Although it can be worrying putting your money into a home you can’t yet see or touch, ultimately buying off plan can make dream homes a possibility on a budget that wouldn’t normally go so far on completed properties. With that in mind, realestate.com.kh has put together the ultimate guide to buying off plan – Be informed and invest wisely…
What does it mean to “buy off plan”?
This is an expression for buying real estate at a point where all there is to see is a plot of land and a house plan. You sign a contract indicating a purchase price for the land and a house to be built from a specific set of architectural plans.
Why buy off plan?
Getting in at the plan stage of development gives buyers the chance to get the choicest plots of land or the best units in a building.
Plus, buying off plan can allow for a higher level of customization, including changing the floor plan, merging two adjoining condo units into one larger unit, and having more say in details like type of appliances. Fussy buyers who desire to have a great deal of control over every detail are often most satisfied with a purchase made at this stage. It allows them to get exactly what they want.
Off-plan buyers also may get discounts on the price or see substantially more capital growth than average. Investors and speculators find these two facts compelling, especially when they are combined. In Phnom Penh, buying during the pre-sale period can result in appreciation of up to 30 percent. This can be up to 6 times as much appreciation as the typical 5 to 10 percent experienced when buying after construction has begun.
Additionally, buying off plan allows the buyer to spread out payments. When buying a villa, payments may be spread out over a period of 10 to 18 months. With a condominium, it could spread out as long as 24 months.
Foreign nationals have an extra incentive to buy as early as possible. The Law of Foreign Ownership (2010) allows foreign nationals to purchase a limited number of condominium units. Up to 70 percent of the units may be purchased by foreign nationals, granting them a freehold title.
What does the process look like?
This stage of development where buying off plan deals get offered is called pre-launch. The developer is still in the process of confirming plans, obtaining permits, and performing an Environmental Impact Assessment. However, even at this early stage, they need money in order to move the project forward. Because buying at this point involves a long wait for the property to be completed and more risk than at a later stage, they typically offer incentives to early buyers. In addition to price breaks, they may offer guaranteed rental returns, financing options, opportunities to customize the early units and other perks.
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When this excitement occurs in a competitive atmosphere, such as what you see in Phnom Penh in the recent condo and borey boom, it is easy to get carried away. At realestate.com.kh we cannot stress strongly enough that you need to do your research when considering buying off-plan. But we are here to help - get informed and invest wisely, get online www.realestate.com.kh/news and learn more today!