Off-plan property; a guide for Brazilian property investors
It’s no secret that the Brazilian property market is set for a boom. As the host of the Olympics in 2016 and the football World Cup in 2014 significant interest has been sparked in the country as both a tourism and investment destination.
The price of property for sale in Brazil, in particular in the northern regions of the country, has already jumped by as much as 20 per cent in recent years, according to reports.
However, the question that remains is how to best cash in on this growth, and for those who are looking for large returns and are willing to bide their time for prices to potentially increase further, off-plan property could be the answer.
What is off-plan property?
In simple terms, off-plan property is a building which is sold before it is finished, and often before construction has begun. Investors make their decision based on the architect’s plans and the predicted finished result, then purchase directly from the developer rather than the previous owner.
This means that expenses such as a professional survey are not required. However, some of the same considerations need to be made as when purchasing pre-built properties, such as how an area is going to develop and how property prices are expected to change.
The benefits of off-plan property
For those who are looking to buy a house in Brazil, off-plan property is currently looking like an ideal option because of its wide ranging benefits and, perhaps most importantly, price.
When the price of an off-plan property is agreed it is often at the current market value, if not slightly lower, as it is based on the current price of materials and other costs. This allows investors to take maximum advantage of growing property prices, as by the time the structure is complete its value is almost guaranteed to have risen.
It also means that investors should try to get in as early as possible to secure the lowest purchase price and highest resale value.
Offplanpropertyabroad.com believes that those who invest in off-plan property could see returns as high as 20 to 100 per cent in just two years.
As mentioned previously, off-plan property is purchased straight from the developer. This means that people avoid some of the most tiresome problems affecting chain property transactions. While delays are possible, as with any building project, they won’t find themselves in a position where a person changes their mind about the sale at the last minute.
Off-plan property is also ideal for those who are unable to provide large amounts of cash up front. Often a deposit is enough to secure the property, while the full price must be paid on completion. This means investors will be able to place their cash in other locations and allow it to increase in value rather than accumulate interest on mortgage repayments.
Finally, off-plan property means that buyers don’t have to compromise. They can purchase a house in the location that they want, to their requirements and avoid having to settle for one which has already been designed for another purpose.
Avoiding the drawbacks of off-plan property
As with any form of investment, off-plan property is not without its risks. Yet knowing the potential problems can help you avoid them.
Firstly, people should make themselves aware of any changes planned for the area that their property is due to be built in. Planned future investment can provide a real boost to property prices, while overdevelopment or a lack of investment can cause prices to drop.
Secondly, as with any investment, the price of an off-plan property can go up or down. While the risk is minimised as the cost of a completed property is almost always higher than that of one in construction, factors like inflation need to be taken into account. The economic situation of any country should be assessed before an investment is considered.
Finally, off-plan property is not for those who want a house they can use immediately or who need to see a return on their money straight away. Building understandably takes time and it can be a couple of years before properties are completed, making it ideal for those looking for a medium to long-term investment.
