Opting to invest in off-plan property can be a lucrative proposition for investors looking to make a strong financial return on their investment. However, like with all investments, there are both positives and negatives of choosing off-plan property as your next investment venture.
Here, we’ve explored the key pros and cons when it comes to investing in off-plan property and what it could mean for your return on investment.
Pros of off-plan property
Different routes for ROI
Investing in off-plan property can benefit from two avenues to generate a return on investment. Firstly, long-term investors may wish to look at strong rental yields to gain returns from the asset class. If the rental market strengths, you’ll be able to benefit from better yields.
Alternatively, if you’re looking for a short-term investment strategy, you can also to look to sell your asset once the build is completed.
Purchasing at a ‘lower than market value’ price
A major benefit of off-plan property is that you can usually purchase at a lower than market value price and some developers also offer bulk discounted rates when an investor is looking to take up several properties in one purchase. This is different compared to investing in ‘already complete’ property, where you’d be required to pay full market value.
By getting a discounted rate, investors can reap the rewards when it comes to capital growth and strong rental yields.
Investing in high-quality property
With your off-plan property being classed as a new-build asset, you can be guaranteed that it will be of high of quality and meet all the necessary standards and requirements of modern buildings. This is a positive for any potential tenant, as they’ll know they’ll be renting a quality apartment, as well as from a capital growth perspective – a modern apartment will most likely appreciate better compared to potentially older stock.
Cons of off-plan property
Completion timing
Usually, you’ll invest in off-plan property prior to the building being completed or, in some cases, before any construction has actually commenced. This might not seem much of an issue, however if problems or delays occur during the construction process it pushes back your ability to benefit from any capital growth or rental income as the build hasn’t complete.
In comparison, if you were to invest in a completed property, you’d essentially be able to benefit from rental income as soon as you become the legal owner.
A change in market conditions
The prospects of the property market regressing is arguably the major con of any property investment – however can have a major impact particularly on off-plan property. Even at a discounted rate, a change in market conditions could inevitably leave your asset valued at less than your initial investment meaning, especially in the short term, your capital has fallen.
This can also impact the rental market, as the attaining the prospective yields you may have initially envisaged at the point of investment are no longer feasible.
Find the perfect off-plan property investment in Leeds
Citylife is creating new high-quality residential buildings in Leeds, across premium city centre locations, perfect for investors seeking new investment opportunities in a fast-growing city.
Find out more about our live developments of off-plan investment properties in Leeds here. If you’re interested in investing in the off-plan property Citylife is developing, get in touch with us today.
