Benefits of buying a home off-plan often include tailor-making options according to layout, fixtures and fittings. We look at some appealing development options
WORDS: DEBBIE HATHWAY – PHOTOS: SUPPLIED
The impact of the coronavirus pandemic continues to motivate people to reassess their priorities and make changes towards achieving a more balanced and sometimes more cost-effective lifestyle. This shift is evident in the residential property market, says Andrew Golding, chief executive, Pam Golding Property group.
“In South Africa, the seemingly ever-resilient residential property market has historically been one of the few investments that has acted as a hedge against previously rampant inflation. Property investment, as an asset class, tends to be less prone to extreme bouts of short-term volatility.”
He says to mitigate risk for those who have no appetite or financial means to assume high risk, property investment should be regarded as a medium- to long-term investment of at least five to six years. “This will allow for absorption of associated costs such as transfer duty when buying, and the consideration of any capital gains tax when selling. That said, for the savvy investor, short term speculation can produce excellent profit. In certain markets, buying now off-plan can yield significant upside returns even before the time of transfer.”
…but can they deliver?
When it comes to buying a property off-plan the most important consideration is to thoroughly research the developer and their ability to deliver on their promises. Over the years the property industry has been marred by unscrupulous developers who are unable to deliver according to their agreements with buyers. It is crucial that you only buy off plan from a reputable developer who has a proven track record. Check, for instance, how many houses they have sold off-plan and delivered successfully within the agreed timeframes and quality standards. Often people who buy off-plan end up either not receiving what they paid for, or the delivery is delayed significantly. In the worst cases, nothing is delivered at all.
Buying off-plan from a reputable developer offers certain advantages. The first phase of a new development is always competitively priced to stimulate sales. Early-bird buyers who invest off-plan will have more to choose from among the prime stands in the development. They will also see accelerated capital growth compared to people who buy later when the development is established. By the time their house is built and they move in, their investment will have grown significantly in value.
For example, Cosmopolitan Projects’s Lion Pride development, launched in September last year: a 188m2 house that sold for R1,6m is now selling for R1,785m (11.5% capital growth in less than a year). And in 2020, the first phase of its Capital View development in Pretoria sold out in only five months. The next phase has just launched, offering full title houses that can be bought off-plan giving buyers the same opportunity.
Another advantage of buying off plan from a reputable developer is that you get a brand-new house without enduring the designing and building process yourself. You also don’t have to worry about finding a reliable contractor and dealing with all the construction issues. In addition, you have the freedom to choose your preferred finishes and make a few plan changes – more so with full title than with sectional title properties, which give you less freedom to make changes.
Craft Homes offers the opportunity to buy a range of properties online. Buyers are invited to register for the launch of their latest developments via their interactive website. A new development of two- and three-bedroom homes, priced from R899,000, is launching in Ermelo at the end of May. And another one, Mayberry, is launching in June. This includes a mix of exclusive two-bedroom, two bathroom apartments selling from R1,149,999 as well as freestanding three- and four bedroom homes.
Buyers looking for exclusivity and a more boutique feel may be interested in Amberwood, their development of 18 freestanding duplex homes on Waterloo Road in Bryanston. Prices start at R2,4m.
Investment in a development such as Ellipse Waterfall, the luxury high-rise tower in Midrand, means as much as a two to two and a half year wait from when you buy the apartment off-plan until you take delivery of it. “Investors will see capital growth for that period, which improves as the precinct develops,” says Kent Gush, Kent Gush Properties. “People who bought during the initial launch phase are seeing 10% to 15% growth in value. Buyers who invest now, at the current interest rate of 7.25%, and put down a 10% deposit, will be almost cash neutral from day one.”
Gush launched Ellipse Waterfall in a soft market in November 2018. He says it’s the most successful project he’s ever undertaken in the most difficult market he’s experienced in 36 years. “We’ve sold more than 351 apartments in close to two and a half years, to the value of just over R1bn.” USPs are Ellipse Waterfall’s magnificent architecture and the fact that Waterfall as a precinct works. Gush calls it almost Dubai esque. “Every touchpoint is triple A-grade. The quality of the finishes is as good as a luxury apartment in Sandton, but the units are smaller.” Of the 272 apartments launched at the Newton and Kepler towers, there are only 30 still available for sale.
At Cassini, the third and tallest tower that has recently broken ground, 121 of the 180 apartments have been sold. Cassini boasts the 1,100m2 Luna Club on the ground floor. Members are able to enjoy features such as a gym, heated lap and leisure pool, private dining facilities, and a private wine cellar. Guy Gordon, MD, Amdec Property Developments, says buying off plan is a great option whether you’re buying to rent or to live. Perks include being able to enjoy a brand-new unit that no one has ever lived in, and possibly securing a higher rental as a result.
Buyers will also save on transfer duties and VAT, which are included in the purchase price. “Mixed-use developments such as Harbour Arch represent the pinnacle of convenient, contemporary living, making them an extremely attractive proposition for savvy investors looking to take advantage of the lowered interest rates and favourable lending conditions,” says Gordon. As the dates of transfer and occupation don’t always coincide, be prepared to pay occupational rent and make sure you have money set aside for that.