What is Buying Off Plan?

The concept of buying off plan, (before the property is built), is not new - many investors have done it before in both the UK, here in Phuket, and other countries around the world. However, this trend is on the increase as more people begin to realise the benefits.

To buy a property “off plan”, means reserving either a plot, or a specific property, at the initial stages, usually prior to the development commencing, or when the plans are first approved. It is the opposite to either buying a re-sale, or newly built property. Investing in property in this way is becoming increasingly popular, as they often offer larger financial rewards, particularly on Capital growth. 

Off Plan Property Investments - How does it work?

What capital is required to Purchase Off Plan?

A reservation fee is required when you buy a property off-plan; with IOR Group, that figure is only an initial 1% of the full property price. This 1% payment secures the property of your choice, at the “Off Plan Price”, normally for a period of around 30 days. Then the Contracts are sent out to the purchaser, who has this 30 day period to view, agree and sign the Sales Contract. When this Sales Contract is returned, a further payment of 19% of the property price is required, which secures the “off plan” purchase price for the selected property. It also secures the price against any further increases.

In Thailand mortgages can be now be easily arranged for 50% of the total purchase price. With this a Purchaser having already paid 20%, now only needs to find a further 30%,  which is payable normally once building work commences, the 50% mortgage will pay the balance.
As the property WILL appreciate in value over the development stages, often “off plan buyers” may decide to sell the property, even prior to the final completion. So even though the property has not been completed, they are able to take full advantage of the capital growth gained.

Choosing a good quality luxury complex, especially one in a prime location, will easily enable the buyer to re-sell the property to someone who does not wish to wait the period of 12 – 24 months,
it would take for a new property to be built.

Overseas Property Investments - What to look for?

Buying a property abroad off-plan does not always guarantee a good capital growth, as a lot of overseas property buyers/investors have found out the hard way. Has the area you are looking at reached full maturity? Will property prices continue to rise? Are prices still rising?

In Phuket, property buying is relatively new, and has mainly developed over the last five years. You should also consider the historical increases, on Phuket, that average is around 25% per annum. Is there room for further Capital growth? It is predicted by most local experts on Phuket, that property prices  will double in value over the next three years.

Finally, you should also consider the quality of the development and of course the location, and size of a specific project. Many early buyers of property in Phuket have already found it very financially rewarding to buy "off plan" here. With the predicted property demand expecting to grow at an even greater rate, now really is the ideal time to invest.