Off-plan purchase is a lucrative overseas investment. Below is general information regarding off-plan property in Australia and the benefits it offers for investors.
Off-plan purchase offers investors the ability to achieve maximum returns on investment by buying at the lowest possible price.
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In order to limit financial risk and debts, the developers of any project will wish to sell units off-plan. They understand that if buyers cannot see a physical property at the beginning, they will demand a lower price, while relying purely on the developer’s reputation, the property location, artistic impressions and computer simulations on which to base their decision to purchase.
By the time the property is finished, prices rise due to market forces and the greater general appeal of a completely finished property that is ready to move into. Investors therefore sell the property on to another property purchaser and in doing so, enjoy some excellent returns whilst never having paid the full purchase price. Alternatively, many investors keep their property for a number of years, meanwhile receiving excellent rental income and often enjoying a beautiful holiday home. Over this time the value of their property increases steadily.
Investors should however exercise due diligence and choose wisely, making sure that the property is located in an area where they will resell quickly and easily or where there is a high rental demand for their buy-to-let option. With an off-plan investments, even in the “worst case” scenario if the property cannot be sold upon completion, the final balance due can often be financed by the developer himself, typically over 4 years or more. Furthermore, the rental income may pay off the finance of this loan and yield further eventual return on your investment property in Australia.
Off-plan properties in Australia have provided huge returns, particularly within cities such as Melbourne and Sydney as well as those located in coastal regions where returns can be around 30% per annum. The growth in apartment, units and townhouses has been dramatic and off-plan is still a profitable investment option in Australia.
Many developers in Australia will offer beneficial payment schemes. Through IPIN Global we carefully vet these offers and work with only the most reputable and secure development companies that operate in your favoured location. Payment schemes currently on offer allow you to buy property off-plan with down payments of around 10% of the property price.
In addition to the excellent off-plan price, some highly beneficial finance structures are in place. Meanwhile you will normally pay only a 10% deposit, while the rest is payable upon completion. This could be funded by a mortgage (view our mortgages in Australia section).
If you decide to invest in off-plan property, you will need to decide which strategy you will adopt to achieve your return on investment. Our experts will help you to choose the most appropriate plan, creating an investment programme suitable to your needs, whether this is "pure investment" or a "buy-to-let" strategy (view our buy-to-let investment Australia section). We will also assist you in finding the most appropriate location to suit your investment needs.
Prices never remain low for long and, as construction progresses, prices begin to rise steadily. In Australia, as in any other market, it is important to buy as soon as possible during the early stages of development when prices remain very competitive but are already beginning to rise. Early investors will invariably see the greatest returns.
Early purchase allows investors to choose the most sought after properties on any given development. The best units always offer higher capital appreciation in the smallest time frame and can often demand the greatest rental incomes. Penthouses are often firm favourites.
As the development begins to be constructed, the value of the units begins to rise. A completed show home is normally available for viewing at this stage, while buyers are taking less of a risk as they now do not need to rely completely on plans.
As more units are sold, the price of the remaining units rises. Units sell faster when buyers are able to physically see them. There is often a phase payment structure in place which mirrors the increasing value of the properties. To the early investor this means that, should you decide to sell your property, it will be worth considerably more at this stage than when you made your initial purchase and paid the deposit.
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