What we won’t buy
Why off-the-plan units rarely make our shortlist
Land-to-asset ratio, depreciation, valuation gaps and supply concentration — explained without the slogans.
Off-the-plan units occasionally make sense — for the right buyer, at the right price, in the right structure. The problem is that the marketing economics of new apartment stock require them to be sold into the wrong buyer, at the wrong price, in the wrong structure.
The four hard numbers
| Off-the-plan unit | Established house | |
|---|---|---|
| Typical land-to-asset ratio | 10–20% | 55–75% |
| Embedded marketing & GST cost | ~15–25% of price | ~3% (agent + duty) |
| Bank valuation risk at settlement | Common 5–15% short | Rare |
| Supply concentration (1km radius) | Often 500+ similar units | Usually <20 substitutes |
You are not buying a property. You are buying a marketing campaign, two sets of GST and a depreciation schedule.
Why land-to-asset ratio matters more than people admit
Land appreciates. Buildings depreciate. A property with 70% of its value in land grows roughly 3× faster, over a decade, than one with 15% — even in the same suburb. Off-the-plan units are structurally on the wrong side of this equation from day one.
Where your purchase price actually goes — typical OTP unit
- Building cost55%
- Developer margin & marketing22%
- GST9%
- Land14%
The narrow case where they do work
- Genuinely scarce locations (waterfront, heritage precincts) where land is locked.
- SMSF buyers prioritising depreciation, low maintenance and single-tenant suitability over growth.
- Owner-occupier buyers paying for lifestyle — and not pretending it is an investment.
| Metric | Off-the-plan unit | Established house |
|---|---|---|
| Avg annual growth | 0–3% | 5–7% |
| Land component | Low (5–15%) | High (60–80%) |
| Depreciation Y1–5 | High | Low |
| Settlement risk | High | Nil |
| Strata/maintenance | $4–8k/yr | $1–2k/yr |
Liked this? Get the weekly NOVAQ market brief
Suburb deep-dives, RBA & policy moves, and deal stories — straight from Chartered Accountants buying property every week.
FAQ
Frequently asked
- Are off-the-plan apartments ever a good investment?
- Rarely. The exceptions are small boutique projects (under 20 units) in genuinely supply-constrained inner-ring suburbs with strong owner-occupier demand. Generic high-rise stock almost always underperforms.
- What is sunset clause risk?
- Most contracts allow the developer to rescind if construction isn't completed by a 'sunset date'. In rising markets, unscrupulous developers use this to cancel and re-sell at higher prices. Always negotiate sunset terms before signing.
Go Deeper
Free guides related to this article
Written & reviewed by
The NOVAQ founders
Every NOVAQ article is written or reviewed by our founders — both Chartered Accountants who actively invest in Australian property. Not journalists, not interns.
Shreyas Doshi
Co-Founder · Chartered Accountant
15+ yrs in international tax, compliance, structuring and advisory across Deloitte, PwC and a large multinational mining company. Multi-state personal portfolio under different structures.
Yuvraj Kapadia
Co-Founder · CA, CPA, SMSF Specialist
ASIC-registered SMSF Auditor, Tax Agent, licensed Finance & Mortgage Broker and Buyer's Agent. Multi-state personal portfolio under different structures.
Get in touch
Ready for a goal-based property strategy?
Book a no-obligation strategy call. We’ll listen first, then tell you whether property is the right tool for your goal — and which strategy fits.
⚡ Instant calendar · Free 60-min callTakes 60 seconds. Pick your time straight after — our live booking calendar opens the moment you submit.