Paul Castran and the off the plan market

In 1991, I was involved in one of the first off the plan apartment building sales located on Barkly Street, Carlton.

The massive benefits of off the plan purchases were glaringly obvious to me, however I knew I would have to spend a generous amount of time educating my clients.

At one of the first open for inspections, a man, in his 40s, walked into my office. He came to the open and he was interested in one of the apartments we had in the building.

I explained to him all the incredible benefits purchasing an off the plan apartment would bring; running through all the details of stamp duty, depreciation, and pre-settlement growth. He nodded.

Usually when I tell clients about these kinds of potential savings, their eyes open up and they are intrigued to find out more. This man again just nodded.

I asked him what he did for a living. He neatly replied, “I am the Deputy Commissioner of Taxation for the Australian Government.” I could only smile as he already intimately understood all of the benefits I had explained to him.

He bought the apartment immediately. And it was this transaction that proved testament to the benefits of purchasing off the plan.

Today, I have sold off the plan apartments to both first home buyers entering the market at $300,000, through to empty nesters seeking top of the range luxury residences reaching up to $8,000,000 and beyond.

It is here, that despite obvious affordability issues creeping up against purchasers all across Australia, that off the plan apartments do not discriminate.

Unlike NSW, where off the plan stamp duty benefits do not exist, in Victoria, the savings can be remarkable.

What was once considered an unheralded risk, has now become the norm, as purchasers are comfortable laying down a 10% deposit to not settle until 12-18 months down the track. 

No longer do purchasers shake at the knees when we utter the words ‘off the plan’, instead they want to know more.

Moreland Road, a development in Footscray, had about 240 apartments for sale, yet only 20 remain. Another, Pier One, in Patterson Lakes, is doing extremely well. No matter where, or at what price point, the Australian market has finally recognised quality in the off the plan market.

Whilst the stock market may be turbulent, creating a nervousness from Australia to Wall Street, it is Australia’s real estate game that is providing a stable platform for investment.

Recognising, of course, that the mining industry is experiencing difficulty and the manufacturing industry is now in China, leaves construction as one of Australia biggest employment creators. 

It is the benefits associated with new apartments that really ring true, not only to first home buyers, but downsizers, seasoned investors and empty nesters as well. With huge 75% savings on stamp duty, an increasing tolerance to customisation, and the time to save up whilst knowing you have secured a property, these off the plan apartments serve wonders to all types of buyers, in all cycles of their purchasing life. 

Only recently was it relayed that Australia’s population had reached 24 million, three years ahead of estimates. Unlike twenty years ago, today’s generation needs four things; food, water, shelter and wifi, and it is the thought of supply and demand that triggers people to reconsider.

The Reserve Bank of Australia is reportedly expected to soften their stance, with Goldman Sachs suggesting that there is the distinct possibility of two interest rate cuts on the horizon for 2016; it is clear, it is time to buy-in.

Paul Castran is the Director of Castran Gilbert.