Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Guide to ‘Off the Plans’ Buying

FOR IMMEDIATE RELEASE

Guide to ‘Off the Plans’ Buying

Martin Dunn from City Sales believes a ‘property cycle’ has made buying off the plans a timely investment option.

Complex risks associated with buying property ‘off the plans’ are periodically outweighed by benefits unearthed by the ‘property cycle’. Martin Dunn from City Sales believes now is a time when property investors can prosper from buying ‘off the plans’ and gives advice on what to look for and what to avoid.

“Of the ten or so new apartment projects being currently marketed off the plans in the Auckland CBD, City Sales is involved with one of them”, says Martin. “We’re incredibly selective in what we sell – City Sales hasn’t supported any new builds since The Statesman in 2004. For us to be involved in a new development, we need to be certain that it ticks all of the boxes for us, and right now The Sugartree on Union Street does just that.”

Dunn places a great deal of importance on these boxes to tick, and compares getting it wrong to the Blue Chip debacle “Here we are, four years on from Blue Chip and we’re still trying to extricate terribly damaged families from a financial Armageddon.”

But Dunn believes that the time has come in the ‘property cycle’ when buying off the plans can be extremely rewarding.

“I believe the Auckland residential market is in a long term growth phase that will be slightly tempered in the coming two years by interest rate rises and political intrigue.

But the growth will continue relentlessly and the technical manpower to build for this growth is hopelessly inadequate. We don’t possess the trade skills and personnel to cope with the Christchurch rebuild let alone provide for Auckland’s growth.

I predict a steady continued growth in Auckland residential real estate and gearing into this market with as little as a 10% deposit in a rising market might put you in very good stead come settlement time.”

Dunn adds that a buyer must understand the risks completely before making such a commitment.

“When you sign that contract to buy something that does not exist, you are effectively contracting to the developer’s bank that on completion you will pay the $485,000 or whatever you’ve agreed to – and you can’t change your mind. You can get your lawyer to OK the documents by buying conditionally for say five days, which we generally suggest is prudent, but then you’re locked in.

No matter how friendly or approachable the developer is, don’t be lulled into a false sense of comfort. Your agreement will be immediately passed out of his hands to his bankers and if your personal situation goes pear shaped for whatever reason in the 12 to 18 months it takes to build your new suite, it is the bank you will be speaking to, not your friendly developer.”

City Sales has outlined further risks to be aware of when buying off the plans in a checklist below.

Is the development to actually go ahead? What happens to your deposit if it doesn’t?

Does the developer hold your deposit or is it protected in a lawyer’s/agent’s audited trust account until settlement?

Does the developer know how to develop an apartment building?

Does the successful tenderer construction company have experience in building apartments?

Does the developer own the land?

Are you buying through a ‘spruiker’ (unlicenced sales organisation) cribbing the law or a Licenced Real Estate Agent with all the protections that offers?

Is the size of your apartment clearly spelled out and do you understand the significance of what this means?

On what basis is the price demanded e.g. is this sale price justifiable with other new builds or is it out of kilter in comparison with what City Sales terms ‘the secondary market’ i.e. existing apartments. On this count, brand new suites built to more demanding construction codes are likely to be dearer than existing stock but… by how much and are you dealing with a broker who can justify this to you with day to day market facts?

If the developer/agent is touting potential rentals achievable and Body Corp charges can he/she demonstrate examples as to why those figures are justifiable?

Is the location pioneering or established?

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing Policy: Auckland Densification As Popular As Ebola, English Says

Finance Minister Bill English said calls by the Reserve Bank Governor for more densification in Auckland’s housing were “about as popular in parts of Auckland as Ebola” would be. More>>

ALSO:

Crown Accounts: NZ Government Deficit Smaller Than Expected In First Half

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>

ALSO:

Fruit & Veg Crackdown: Auckland Fruit Fly Find Under Investigation

The Ministry for Primary Industries (MPI) is investigating a find of a single male Queensland fruit fly in a surveillance trap in the Auckland suburb of Grey Lynn... MPI has placed legal controls on the movement of fruit and some vegetables outside of a defined circular area which extends 1.5km from where the fly was trapped in Grey Lynn. More>>

ALSO:

Scoop Business: Westpac NZ Reaches $2.97M Swaps Settlement

Westpac Banking Corp’s New Zealand unit has agreed to pay $2.97 million in a settlement with the Commerce Commission over the way the bank sold interest rate swaps to farmers between 2005 and 2012. More>>

ALSO:

Going Dutch: Fonterra Kicks Off $144M Partnership With Dutch Cheese Maker

Fonterra Co-operative Group, the world’s largest dairy exporter, has commissioned a new dairy ingredients plant in Heerenveen, in the north of the Netherlands, its first wholly-owned and operated ingredients plant in Europe. More>>

ALSO:

Scoop Business: NZ Retail Sales Beat Estimates

New Zealand retail sales rose more than expected in the fourth quarter, led by vehicle-related transactions, food and beverages, adding to evidence that cheap credit and a growing jobs market are encouraging consumers to spend. More>>

ALSO:

Delivery Cuts Go Ahead: 'Government Money Grab' From NZ Post

"It's a money grab by the Government as the shareholder of New Zealand Post" says Postal Workers Union advocate Graeme Clarke about the changes announced by NZ Post. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news