Explanation
 To buy a property “off plan” means reserving either a plot or a specific property before construction of a development has started. The concept is widely practiced throughout Europe and most of the Western world. It carries a risk in that you cannot see what you are going to get before investing; however, the risk is offset by the opportunity to make more money, as off plan pricing is almost always lower than ones offered when the construction finishes.
The motivation for buying off plan is twofold:
- The purchaser is usually able to negotiate a better discount; he is effectively funding the developer and enabling him to commence the project knowing the buyer is already set.
- In order to encourage sales, developers have a tendency to under-price the project. Thus the buyer's capital growth is disproportionate to the increase in surrounding property values.
As a general rule in Phuket, prices will normally go up during the launch period by approximately 5 to 15%. Further increases of around 10 to 15% usually happen during the construction period, normally over one to two years.
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Early investors who secure property at an off plan price usually achieve healthy appreciation, but the skill is in selecting the right development and the right location within it. At The Village Coconut Island we have tried to create quality in every single offering, in order to make off plan buying as risk-less as possible for our buyers.
How it works
A reservation fee is required when you buy a property off plan; the fee varies from project to project. This fee reserves the property whilst the contracts are examined and the final details negotiated.
On acceptance of the legal terms and conditions, the remainder of the deposit price is due; in most cases between 10 - 25% of the property price. This secures the property and fixes the price. Thereafter there are the usual stage payments based on construction progress.
The capital required now is only 50% of the property value. Consequently, in terms of capital employed, the percentage return can be very lucrative.
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