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Further Reading:

Buying of Plan

With the significant number of new projects launched over the last six months many of our clients ask us to summarise the advantages/disadvantages of buying into an off plan (ie not yet built) project as opposed to a property on the secondary market.

Leaving aside for the moment all the legal issues relating to foreign purchase/lease of land (which I have covered in many previous issues) buying a house that is already completed is certainly a much simpler exercise than buying land and building a home for yourself. When you buy a house, you can see exactly what you will get and know exactly what you will have to pay for it. With a little bit of due diligence you can also determine what building defects (if any) might be present.

If you can find a sound and attractive house that fits your needs and lifestyle choices at a price that appeals to you, then you should probably just go for it. But therein lies the rub, if you find a prime house in a prime location that is already in existence, it will almost certainly be marketed at a significant premium over it's development (land purchase plus construction) cost.

The advantages of building for yourself are primarily that you can design build and fit out a house exactly as you need it and (subject to availability)do so within a land size and location that best suits you, with the expectation that done with care the project can be completed at a price significantly below the market value of the finished product.

It all sounds very appealing, but it is not always as straightforward as it sounds. If the property you plan is modest, the design, construction supervision and infrastructure development costs of the site may well outweigh the potential savings. Savings will generally increase the larger the property that you are building. Also it must be noted that even with the assistance of a qualified local architect and construction manager, making sensible design and costing decisions can be difficult for those without prior experience in construction,. As such building on your own does not always guarantee that you will get what you want at the price that you planned.

There is however often a middle ground between buying a fully finished home and doing it all yourself. Several housing developments and land sub-division projects around the island currently offer you the opportunity of buying a serviced plot of land and then offer a fully (or at least partially) customized home design and construction service. These projects also typically establish codes, covenants and restrictions which on the one hand might slightly inhibit your design aspirations , but on the other hand offer a lot of protection from excessive development by your neighbors - something not to be overlooked if you just buy a single plot of land in an uncontrolled area.

Clearly these subdivision / custom build projects are out to make a commercial return, and will cost you more than if you were to do every aspect of the development totally alone (but usually only less if you omit to value your own time contribution if you build all on your own). They are typically managed by experienced developers, who can offer considerable assistance in the design development process as well as economies of scale in the various professional fees, the development of site infrastructure and in the actual construction process. Charging is usually computed on a price per square meter (for a defined specification) and then adjusted for variations in size or specification from the base line or in some cases construction price is set by directly negotiated competitive tender with the developer charging a percentage overhead to cover the professional fees. Because the developer faces little risk and uses only limited amounts of his own capital in the development with this format developers of these buy / build projects can typically work to much lower margins than a builder who constructs homes on spec tying up large sums of capital (or expensive financing). Shop around and consider the options carefully. With care and consideration to your personal needs, design / development abilities and the time you have available to oversee the process, one of the three general approaches suggested above will likely lend itself to your personal situation.