What is "Off-Plan" property in Phuket Thailand?
What is Off-Plan property in Phuket Thailand?
The term Off-Plan refers to property that is available for purchase prior to construction. Pre-construction sales and selling off-plan is used by developers throughout the world when a new development is launched and marketed. It is the beginning or start of the sales process and gives the developer more leverage to secure better financing terms from banks and lenders.
Buying Off-Plan or purchasing pre-construction is a common way for investors to get in early and secure the best unit or plot in a project when buying property in Phuket Thailand. Off-plan buyers enjoy the benefits of discounts and promotions on their property purchases along with being extended a payment plan. It is typical for an Off-Plan property to be worth as much as 30% more when it's completed.
Off-plan property is basically buying the rights to a unit or property that has yet to be built, as opposed to buying a finished unit or property in Phuket on the secondary market.
Off-Plan is Pre-Construction
Typically off-plan means buying property from a developer at the pre-construction stage. It is also common for a property developer to commence construction of a project and continue to sell units of property throughout construction while still referring to properties as off-plan.
When purchasing an off-plan property, it is conceptually important to understand that the developer is assuming responsibility for purchasing land, subdivision, utility access, and basically full accountability for construction and project management. You are essentially consenting to pass responsibility to the property developer for all of these matters regarding your property in Phuket Thailand.
Off-Plan Property Delays
In Phuket Thailand, it is common for off-plan developments to run past the expected delivery date. Unfortunately, this happens more often than not and can be blamed on slow contractors and their crews. Weather delays play a part as Phuket gets a fair amount of rain between May and October. It should be stipulated in the sale and purchase contract the exact delivery date and a subsequent grace period. Should the developer go beyond this grace period the buyer will be paid for late penalties and fees. Developers are liable for late penalty fees plus interest and the buyer can deduct this from the last payment.
Off-Plan Property Benefits
Some benefits to buying off-plan property in Phuket Thailand are that once you have purchased off the plan from the developer, the price is fixed. Buyers are given a payment plan and payments are staged according to the construction progress. Buying off-plan can typically save the new owner between 10% - 30% off market prices. Purchasing this way gives you the opportunity to choose the best unit or location in the estate or building. Purchasing off-plan also means that the buyer gets warranties on appliances and the structure.
There are many advantages to buying off-plan property all of which contribute to the overall aim of capital growth and locking down the best unit or the top floor or the corner plot. With a rapidly growing housing market in Phuket, many investors are taking advantage of purchasing property pre-construction to secure a lower price before completion.
Buyers are sometimes able, but not always, to make changes to the unit or property as desired. Property in Phuket differs from one developer to another in what they are able to change pre-construction.
Selling before Completion
Risks of Buying Off-Plan
As with any investment, there are elements of risk when buying off-pan property more so than buying completed property. It is extremely important to go with property developers that you trust. Firstly, know the developer working on the project and research their background. Ask questions such as how many projects have they completed in the past? Do they have a strong financial background? Are they stable? Avoid the worst-case scenario of losing your reservation payment or deposit if the developer goes bust.
The risks with buying off-plan can be greatly reduced by working with a reputable developer with a good track record and strong financial backing. Other risks are that the property might differ from expectations. Another is that exchange rates might weaken during the payment plan and construction.
All things considered, property in Phuket purchased this way (Off-plan) is almost always going to save you money if done correctly.
For more information about investing in property in Phuket or about the safest off-plan properties in Phuket Thailand call us today at +66 93 606 0906.