Learn more about off-plan housing projects: How it works, prices, ongoing projects, off-plan housing developers, prices and pros and cons.
Image: Citizen TV
Housing is a basic need. Accordingly, the United Nation's Standard Development goals (SDDS) envision a world with limited inequalities in housing and property ownership. Kenyans not left behind; owning an apartment house for rent or an airbnb ready house in Kilimani, Kileleshwa or Lower kabete would be a big dream to chase.
The rat race towards either owning an acre or two of land for sale in Nairobi- Kenya is an opportunity worth chasing for many property buyers in Nairobi. Most Real Estate property developers in Kenya are pouncing on the houses crises with sword sharp acuteness. In order to off-set the excess housing units demand in Kenya, programs such as the Off-plan housing projects and the Affordable housing project (AHP) by the Kenyan Government have gained popularity amongst kenyan middle-class.
7 valuable lessons every investor should learn from the Banda off-plan Homes Scandal
According to World Bank statistics in the country, 91% of Nairobi residents live in rented homes. The report shows that 75% of all apartment buyers only purchase houses for resale to make profits. Further, only less than 10% of the houses bought in the county are actually meant for residing. Well, it is so clear that most average Kenyan citizens cannot afford to purchase their dream homes in the Capital. As a result, Banda Homes jumped into the Kenya’s property market to offer affordable solutions to housing through an off-plan purchase scheme.
What is an off-plan house project?
Basically, when buying an off-plan real estate property development, you are purchasing a house which not yet constructed. In most cases, there only exists house plans, 3D models of what would be the finished house. The off-plan housing model is designed to help the property developer acquire financing from the prospective property owners.
How does off plan property work?
The off-plan housing scheme starts with the property developer identifying a feasible property plan that could appeal to the future home owners. The Real Estate property developer then organizes the funding and acquisition of Land that will host the property. The house drawings, 3D models for the houses are done. The developer then develops a marketing plan after setting the profitable sale price for the finished houses. The ground breaking of the project is set after the off-plan project initiator has attained at least 70%+ of the required funding from pre-sales.
What is off plan property investment?
An off-plan property development is that which is done in a real Estate property which is yet to be constructed. It is like a promisory note in Real Estate
Banda Homes has given average Kenyans rare opportunities to own their own homes through an affordable plan. The company has delivered lots of state-of-the-art units in various locations. That being said, the developer has failed miserably to deliver some houses in Kenyatta Road’s Oak Park Estate and Kikuyu’s Mapple Ridge Estate since 2018.
According to a copy of sales agreement issued to one of the investors, the construction was projected to only take 12 months. Despite making the final off-plan purchase deposit in January this year, the depositor’s unit has never been completed. Speaking to Citizen TV, Banda Homes director went on to explain the rising concerns. Mr. Kamau stated that the lack of progress was largely engineered by “delayed payments” from investors. He also cited other challenges such as heavy rainfalls which delayed construction for only two months!
The allure of off-plan property schemes in Kenya.
Off-plan properties are increasingly becoming popular in the country. A wider lot of investors are loving them because of the following:
They give you enough time to prepare your finances: You will have one to two years to fully pay for the property. All you need is to be able to rise a 10% deposit, sign a contract, and start the waiting game. You do not even need a mortgage; you can pay the instalments through savings.
Property value will go up: When you purchase an off-plan unit now, you don’t have to worry about inflations. This could earn you some profits if you are planning to resell the house.
Crazy discounts: Developers want to sell. This is because banks cannot approve their finances for the development if most of the units aren’t yet sold. Hence you can use this opportunity to haggle a little. Nonetheless, off-plan properties have some downsides. You could lose all your investment money in events where the builder goes bankrupt. Failure to pay the required amount upon completion results in your house being sold.
Also after a large development is finished, many investors will try to cash in their homes. This results in an oversupply of units and hence low value and profits for reselling. Finally, the house delivered could be different from the one promised. Developers might decide to reconfigure the units to save on money.
Image: Construction Review
Due diligence on off-plan properties.
To avoid losing your money or ending up with uncompleted houses, you should stick to the following golden pointers that will definitely help you sieve through lots of deals to only fix your eyes on the best pact in the market:
Conduct a background check of the developer: Take your time, evaluate what the company in question has delivered in its previous projects. Ascertain whether they deliver within the stipulated time.
Adopt a good attitude: You should have a healthy skeptical mindset towards all off-plan developers.
Know the team: To have peace of mind that your unit is in the right hands, be sure you know the contractors, architects, and other staff members involved. Invest only in projects with experienced consultants. For instance, you can check whether the main contractor is registered by the government.
Do a market research: Find out how much the same unit would be sold or rented for.
Study the contract: Do not think of signing it before your lawyer gives you a go-ahead. Some off-planers draft contracts that favour them in case of anything.
10.__ Do an on-site inspection:__ If development has not yet commenced, ask the marketer to visit one of their other estates. Also, insist on updates including milestones like ground-breaking and so forth. Information is key to ensure that there is progress in your unit.
- Have realistic assumptions: Identify possible challenges such as rainfall, health pandemics, and so forth that could cause a delay in project completion. This way, you will not be distressed or start wondering whether to cash out your money at a very advanced stage.
To sum up, the most important thing you should have is information. Be armed with all the details of the plan including contractors and so forth so that you can be certain that your investment is in the right hands.
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