UGANDA, Kampala | Real Muloodi News | An off-plan property is one that is not yet completed or constructed. It typically involves purchasing from a developer before or during the construction phase.
Buyers base their decisions on architectural plans, and designs, and sometimes show units provided by the developer. Off-plan property purchasing is popular due to various factors.
Potential Appreciation and Prime Selections
One major attraction of off-plan property purchases is the potential for significant appreciation in value by the time construction is completed, usually within three to four years.
Early buyers often secure prime properties, allowing for substantial profits upon sale. This appreciation makes the initial risks associated with off-plan purchases worthwhile.
Another advantage is the opportunity to secure the best choices early in the process. Buyers who contact developers early can select condominiums with preferred features such as desired floor levels, optimal views, and favourable pricing. This proactive approach ensures buyers get the most desirable properties available.
Favorable Payment Terms
Annet Babigamba, a realtor and condominium salesperson at Universal Properties, emphasizes the primary allure of off-plan property purchases lies in favourable payment terms.
“The biggest advantage of buying a condominium off-plan is the flexible payment terms. With a pre-construction purchase, you can reserve a unit with as little as five or Shs10 million, which often amounts to less than five per cent of the total condo price. Additionally, you have the option to pay the remaining balance in instalments over the construction period, typically spanning about three years. This payment structure is highly appealing to many prospective buyers,” Babigamba explains.
For most Ugandans, raising the substantial sums required to purchase properties in prime areas like Nakasero, Kololo, or Mbuya is challenging. “Buying off-plan allows individuals to spread out their payments over several years, making it feasible for more people to afford these condominiums,” she adds.
In contrast, purchasing a condominium after construction requires a large initial payment.
“When buying a fully constructed unit, the buyer’s first installment typically amounts to at least 50 percent of the total condo price. Not everyone can readily come up with Shs150 million as a down payment,” she notes.
Preferences and Demographics
In Uganda’s real estate market, buyer preferences vary. Top-floor units are prized for their panoramic views and rental potential, while lower-floor units are favoured for their convenience and family-friendly appeal.
“We have observed that one-bedroom apartments on the top floors are particularly attractive to investors interested in rental properties,” Babigamba explains. “On the other hand, three-bedroom units tend to sell better on the ground and first floors. Buyers of these units often have young children or are planning to start a family.”
The off-plan property market in Uganda is evolving, driven by varying age groups with distinct financial priorities and investment goals.
The demographic most actively purchasing off-plan properties consists primarily of individuals in their 30s.
“Young people in their 20s are still navigating their financial paths, while those in their 40s are typically managing mortgages or settled in homes they have built. In contrast, those in their 30s are in a position to invest in property,” Babigamba explains.
This trend is expanding, with some individuals in their 20s also opting for condominiums due to favourable payment terms and desirable locations.
“Buyers over 50 years old often view condominiums as a sound investment strategy,” Babigamba continues. “Having fulfilled major financial obligations such as education costs, they now have surplus funds to secure their retirement through property investments.”
Approximately 30 per cent of condominium sales are attributed to diaspora buyers, reflecting a growing trust in the market among this demographic.
Cons of Off-Plan Property Purchasing
While purchasing off-plan property offers several advantages, there are also drawbacks.
Property expert Cissy Namaganda highlights potential issues such as unforeseen changes in building details due to various factors and the risk of selecting an unreliable developer. This can result in incomplete projects and considerable inconvenience, even if refunds are provided.
Additionally, there is a risk of construction delays, with projects often taking longer than initially estimated.
Precautions
Steven Opolot, a Ugandan realtor based in Dubai, emphasizes the importance of thorough due diligence before purchasing an off-plan property. Here are steps to ensure a well-informed decision:
Research the Developer: Investigate the history and track record of the developer. Gather feedback from previous buyers and conduct online research, checking reviews and news articles about the developer’s past projects, financial stability, and reputation in the industry.
Check the Location: Thoroughly investigate the neighbourhood and location of the project to determine if it suits your needs. Assess factors such as proximity to amenities like supermarkets, main roads, restaurants, public transportation, hospitals, and schools.
Review the Floor Plans: Examine the floor plans to ensure the layout suits your needs. In the Ugandan market, purchasing off-plan often allows minor adjustments to the condominium’s floor plan. Study the floor plan beforehand to identify any changes you want to make.
Review the Building Features: Inspect each feature and understand how they align with your needs. Ask detailed questions about shared spaces to ensure they meet your expectations and preferences.
Review the Contract: Carefully read and understand all its terms and conditions. Consider hiring a lawyer or real estate agent to assist in reviewing the contract. Inquire about the estimated completion date, potential delays, and the developer’s protocols for handling delays or cancellations.
Market Value: Visit the location and compare the price of the off-plan property with similar properties in the area. This comparison will help determine whether you are overpaying or securing a favourable deal.
Deposit Structure: Fully grasp the deposit structure and payment timeline. Inquire about penalties for failing to complete payments within the developer’s specified timeframe.
Consult Several Real Estate Professionals: Consulting with multiple experts provides valuable insights about the market, developer’s track record, superior alternatives, and valuable advice.
General Prices for Popular Off-Plan Properties
The pricing for off-plan property apartments varies based on their configurations. A single-bedroom unit, complete with a living room, kitchen, toilet, and bathroom, is priced at Shs168 million.
A two-bedroom duplex apartment is available for Shs295 million, offering a unique layout spread over two floors with utility spaces on the lower level and bedrooms upstairs.
For more space, a three-bedroom duplex apartment, priced at Shs353 million, provides ample room across two floors, similarly dividing living areas and bedrooms.
Warranty and Influence on Development
Most off-plan purchases come with guarantees and warranties from the developer. These can cover structural defects, ensuring any issues arising during construction or immediately after completion are addressed.
By buying off-plan, buyers can sometimes influence the development process. Developers may seek feedback or offer options that allow buyers to influence certain aspects of the property’s design or features.
Buying an off-plan property involves purchasing a property that is not yet completed or constructed. The process offers several advantages, including potential appreciation in property value, favourable payment terms, and the opportunity to secure prime selections early.
However, there are also drawbacks, such as unforeseen changes in building details and the risk of construction delays.
Conducting thorough due diligence, researching the developer, checking the location, reviewing floor plans and building features, understanding the contract and deposit structure, and consulting multiple real estate professionals are crucial steps for a well-informed decision.
With these precautions, buyers can navigate the off-plan property market effectively and make sound investments in Uganda’s competitive real estate market.
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