Buying property in new developments comes with a number of benefits
When it comes to investing in real estate in South Africa, secure eco-estates remain a popular choice, particularly along the coastline. And while the benefits of such investments are great, investing in a newly developed eco-estate provides even greater returns.
In new developments that offer plot-and-plan, the upfront investment is often lower. Purchasers are usually only expected to pay around 10% of the purchase price as a deposit, and then in tranches during the construction phase. Importantly, bond repayments commonly only start once construction is complete.
No transfer duties
No transfer duty is payable on newly built properties, and VAT is included in the purchase price. This translates into significant cost savings at the time of acquisition.
Every home will need some form of upkeep somewhere along the line, but when investing in a new development, there are massive savings, as very little maintenance will be needed in the first few years. Costly problems associated with the extra wear and tear of old houses are avoided.
Increased energy efficiency
With loadshedding and water scarcity, energy-efficient homes are becoming a necessity. When investing in a new development, sustainable choices are incorporated, such as LED lighting, natural lighting and ventilation, and energy-efficient geysers, with some also incorporating solar panels and water storage. This brings down running costs and makes the cost of living much lower.
Diversifying investment portfolio
Buying a residential property in an eco-estate is a sound real estate investment – reducing overall portfolio riskand increasing the chance of higher long-term returns. In these uncertain economic times, and as a way to maximise long-term growth, it’s important that investors diversify their portfolios.
Great investment during high inflation
The country’s inflation rate spiked to 7.8% in July, the highest rate since April 2009. With increasing inflation, investing in real estate is a smart move, as the buyer is more likely to earn a capital gain soon after occupation. When investing at today’s property price, chances are that the property value will have grown by the time of occupation, especially in an inflationary environment. Locking in a lower interest rate is also a smart move for bond repayments, before the interest rate rises even further.