Over the last decade, off-plan property investment has become an increasingly popular real estate investment strategy in Nigeria. As major cities like Lagos and Abuja continue to urbanize rapidly, demand for well-located, high-quality properties remains strong. This creates an opportunity for investors to capitalize on off-plan purchases.
But what exactly are off-plan properties, and what are the unique advantages and risks involved with this investment strategy in the Nigerian context?
What are Off-Plan Properties?
Off-plan properties refer to purchasing a property directly from a developer while it is still under construction. Essentially, you would be buying into the concept and vision of a development with the idea that the project execution process would be favorable and meet your expectations.
As an investor, you make payments towards the total property price in installments, usually tied to construction milestones. Upon completion, you then take possession of the finished property as per the original purchase terms and floor plans.
Benefits of Off-Plan Property Investment
There are several unique advantages to investing in off-plan properties in Nigeria:
Lower Entry Price Compared to Completed Properties
Properties purchased off-plan are typically discounted compared to buying completed units on the open market. By securing the investment early, investors benefit from below-market valuations. Price appreciation potential is higher if wider market dynamics remain strong.
Flexible Payment Plans Available
Developers usually offer flexible payment plans for off-plan purchases, allowing buyers to pay a deposit and make staged payments in installments as the construction progresses. This breaks the investment into manageable chunks rather than paying 100% upfront.
Growth Prospects in Nigeria Property Market
Research shows strong fundamentals and growth prospects in Nigeria’s emerging real estate sector over the next decade. As a rapidly urbanizing economy, demand is robust while quality inventory remains limited, fueling capital appreciation potential.
Capital Appreciation Potential
In addition to buying at a discount and leveraging market growth prospects, investors can realize gains through capital appreciation if they choose to sell the property once completed. Factors like location, developer reputation and community growth impact achievable valuations.
Assessing Developer Track Record and Reputation
The key to successful off-plan property investing lies in assessing the track record, reputation and capabilities of the real estate developer behind the project. Be sure to:
– Review their portfolio of completed developments to assess quality standards, completion timelines and reliability, casaperdana has a variety of properties suited for various portfolio sizes.
– Understand their financial strength and backing to gauge execution viability from start to finish.
– Evaluate sales levels – developers will usually demonstrate a high level of sales before formally marketing a development to de-risk execution.
– Research market reputation from existing customers to determine consistency and accountability.
Reputable developers with strong credentials and customer goodwill are more likely to deliver on their promises.
Payment Plans and Terms for Off-Plan Properties
While payment terms can vary across developers in Nigeria, most offer investor-friendly plans that allow buyers to secure properties by paying 10-30% upon contract signing. Remaining balances are due in installments tied to construction milestones like foundation completion or roof installation.
Upon final completion and possessing the keys, 80-90% of the full prices would typically have been paid in total. Be sure to carefully review payment schedules and policy fine prints before entering any off-plan purchase contracts. Reputable players tend to offer flexibility if unforeseen delays occur, shifting milestone timelines accordingly.
Risks of Investing in Off-Plan Properties
While off-plan investments come with unique advantages, they also carry risks that must be carefully evaluated:
Execution Risks
The greatest risk lies in project delays or non-completion by the developer. Before any transactions, conduct thorough due diligence to determine developer capacity. Review their past delivery records, financial strength, existing project portfolio performance and team competencies.
Market Value Risks
If overall market dynamics shift negatively, it poses risks to achievable valuations upon final completion. Carefully assess baseline valuations at the time of purchase to allow for reasonable buffers should corrections occur during the construction phase.
Fluctuating Completion Timelines
Most off-plan developments come with tentative delivery timelines that account for typical construction delays. However, extreme delays can impact financial planning. Assess all fine prints relating to completion deadlines – reputable developers will communicate transparently if delays occur.
Making Informed Investment Decisions
Here are some tips for navigating off-plan investments successfully in Nigeria:
Ask the Right Questions
Enquire about total development costs, specifications, amenities, types of materials being used, access roads and traffic plans, security, power backup plans and sustainability features. Granular details matter.
Understand Value Drivers
Do comparisons of similar completed properties in the area to determine fair valuation benchmarks. Estimate realistic price appreciation potential based on demand-supply dynamics.
Get Objective Perspectives
Connect with neutral parties familiar with the local real estate market who can offer additional insights on the developer as well as evaluate pricing strategies objectively against relevant guidelines.
Mitigate Risks
Only commit to developments backed by reliable developers with sufficient financial and execution capacity. Opt for installments plans over lumpsum payments. Incorporate reasonable buffer timelines into financial plans to accommodate unforeseen construction delays.
Securing prime properties in Nigeria’s expanding property hotspots through lucrative off-plan investments can be an extremely rewarding endeavor if undertaken prudently that’s why casaperdana offers prime homes for valuable investment. Assess each of our project independently after careful inspection of on-ground realities while taking a long-term view on asset quality and community potential. Invest wisely by looking beyond profit alone towards legacy value creation opportunities.
Check out our current off plans and invest wisely.
