Many prospective property investors are becoming wary of the gale of promotions for off-plan sales characterised by incentives for buyers of new homes.
The concept has gone more radical recently, with the private developers offering mouth-watering discounts, installment payments and dangling other attractions to buyers. The traditional marketing ploys include the use of glossy and beautiful brochures and advertising to woo buyers.
But the concept of buying off-plan has been fraught with sharp practices. In some cases, the advertised properties or infrastructure are not delivered.
The most common aspects are site and services schemes dotted in every part of the country. They feature beautiful gates and fences, as it is an appealing option for buyers/investors due to lower prices.
In some cases, the developers never add any infrastructure to the schemes five or eight years after conclusion of sales and promises.
The process also allows purchasers to place a deposit and secure the property while construction takes place. Amid construction process, there is the possibility or otherwise for the value of the investment, particularly in sought after and upcoming areas, to grow substantially.
Investigation revealed that less than 20 per cent of buyers patronises off-plan property sales which used to be popular in Lagos and Abuja, Ogun State, Port Harcourt in Rivers State and Ibadan in Oyo State among others.
The trend in the market now is for people to pay for what they could see and feel rather than the beautiful pictures with which many of the off-plan sales come with. Some also rely on reputable and trusted developers for off-plan properties.
According to industry experts, investing in the property market off-plan comes with risks that do not occur when purchasing completed property. The Chairman, Real Estate Consulting, a division of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Niyi Fudoju said that experiences of people which often are not palatable have triggered loss of confidence on the off-plan concept in Nigeria.
He stated, “When people buy houses, they have reasons and if they buy off-plan and the properties are not delivered at the expected time, they get frustrated.”
Fadoju emphasized that issue of trustworthiness on the part of the property sellers play a key role because the property market has been infiltrated by huge numbers of people who come in, to swindle unsuspecting members of the public other than engaging in honest business.
“Only developers that have clean track record in places like Lagos and Abuja don’t have problem with off-plan sales. Immediately they give the subscription form, people start paying them because they are trusted. The buyers are cocksure they would complete on time and also deliver good housing development that satisfy the taste of buyers”.
According to him, the economic factor especially fluctuations in building materials prices as well as the exchange rate served as a factor why buyers don’t get the quality, which they expect, in off-plan sales.
The NIESV Chairman, Rivers State, Elliot Orupabo confirmed that many people have been swindled in the name of off-plan sale in Port Harcourt. “What we are experiencing in Port Harcourt is that some developers would come and make a lot of noise and promises that even those who are in the practice of estate surveying and valuation cannot fulfill.
“They will call names of estates for people to go and buy, tell them to deposit N6,000 and the land is theirs, people will subscribe and before you know it, the developer would abscond with their money. The fraudulent approach to it has made many people not to be comfortable with it”, he said.
He noted that instances of such transaction abound in the state where people have spent huge fund over 15 years on off-plan property, yet the properties won’t be delivered to them.
For NIESV chairman, Ogun State Chapter, Mr. Salimon Alao Shobanke, the system is full of fraudulent practices by some property developers that collect deposits from people, take them inside the bush especially locations where there are no basic infrastructures and promising what could not be delivered.
“Many people in Ogun state have been cheated by those parading themselves as off-plan property developers.
“Prospective off-plan buyers must work with the principle of Caveat emptor in their quest for any property that is off-plan based. If the firm doesn’t have a registered office location or success story to tell, people must avoid transaction with them”, he stated.