Valuable tips for purchasing off-the-plan

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Off-the-plan properties are often viewed as riskier investments, because unlike established properties, what you see in the glossy brochure or marketing render may not necessarily be what the finished product will look like.

To help investors recognise great-off-the-plan investments, Len Warson, CEO of Glenvill, a Cremone-based residential development group, has provided the following tips:

Recognising opportunities

Investors need to study the Australian Bureau of Statistics’ (ABS) demographic statistics and similar data to pinpoint the areas where people are flocking to live and work. These areas are more likely to increase in value.

Warson also advises investors to follow regional infrastructure changes. “An area will always increase in value when a new train line is built in that area,” he told Your Investment Property.

“An example of a major infrastructure change is the Chandler Highway in the inner eastern suburbs of Melbourne, which held back values north of Yarra due to congestion. When the new six-lane highway and bridge are complete, values will go up significantly.”

Investors should also study rental statistics. “Whilst people say to me that there is an oversupply of apartments in many inner-city areas, vacancy rates are so low that apartments are still great investments,” he said.

Purchasing off-the-plan

“We are in a credit squeeze at present. Check that the developer has funding, as many projects will not proceed in this market when buying off-the-plan,” Warson cautioned.

He also advises investors to go for reputable developers. “These developers are far more likely to deliver a better quality building that will need less maintenance in the long term.”

“An apartment building will look its best the day it is complete. Make sure the design will endure the test of time and that it’s built with enduring materials. Many developers take the cheapest option; find out more about the materials used for the structure and not just what goes inside the building.”

Warson also advises investors to carefully scrutinise marketing materials, including renders. “Make sure that what you see in them, you are getting. A good example is windows: Often they are drawn to the ceiling but then get value managed to a bulkhead over, which has a different look. Similarly, lights can appear in renders that aren’t in the actual build. Make sure your contract is clear.”

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