Off-plan Property In South Africa

Buying off-plan property makes sound financial sense for the overseas property investor. Below we have gathered information on the advantages of off-plan options to South African property buyers.

  • Off-plan property provides investors with the opportunity to purchase for the lowest price and attain the greatest returns on investment.
  • Investors in off-plan can often capitalise on their purchase by selling at a higher price before completion. Others use their property for rental purposes and have the added advantage of enjoying a delightful holiday home.

Due to the shortage of homes and ever increasing prices, buying off-plan property has become a popular choice in South Africa. Property developers are keen to maximise on off-plan sales as an aid to financing a project. Buyers choose their properties from plans, elevations and computer graphics, and need to exercise their imaginations to envisage the end product. There is also a small element of risk attached to buying off-plan, therefore developers offer the property at low prices. As construction nears completion, the risk diminishes and the price start to rise. In addition, buyers can more easily see what the finished product will look like and are eager to snap up properties at, despite the higher price.

Property investors should act with extreme caution however and take steps to ensure that an off-plan option is the right one for their purposes. Among other factors, it needs to be in a good location and the developer must have a good track record. At we have investigated a number of carefully selected developers and off-plan properties in what we consider to be the best South African locations.

Off-Plan investment property in South Africa in some areas such the Western Cape, Cape Town, Eastern Cape towns on the Garden Route and in the areas around Durban in Kwa-Zulu Natal have brought excellent profits for investors in recent times. High returns on off-plan of between 20 and 50% per annum have been known in a short space of time (in some cases under 24 months).

Benefits of buying off-plan in South Africa:

The first buyer of a ‘new’ property is exempt from paying Transfer Duty, which can offer savings on a property of ZAR 1,000,000 (GBP 72,000) of ZAR 25,000 (GBP 1,800).

Profits from off-plan properties can be free of capital gains tax if the property is sold before completion. Our tax experts will be able to inform you further about this approach.

Often the developer will pay the legal costs generated by a property purchase, such as the fees incurred through the registration of the title deed and the costs involved in raising a bond or mortgage.

Only a relatively small amount of money is needed up-front, usually about 10% of the purchase price.

The long construction time of at least 12 months means the off-plan purchaser can benefit from the increases in property prices over a year as well as have time to come up with the final payment upon completion.

In South Africa you will find many developers offering a variety of tempting off-plan options. We carefully scrutinize these proposals and work only with development companies that have the best, proven track records.

How can property be cheaper if bought off-plan – How does it work?

Besides the extremely attractive off-plan price, some greatly advantageous finance arrangements are in place. Initially there is only a 10% deposit and the rest of the payment is only due on completion. Furthermore it is possible to finance this through a mortgage.
Once you have made the decision to invest in off-plan, you will need to consider what type of investment strategy you wish to follow. We have access to experts who will help you work out the plan that is most suitable for your needs, either a "pure investment " or a "buy to let " strategy. Our experts will also help you to choose the best location for your circumstances.

Maximizing Profit From Off-Plan Investment in South Africa

The Process of Price Increase

  • Purchasing early

    In order to maximise on profits through off-plan purchase it is essential to purchase early. The South African property market, as in many others, is experiencing a steady growth and prices never stay at the initial offer level for long.
  • Purchasing the best units

    The first investors in a development have the opportunity to select the best properties and choice units. They will receive the highest capital appreciation in the shortest time. In addition, the best units command a higher rental income.
  • Price increases as development matures

    Once there is physical evidence of construction on the site, the price of the units begins to increase. Often developers will complete a show home at this point, which potential purchasers can view, therefore minimising their risk. The price of units then increases as buyers are no longer purchasing solely from plans.
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