Currently there seems to be the idea around with certain property market commentators that the desirability of marketing new apartment projects off the plan (OTP) is, for buyers and developers alike, some sort of a lottery, which implies there will be some winners, and because of the numbers involved more duds.

However I disagree and I want to outline why I suggest that OTP marketing is here to stay as a foundation of the housing (apartment) market.

With the big increase in construction activity across almost the entire country we have seen OTP sales grow and so dominate the apartment market over the past 2-3 years, and there are many reasons why buyers have embraced these trends. However before looking at the buyer’s perspective, here’s some figures that highlight why OTP sales will remain a core-marketing channel.

Figures published on the 6/4/2016 in the 8th Edition of the RLB Crane Index help paint the big picture for us (RLB – Rider Levett Bucknall). The Index shows that of the 651 cranes now on-site across Australia, 288 are associated with residential constructions with 239 in NSW accounting for 81.1% of total deployed residential cranes.

Many of these projects will, or have already been taken to market via OTP, with more to follow, and with this level of activity, marketing OPT will remain central. I suggest that both developers and buyers are now well educated in this important market sector, the area is competently managed and is by no means a lottery.

My experience shows that OTP has wide appeal among owner-occupiers, investors, and combination buyers and offshore buyers of course, which together covers almost the entire market and so this underlines market wide acceptance. And while each group has their own different short and long-term goals buying OTP does work for each group.

I have referred to combination buyers as a specific group, because these are buyers who purchase with a mixed agenda. They might buy and lease their apartments before moving in themselves upon retirement or buy and lease the apartment and later pass the property onto the kids as their first home.

So as a group they have a very specific set of requirements to be meet and are happy to purchase OTP. While offshore buyers might have few options to buy into the local market, these buyers are also no fools and are very selective when they consider an OTP purchase.

The impression that somehow offshore buyers are easily lead into almost any property or location is wrong. And there’s also the impression that among OTP investors it’s all about speculation, however ABS statistics suggest the opposite as most investors (66%) state that one of the main reasons for purchasing a property was that it provided a secure long-term investment.

Security Well Supported

Over the past decade the spread of apartment living has started to re-shape our major cities, it’s a trend that will continue, and it does change the matrix of the market. While this change is taking place buying OFT does deliver security and suggestions that areas that have seen a big jump in supply will somehow collapse are wrong.

The reasons are simple, buyers are attracted to areas that offer good infrastructure both built and social, and the level of services they look for only comes about when areas reach a critical level of population density. This requires development, and while 20,000 or 30,000 apartments in one area (Like Sydney’s inner south or Melbourne’s CBD) might look a big number, it’s necessary to support the infrastructure buyers seek, like light-rail and vibrant diverse retail facilities that can trade over extended hours.

Cities are now very different markets than they were 10 years ago and in some ways we are still adjusting. The new levels of density will also create a far greater range of sub-markets with different price points and supply and demand pressures.

Still the link between density and the level and quality of infrastructure will remain. Sydney’s Broadway is one good example and Green Square offers the same promise. The sort of infrastructure buyers look for is always evolving, the ‘wellness boom’ for example has seen an explosion in gyms that trade 24/7 and have amazing facilities, so much so that the word ‘gym’ urgently needs updating, and these facilities need population density.

I acknowledge that buying off the plan is not always risk-free, but today buyers have made this a popular choice and I think in the main that’s because of the quality of planning and marketing that goes into any new project. While developers have realised the importance of quality marketing which buyers embraced.

Firstly looking at the fundamentals, buyers can usually have the pick of apartments in a new development, they can in some cases (this often depends upon the price point) personalise the interiors and there is an opportunity for capital gain if the market moves up. However I suggest this is not the key motivation for most buyers it more about locking in an apartment with time to plan their move and finances.

In NSW new legislation also means that in rare cases where projects might have been delivered late buyers are now protected. Also in today’s market professional developers know and greatly value their reputation and brand.

The delivery process is well managed and developers make big investments in supporting OTP sales. Buyers can read plans, I think it’s a little snooty to suggest otherwise, and most projects also have complete display apartments, or they have high quality material now including virtual reality.

As we continue to see greater density across urban areas OTP aims and needs to be very transparent, a seamless and reliable procedure for buyers.

Buyers are attracted to New

A key feature of OTP is the appeal of the new, a new building, a new neighbourhood many buyers find this very attractive and exciting.

OTP no longer involves ‘second guessing’ and with some major projects the sales path has morphed into a full brand experience that is totally focused on the buyer. OTP marketing is very accessible for even the most inexperienced of buyers with standards, quality and innovation always increasing. The market is very comfortable with the ability to access varied projects and locations, with time to plan and with the certainty of a known price all supported by quality marketing.

This is important, because while buyers are now days very comfortable with OTP marketing, standards still have to always keep improving along with the quality of marketing.

Here’s a final thought, if you had a time lapse camera over some areas of Sydney for example, lets say South Sydney, or Rhodes or Chatswood for the past 5-10 years, the change would be nothing short of breath taking. This is a market ideal to OTP marketing and we need to adjust our thinking to greater levels of density and appreciate that the combination of growth and dynamic services is the most viable option and that selling OTP is a key part of this mix.