Building Off Plan
Developing a property is an expensive enterprise no matter how you approach it and no matter where you build. While certain types of properties will cost more or less depending on a lot of different factors, the truth is that there's simply no getting around the hefty costs associated with developing off plan properties. Due to the many unique considerations that come hand-in-hand with building off plan properties, it's smart to look at the pros and cons with a bit of context. This way, you can make more intelligent choices with the property going forward into the future.
What is an Off Plan Property?
The term "off plan" is used to describe a property that is off of the public city plan because it simply hasn't been built yet. In a technical sense, this means that any property that has not been developed yet is considered to be an "off plan" property. In addition, any new build that is more than three months away from completion is also referred to as an off plan property. By contrast, buildings that are within three months of being complete are considered "new build" properties by city planning officials.
The Benefits of Developing Off Plan Properties
There are many pitfalls that can come with developing these types of properties, but that doesn't mean there aren't some very definite perks. While the initial costs may be higher in some cases than simply renovating a developed property, the truth is that these costs aren't as intense as you may think. In fact, many of these costs are offset greatly by the benefits that can come with building off plan properties.
One major benefit of building off plan is that some municipalities have funds set aside to assist with the development of these sites. Empty building sites within any area are generally not popular since they can bring property values down and cause many other issues. Many city governments provide tax incentives to develop previously undeveloped properties in a way that can contribute to the community. These tax incentives can go a long way toward making this type of investment very affordable in the long-term.
Off plan properties can also be developed in a way that is more in-line with the way you want your property to be. Often times, people will purchase a developed property and invest a lot of money or time into turning the property into something that's more in line with their needs. A great example of this can be found in properties that have aging windows, doors and HVAC systems. Most property owners are starting to see the many benefits that come along with operating in a more environmentally-friendly fashion. The savings on energy that are heralded by "green" changes to a property are nothing to deny. However, the amount of money and time that goes into renovating an old building to be more in line with currently-accepted efficiency standards can be quite a lot. For some, the cost can be so prohibitive that they don't do anything at all. The problem with this is that they then start to lose money on an inefficient property, which isn't good for anyone.
Finally, it can be more expensive to close on a developed property than on a off plan property. First, you need to consider the amount of money that goes into the process of assessing a property before purchase. When you have many different elements to assess on the property, you are paying an assessor to do much more work. In addition to the larger amount of money being paid to an assessor, you'll also end up spending a lot of money on an inspector for the buildings that are already on the property. If you plan on using the buildings on a developed property, they need to be inspected by a state-qualified inspector for habitability. Any issues that exist in the buildings on the property will then become your financial responsibility to remedy.
Putting it All Together
In the end, there are a lot of different types of property for you to choose from when you decide to build. While many people purchase properties that have been previously developed, the truth is that not everyone wants to go through this. The process of having an old property renovated into a "new" property can take a lot of time, money and effort on the part of the owner. This can end up causing very real financial concerns for whoever purchases these developed properties. By contrast, developing an off plan property allows you to start with a clean slate and make something fresh. The freedom of being able to start anew is a big part of what draws people to off plan properties. Since these properties are often much cheaper to develop, the financial benefits are also important to keep in mind.