More aspiring homeowners are opting for off-plan products to evade burgeoning house prices and unpredictable rent regimes.
Mizizi Africa Homes yesterday announced its Sh54 million off-plan housing project, Penguine Estate, was completely sold out, three months after its launch.
The firm attributed the faster than normal uptake of its units to growing interest and preference in off-plan units over the last quarter of 2019.
This, as customers shun costlier finished units on the back of an unfavourable economic climate.
“Buyers have been making cautious real estate investments with many showing interest in affordable projects with higher returns and those that give them some financial freedom,” Mizizi Africa Homes finance and operations director, George Mburu said.
Off-plan purchasing is a trend that has seen many aspiring homeowners acquire their dream homes by putting their money on nothing more than an architectural plan.
It is the purchasing of real estate property before construction begins or during the construction period.
The selection of units for sale by potential purchasers is made from paper, like the site layout plan and the architectural models in the form of reduced dummy versions of the completed project, which give potential purchasers a feel of what the project will look like when completed.
This as real estate developers opt for off-plan products that provide them with upfront sales to finance the projects, as opposed to financing through costly bank loans.
A survey by Cytonn, a real estate investment firm found that off-plan developments have been growing in popularity over the past few years.
This is as prices quoted for off-plan properties are much lower than the market value and at times, up to 50 per cent less than the price of a completed house.
“Off-plan properties are also known to appreciate in value even before completion. Owners can select fittings and location of their unit. Off-plan’s installment mode of payment makes it easy for one to pay a deposit and pay for any property as construction continues,” the report stated.
This means the biggest attraction in off-plan purchases is that payments are usually flexible and can be made as the construction goes on.
A buyer can pay an initial deposit of 10 or 20 per cent, or even more, and then agree with the seller on how and when to settle the balance, which may be done in installments.
This flexible arrangement allows the buyer to make piecemeal payments against the purchase price, thereby reducing the balance payable upon completion.
“We know most customers are now opting for investments that offer an alternative to paying rent, offer flexible payments, higher returns and deliver financial freedom,” Mburu said.
