2009/02/05

The worst scenario for the off-plan investor is that the deposit may be lost, but this can be avoided with some homework.

So says Ronald Ennik, executive director of Pam Golding Properties and managing director of its Gauteng division, who further adds that this should certainly not be the case if adequate research has been done, not only on the developer but also on the estate agent involved.

"For instance, check the financial status and stability of the developer, his track record and his standing in the market. Do the same with the estate agency.

Andre Dippenaar, head of the development division of Pam Golding Properties in Gauteng, says "it takes courage and patience to adopt a 'contrarian' strategy when investing off-plan in residential developments at a time like now, when the heads of most other investors are well below the parapet".

"The benefit of investing off-plan is that – before construction of the development – the developer carries virtually all of the risk, by bearing the interest rate burden and meeting the other finance costs associated with the project. This is particularly so in the case of sectional title developments