Benefits of Investing in offtake real estate!
The real estate market in Nigeria is rapidly evolving and most developers are beginning to adopt the offtake system of purchasing a property. An offtake agreement is an agreement that a buyer makes with a developer. The developer agrees to sell the property at an agreed price while construction is in progress. An offtake agreement usually occurs before or during the construction of the property.
Buying a property at offtake has tremendous benefits such as the following:
For the Buyer
An offtake agreement allows you to buy at a comparatively lower cost, which appreciates in value once construction is completed. Offtake prices are typically lower than the cost of a fully constructed property.
Buying at offtake allows you to save more and as a plus, you benefit from instant value appreciation of up to 10% once the building has been completely constructed.
An offtake agreement functions as a hedge against future price fluctuations. As an offtake buyer, you’re insulated from fluctuations in the money market, for instance, weakening of the naira against the dollar.
Buying at an offtake allows you the freedom of expression. You’re given room to voice your expectations, tastes and what you want in terms of designs required in your building. This saves you the extra cost of renovating an already constructed building to suit your taste.
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The developer also benefits from the offtake agreement in the following ways:
For the Developer
An off-taker purchase allows the developer to recoup a large chunk of their investment and prevents long-vacant periods after construction. It’s common to see buildings stay vacant for up to three years after construction, in which they’d have to factor in depreciation. The system also allowed for a reduction of void before the building is constructed. Offtake agreement facilitates the easy transition from construction to occupancy and increased value of the property.
The offtake agreement gives the project the extra nudge to guarantee the completion of the project in the future.