Off Plan Property Abroad Versus Resale Real Estate

Should you be buying a property abroad off plan or looking for an already completed home?

A commonly asked question when it comes to buying property abroad is whether off plan property represents a better decision than buying resale real estate but in all honesty there is no simple answer to this question.  A great deal depends on the country, the location, the market, the reasons for buying the property in the first place and even the personal circumstances of the buyer in question.

In this article we examine the pros and cons of off plan property abroad versus resale real estate to enable you to apply the issues raised to your own buying decision and hopefully make the best informed choice at the time.

Buying Off Plan Property – The Pros

In certain circumstances, buying off plan can give an investor the chance to gain strong capital growth on his initial outlay because on a large development or in a popular location a development can increase in value during the build time.  This means that in special circumstances a buyer can even resell their property before it is completed and make a profit from it!  In the golden days of the Dubai property market some properties swapped hands up to three times during the build process with each buyer making a profit!  Of course this capital growth is not guaranteed but it is a potential ‘pro’ for buying off plan that’s cited by many a developer.

If you buy off plan you have more choice in terms of the property unit you purchase and also on the internal fixtures, fittings, specifications and finishings which means all the input you give makes the property feel like home by the time it’s completed.

By buying off plan you will be able to stagger your payments for the property throughout the build process – in effect you get an interest free payment plan by taking this approach.  It can make it more viable for more people to budget to afford a new home.

Buying Off Plan Property – The Cons

There is sometimes a very real risk of the developer actually going bankrupt during the build process or of them re-mortgaging the land on which your property is being built so that by the time you believe you’ve finished paying for it, the bank still owns it and you will not get your title deeds to it.  In developed countries with established property markets you are protected against this by sophisticated laws…but in most emerging holiday home markets this is a real risk to be aware of.

If you’re buying in an area with a lot of development going on you will be surrounded for many years by builders’ bums and construction trucks – at first this may not concern you but after a while 7am starts and non-stop dust will drive you mad!

Many people can’t actually accurately read design drawings and plans which can leave some people disappointed with their completed property – what’s more, promises of facilities provided by the developer may not come up to your expectations upon the final delivery date.

Buying Resale Real Estate – The Pros

If you’re looking for a property abroad purely as an investment vehicle it is possible to buy a completed unit that already returns a rental income either full time or as a holiday let, this means you’re buying a returning investment commodity from day one.

WYSIWYG – or what you see is what you get – you can tangibly touch what you’re buying and so as long as you get a surveyor to check the property over there are likely to be no nasty secrets or disappointments.

In addition to this, if you’re buying a resale home on a completed development you can see how it has aged, you can see how well communal facilities have been completed and are maintained, and effectively you can really see what you’re getting for your money.

Buying Resale Real Estate – The Cons

You will need to front the payment in one fell swoop – there will be no interest free period over which you can get the purchase price together.

You will have no choice over the finishing of the property or the internal specifications – although if you really hate something there’s nothing to stop you getting a builder in later!

It can feel less like home for a while as you have had no personal input into the property and what’s more, someone else has lived in it before you move in.

Communal facilities may be dated or worn or even substandard compared to brand new developments.

In conclusion – the above lists of pros and cons are not exhaustive by any means but hopefully they will give you some food for thought before you head off on your holiday home hunting trip abroad.