Off-the-Plan Evolves to Meet Shifting Market Expectations

Changes are afoot for the off-the-plan market. The pre-sales market for apartments and land-and-home packages has been plagued by interest rate rises, construction and planning woes as well as a dose of less-than-positive publicity, all of which has eroded consumer confidence. That included when it emerged Avid Homes had entered into pre-sale contracts before it had secured specific development entitlements from the council last year, which led to contracts being cancelled. Developers operating in the off-the-plan market have had to innovate to address low confidence as sunset clauses are enacted and high profile projects such as Queen’s Wharf are forced to tear up contracts to keep the project alive. Drew Group moved to ditch sunset clauses on its $415-million Lagoon on Main Beach project on the Gold Coast ( pictured above ), to give buyers more confidence that their contract would be honoured. Laver Residential Projects co-owner and director Dennis Vertzayias says the market is showing signs of improvement. “We certainly have seen an adjustment in the off-the-plan market post-Covid, however in [the Sydney] apartment space it isn’t as bad as some think,” Vertzayias says. “While we have not needed to go near those types of initiatives to make sales, what I can tell you is that off-the-plan has gone full circle; it’s almost back to where it started 20 years ago.” What buyers want Buyers have fundamentally changed, Vertzayias says, and developers must follow. “The first thing buyers want is certainty around the delivery team,” he says. “They want to be sure the developer and builder have a solid track record. They want all the documentation in place prior to signing those contracts. “Gone are the days developers can have four-year sunset dates and uncertainty, where they don’t even know who the builder is.” ▲ Co-founder and director of Laver Residential Dennis Vertzayias. At the 18-month to two-year mark, buyers expect solid performance and project progress, he says. “You just can’t drag the chain,” Vertzayias says. “Documentation needs to be upfront and finalised before going to a buyer and we are fully supportive of this so that buyers can make fully informed decisions when buying off plan.” This is why Avid Homes’ decision to sell lots, albeit land-and-home packages rather than apartments, without approval raised eyebrows. But that’s not to say the approach is without merit, Silo Real Estate founding partner Jeremy Marmur says. “With land supply constraints and high demand, buyers are willing to commit earlier in the process,” Marmur says. ▲ Avid Homes made headlines for selling lots at its Harmony development on the Sunshine Coast without council approvals. “Selling prior to approvals allows developers to gauge market interest, optimise pricing strategies, and de-risk the project financially before full-scale development begins.” For a buyer, this could enable them to secure a property at today’s prices. Given that home prices in Australia have, according to PropTrack, increased 45.1 per cent since the beginning of the pandemic in March of 2020, it could be a sensible option to beat potential market appreciation, Marmur says. “However, developers must ensure clear communication regarding timelines and approval risks to maintain buyer confidence.” Making off-the-plan attractive again Marketers have become a little more creative and a little more educated about the needs of buyers in this market, Vertzayias says. “On some of the slow-selling projects, which are generally larger scale or located in the outer ring, we are providing retail offers,” he says. “What’s been really popular lately with first home buyers especially is giving them two or three years of free strata. We’ve seen developers providing initiatives that provide value and the market has responded really well. ▲ Silo Real Estate founding partner Jeremy Marmur. “If they’re buying their unit for $900,000 or $1 million, they can take away the fear that are they going to be able to afford their levies, and alleviate that as a concern for the first couple of years, but it’s nothing drastic. “Eighty per cent of the off-the-plan projects we work on haven’t needed to do anything and sales are consistent.” Marmur says that developers are also investing in digital tools and new strategies to make a project seem more “real” and provide confidence to off-the-plan buyers. These include invitation-only sales events that generate hype before official launches, immersive technology including virtual and augmented reality, and partnerships with lifestyle brands and influencers to position homes as a lifestyle investment. ▲ Botanica Kingsford, a 58-apartment projec: its offer of free strata levies for two years has reportedly been well accepted by the market. But from a financial standpoint too, affordability is more important than ever, and developers are offering customised payment structures, whether it’s lower initial deposits, extended settlement terms or rental guarantees. End of the day of sunset clauses? Sunset clauses can go either way for developers and buyers and have often been the source of much consternation as a result. “Developers that are in tune with the market are often sensible with sunset dates, developers who are not in tune with the market are creating four-year sunset clause periods buyers just won’t accept,” Vertzayias says. However, for developers, eliminating sunset clauses could be a competitive advantage in a market where buyers are looking for stability, Marmur says. “Buyers have grown increasingly skeptical of sunset clauses, fearing they could be leveraged unfairly to cancel contracts and resell properties at higher prices. “By removing these clauses, developers like Drew Group are signaling transparency and long-term commitment, which builds greater trust with off-the-plan buyers,” Marmur says. The future of off-the-plan The industry is optimistic that the off-the-plan market will adjust as interest rates level out. “The average purchaser we’re talking to is confident we’re going in the right direction economically, inflation is down and interest rates are only heading in one direction,” Vertzayias says. “All those fundamentals are in place and we’re past the bottom of the market so the only way is up. ▲ Drew Group scrapped sunset clauses at it Lagoon project. “But it will be a gradual up, rather than a huge increase overnight, and I think smart buyers know it’s the time to get in now. “Last year people were looking but not committing, but now if it’s the right price and the right property, they’re committing and that’s reflected in our transactions, given we had an exceptional January, which isn’t usually the case for the beginning of the year.” It helps that government initiatives to support off-the-plan sales are being introduced, such as the Victorian government’s latest off-the-plan concession for contracts entered into between October 21, 2024 and October 21, 2025. The concession applies to off-the-plan purchases of homes within strata subdivisions that have common property. ▲ Avid contract clauses noted that approvals had not yet been secured, which is allowed under Queensland regulations. “This new incentive will encourage more buyers to commit to off-the-plan purchases, particularly in high-density developments where common property is a key feature,” Marmur says. “It’s a timely boost for developers seeking to drive pre-sales and secure financing in an evolving market.” But the key to off-the-plan sales success is balancing risk mitigation with buyer confidence, he says. “Strategies like removing sunset clauses, selling pre-approval and incorporating digital sales tools are setting new industry standards.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

Off-the-Plan Evolves to Meet Shifting Market Expectations

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