Off-plan sales to cope with new apartments dearth
Signing contracts for apartments and townhouses even before they are built
When the demand rises and new apartments are lacking, there’s just one solution: the take-it-on-faith condo!
In New York, buyers are increasingly signing contracts for apartments in luxury condominiums and for town houses even before they are built.
The 200 East 79th Street Skyline Developers project is still being implemented. The building is projected to open in summer 2013, but 25 out of the 39 units have already been sold. Alchemy Properties is developing 11 town houses and 32 condos in Carroll Gardens, in Brooklyn: 24 of the condos and 2 town houses are already in contract at the asking price. Prospective buyers snapped up the properties in the construction phase basing their choice just on floor plans, artists’ renderings and model kitchens and bathrooms. Mr Kenneth S. Horn, Alchemy’s president, said the lack of new properties is so great that nice products with nice finishes in good areas can be easily sold.
Housing inventories have been dropping in markets like Miami and San Francisco; as a result, some condos in Brickell – in Miami – and Mission Bay – in San Francisco – have been sold from floor plans, while they are being built. The availability of new houses in New York City has fallen by 25%. Due to tight lending and high land costs, most of the buildings entering the market are relatively small. By the end of 2012, 1,249 new apartments are expected to be available in Manhattan. After the 2008 collapse, presales dropped as buyers avoided buying unfinished properties as they feared developers would not have been able to complete the building.
Off-site showrooms re-emerged at the end of 2011 and off-plan purchases increased again. More than 60% of the 92 luxury apartments forming part of the One57 high-profile tower have been sold since the beginning of sales about one year ago. Buying off-plan properties early often means acquiring a property at a lower price, as rates can be raised during the construction; therefore, prospective buyers are often ready to put their names on a waiting list.
Is there any pitfall when buying a property before it is completed? Construction delays, rising interest rates and finding an apartment that is smaller than expected are some of the risks. Buyers are advised to carefully analyse the terms and conditions of the sale – even when they rely on their lawyer – to look closely at the price, the projected common charge and the projected annual budget and to consider the possible ways their investment might be jeopardized.
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