The risks of buying off plan property

  • Thread starter Nicholas Wallwork
  • Start date
Nicholas Wallwork

Nicholas Wallwork

Editor-in-Chief
Staff member
Premium Member
As the worldwide real estate market continues to recover investors are now looking towards traditional investment strategies such as buying off plan. There is no doubt that done correctly, off plan investments can be very lucrative and in many cases can lead to a short-term profit. However, buying off plan is not as easy as [...]

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Shivashish

New Member
Risks to buying off the plan:

Falling property market – There is a risk that you may pay too much for a property if the market falls between the exchange of contracts and building completion. If this does occur you may find it difficult to secure finance for the full amount.

Failed expectations – As many builders do not allow you to see the property until construction has completed, there is a risk that what you envision is not what you will receive. The quality of work may also not meet your standards.

Rising Interest rates – Interest rates could increase before you settle on the property which is problematic if you wanted to fix the term of the loan at the current interest rate.

Bankruptcy – Many buyers fear the developer could go into liquidation before the project is completed. You need to ask what the options are if this occurs; will you get your money back and what guarantees do you have?
 
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sofhiathomas

New Member
Weaker values after completion due to high penetration of other developments is one of the high risk factor as far as buying-off risks is concerned
 
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Bigtowers

New Member
I was not aware about buying off plan property. Its my first time reading about it. I hope you will come back with more information. Keep it up.
 
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SmithandCo

New Member
Falling property market – There is a risk that you may pay too much for a property if the market falls between the exchange of contracts and building completion. If this does occur you may find it difficult to secure finance for the full amount.

Failed expectations – As many builders do not allow you to see the property until construction has completed, there is a risk that what you envision is not what you will receive. The quality of work may also not meet your standards.

The above information says it all thanks for sharing such great information @Shivashish
 
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AshleyJohnson

Banned
Many builders do not allow you to see the property until construction has completed, there is a risk that what you envision is not what you will receive. The quality of work may also not meet your standards.
 
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Steve Hand

New Member
Many builders do not allow you to see the property until construction has completed, there is a risk that what you envision is not what you will receive. The quality of work may also not meet your standards.
I can not believe this - how is it possible that builders will not allow you to see the property until after completion !!! ???
 
LandDevelop

LandDevelop

Banned
wow I thought if you bought off plan! you get to be more involved with the build and interior
 
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Ma3salaama

New Member
Also concerned about the risks of purchasing offplan, as someone close to me went ahead with a deal in Dubai for a studio flat, size 474.82 sq ft, however they have now received the SPA to sign which includes a breakdown with the property size of 389.76 sq ft, which is a significant reduction in size, but the price remains the same! The developers have not been very helpful at all with answering queries regarding this. Is this the done thing with off plan properties in Dubai?
 
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Longterminvestor

Administrator
I thought there were new regulations in Dubai offering more protection for investors?
 
NewOrleansHomeBuyer

NewOrleansHomeBuyer

New Member
Off the plan is very risky. Obviously it can work in a rising market but I think it brings up extra risks. Particularly the risk of the builders not performing to standard. Off-the-plan has been really popular in Australia but there are lots of horror stories emerging about bad building practices and faulty material like flammable cladding being used. It has really impacted the apartment market.
 
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