rail or bus stops?
- Are there quality parklands and/or beaches within close distance?
- How far and how easy is the journey to the airport?
- Are there roads close by, and will high-traffic noise be an issue?
With modern and convenient amenities in the area you have an excellent chance of buying in an area where demand – and therefore prices – will continue to increase over time.
Study the apartment’s orientation
The other location-based aspect to consider is in relation to the building and precinct itself. Consider:
- Which way will the apartment face, and will this capture sun at the right times of year?
- What will the outlook be, and will this result in a pleasant view?
- Which level of the building do you prefer for your apartment?
While two adjacent apartments may have the same initial cost, by choosing one with a more desirable orientation you may find that your investment actually holds greater value over time.
Consider the future
While it’s impossible for any of us to know what the future holds, there are two important rules to remember when assessing an off-the-plan purchase for its future value.
Envision what tomorrow’s buyers will want
Even if you’re planning to live in your brand-new apartment for decades to come, it’s still wise to consider what will appeal to future buyers. If it’s in a location close to the city, will the property and its surrounding infrastructure suit urban professionals? Is there enough in-built storage and space for the average couple or family? Aim to ensure that the planned property will offer privacy and space, as these are universally desired attributes. Buying off-the-plan can also work in your favour if you go to sell, as a newer, quality-built apartment typically fetches a far higher selling price.
Note the appeal of individuality
Even in an oversupplied property market, a prestigious property with unique facilities will be more desirable to rent or buy than a standard alternative. It pays to search for an off-the-plan development that offers distinctive added value, whether that’s luxurious design, bespoke features or in-building amenities such as swimming pools and gyms.
Research the developer’s reputation
You may not be able to examine the apartment you’re purchasing, but you can carry out due diligence to ensure the builder and developer are experienced and reputable. Not only will this mean a quality-built home, but it will also mean any unexpected issues are likely to be rectified quickly and accurately.
Examine the developer’s experience
Step one is to explore the developer’s expertise in similar developments. Have you heard of the name before? Have they been around for a long time, and do they have a track record of other successful developments? If a quick search brings up unfavourable complaints or legal findings this can be a red flag, so look for signs of experience and professionalism from your chosen developer and their builder.
Check the quality of previous projects
If there are previous development projects similar to the one you plan to purchase in, consider asking to see these properties first-hand. You’ll be able to see the finished quality up close, ask how the property has improved in value and get a feel for the type of community you can come to expect. While a visit to a display apartment can demonstrate the anticipated standard of workmanship and design, experiencing a previous project can give you an understanding of the lifestyle and amenities you can look forward to.
Remember strata matters
One of the finest aspects of purchasing a modern luxury apartment is in the shared amenities, such as a rooftop swimming pool and a state-of-the-art gymnasium. By living within a strata scheme you can gain access to these resort-style facilities while paying just a fraction of the maintenance costs. However, you should be sure that your body corporate fees will be reasonable before signing on the dotted line.
Understand proposed strata levies
Your developer will have an outline of the proposed strata levies that you’ll pay on a regular basis, so be sure to ask about these fees to make sure they’re in line with your expectations. Do the strata levies offer good value when it comes to shared amenities? The good news is that with a newly built building there shouldn’t be any major maintenance required for some time to come, which can save you significantly.
Rest assured with the NSW building bond
Within New South Wales there is relatively new legislation in place to help protect owners within a new development. The developer of a major project must put aside 2% of the contract price that can be used to cover the costs of any defects if they arise, which is determined through mandatory defect inspections and reports at various stages of the building process. This is excellent news for any investors looking to purchase an apartment off-the-plan.
Review the contract
A property sales contract is in place to protect all parties, so it’s important to examine this document carefully with independent advice from your solicitor.
Look over purchase contracts in detail
It’s wise to pay attention to the specifications in your sales contract and the proposed floor plans of your future apartment. Be sure to review the details and inclusions before signing your contract to ensure you’ll receive a final product you’re delighted with.
Familiarise yourself with the sunset clause
Large developments can take some time to complete, and occasionally there can be factors that cause delays. Contracts of sale will typically include a sunset clause which is the date that the developer agrees to have the building completed by. If the developer fails to deliver the project by this date, then you will usually be entitled to exit the contract and be refunded your deposit. Familiarising yourself with your contract’s sunset clause can provide peace of mind when purchasing off the plan and waiting to walk in the door of your new apartment.
A final word
Buying off-the-plan can allow you to own a beautifully designed, ultramodern apartment with enviable proximity to city amenities. While there are naturally risks involved with any property purchase, you can find truly promising investment opportunities by focusing on location, developer reputation, value and future appeal. After all, a meticulously designed and built luxury apartment in an excellent location will always be a desirable asset.