Question: I have a question that I have not found the answer to in all kinds of magazines. The question is: when you buy off-plan apartment or units, what is the right price? Is there a way to calculate the right price for an off-plan project in a certain area, or is there a guideline to compare the price of a brand new apartment to that of a five-year-old apartment with similar features in a similar location?
Answer: When buying off the plan it is important to investigate the price of comparable established apartment developments to ensure that the off the plan purchase price is consistent with current market levels and not overpriced.
Comparable complexes should be neighbouring apartment buildings, or those in similar locations serviced by comparable infrastructure and amenities. Comparisons should also take into consideration whether the building has a pool and/or gymnasium, whether the apartment comes with a parking space, and the number of elevators, if any.
All of these features add to the price of the apartment and to Owners Corporation fees, which is another important factor to consider when buying units and apartments.
Reviewing other modern established apartments enables a prospective buyer to determine if the “off the plan” purchase price could be achieved on the open market – that is, if it was sold by a local real estate agent.
While buyers will always pay a small premium, generally between 2.5% and 5%, for a brand new development, the premium paid is often far beyond what can be justified.
When buying off the plan buyers need to be well informed by investigating recent sales and by speaking with local agents or engaging a professional and certified property valuer.
- Answer provided by Greville Pabst, CEO WBP Property Group
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