Buying an apartment that is already complete is fairly straightforward. You can visit the property, see exactly what you are buying, and, once the transaction is complete, move in or rent it out.
Buying off-plan is different.
With an off-plan apartment, you are buying a property before construction is complete. In some cases, you may even be buying when construction has only just started.
Off-plan purchases have become increasingly common in Nairobi, partly because of the lower prices and flexible payment plans that developers offer.
But while buying early can have its advantages, there are also risks that you need to consider before committing your money.
If you are thinking about buying an off-plan apartment in Nairobi, here is what you need to know.
Quick Takeaways
An off-plan apartment is purchased before construction is complete.
The biggest attraction is usually the lower price compared to a completed unit.
Developers may also offer payment plans that allow you to spread the cost over several years.
Buying early can give you room for capital appreciation if property prices increase.
The main risks include construction delays, failure to complete the project and differences between the advertised and final property.
Research the developer, verify the land ownership and have the sales agreement reviewed before committing.
What Does Off-Plan Mean?
An off-plan property is a property that has not yet been completed.
Instead of buying a finished apartment that you can walk into, you are buying based on the plans, designs, specifications and other information provided by the developer.
Depending on when you buy, construction may not have started yet, or the project may already be under construction.
This is one reason why off-plan apartments can be cheaper than completed units.
Why Do Developers Sell Apartments Off-Plan?
There are several reasons developers sell apartments before they are completed.
One of the main reasons is to raise capital to finance the construction of the project. Selling some of the units early gives the developer money that can be used to fund construction as the project progresses.
The other reason is that off-plan units are generally easier to sell because developers can offer buyers lower prices and attractive payment plans.
For example, a developer may sell an apartment at a lower price during the early stages of construction and gradually increase the price as the project gets closer to completion.
In some cases, by the time a project is completed, the developer may have already sold most or even all of the units.
This allows them to recover their investment and move on to their next development.
Why Do Buyers Choose Off-Plan Apartments?
For buyers, the biggest attraction is usually the price.
An apartment purchased off-plan can cost significantly less than the same type of apartment once construction is complete.
For example, imagine a two-bedroom apartment in Westlands that would cost around KSh 10 million once completed.
The same apartment could potentially be offered at KSH 7 million to KSH 8 million during the early stages of the project.
That difference can be significant.
And generally, the earlier you buy, the lower the price can be. As construction progresses and more units are sold, developers may increase their prices.
Flexible Payment Plans
Payment plans are another major reason people choose to buy off-plan.
Instead of having to raise the entire purchase price upfront or immediately take out a mortgage, you may be able to pay the developer in instalments during construction.
For example, if an apartment costs KSH 8 million, the developer might require a 20% deposit and allow you to pay the remaining balance over three years.
That spreads the cost over a longer period and can make the purchase more manageable.
The exact payment schedule will depend on the developer and the agreement you sign, so it is important to understand the terms before committing.
Related: Buying an Apartment in Nairobi: A Complete Guide for Buyers
Potential for Capital Appreciation
There is also the potential for the property to increase in value between the time you buy it and the time construction is completed.
Going back to our example, if you buy an apartment off-plan for KSh 8 million and similar completed apartments are selling for KSh 10 million or more by the time your project is finished, there is already a difference in value.
If property prices continue to rise, that gap could become larger.
However, it is important to remember that property values do not automatically increase. Capital appreciation depends on factors such as location, demand, the quality of the development and wider property market conditions.
One Buyer's Experience of Purchasing an Off-Plan Apartment
To understand what the process can actually look like, we spoke to Kevin Maina, who purchased a studio apartment in Lower Kabete.
For Kevin, the price was the main attraction.
The studio was selling for KSH 2.1 million, with a 20% deposit required. The developer also offered a payment plan that allowed him to spread the remaining amount over time.
Kevin started by paying around KSH 50,000 to KSh 60,000 per month, with the amount increasing as the months went by.
This made the purchase more manageable for him and allowed him to buy without having to raise the entire amount at once.
Visiting the Development and Choosing a Unit
Kevin's process started with a visit to the development.
He met one of the developer's sales executives and viewed the show house. This gave him an idea of what the finished apartment could look and feel like.
He then selected the specific unit he wanted.
The floor was also important because the price was different depending on the level.
Generally, higher floors were more expensive, so he chose one that fitted his budget.
Once he had selected the unit, the developer sent him an offer letter outlining the apartment he had chosen and the payment schedule.
He signed the offer letter and paid the 20% deposit within a week.
Reviewing the Sales Agreement
After the offer letter and deposit, the developer's lawyers prepared the sales agreement.
Kevin initially used the developer's lawyers, but he also went through the agreement carefully himself.
This is where he says he was able to raise several issues and have some provisions changed to what he considered fair.
Among the things he wanted clarified were matters relating to the sectional title, valuation fees, stamp duty and the owners' corporation, including the amount that would eventually need to be paid towards it.
This is an important part of the process.
The sales agreement sets out the terms of the purchase, including the obligations of both the buyer and developer.
If there are provisions you do not understand, it is worth getting independent legal advice before signing.
What Are the Risks of Buying an Off-Plan Apartment?
The potential savings and payment plans make off-plan purchases attractive, but they also come with risks.
The biggest concern is that the development may not be completed as expected.
The Developer May Fail to Complete the Project
There is always a risk when buying something that does not yet exist in its finished form.
A developer could experience financial difficulties, encounter problems with approvals or face other issues that affect the project.
This is why researching the developer is extremely important.
Look at their previous projects. Have they completed other developments? What do those projects look like today? Do they have a history of delivering what they promised?
A developer's track record can give you useful information before you commit your money.
Construction Delays
Even when a project is eventually completed, it may not be completed on the date originally anticipated.
Construction can be affected by a number of factors, so buyers should avoid planning their finances around an exact completion date unless the agreement provides appropriate protections.
For someone buying a home, a delay could mean having to continue renting for longer.
For an investor, it could mean waiting longer before the apartment can be rented out and start generating income.
Build some room into your plans for possible delays.
The Final Product May Differ From What Was Advertised
Another issue to watch out for is the difference between what was advertised and what is eventually delivered.
Developers usually market projects using architectural designs, show houses, brochures and specifications.
But the finished apartment should match the agreed specifications.
Pay close attention to the finishes, fittings, fixtures, amenities and other features promised by the developer.
Do not rely solely on a sales brochure or verbal promises. Where possible, make sure important details are captured in the agreement or other contractual documents.
What Should You Check Before Buying an Off-Plan Apartment?
Before paying your deposit, there are several things you should look into.
Do Your Due Diligence on the Developer
Start with the developer.
Find out who is behind the project and look at their previous developments.
A developer with a history of completing projects gives you more information to work with than one with no track record.
You should also look into the company's ownership and the people behind the development.
Check the Land Ownership
You should also establish who owns the land on which the project is being developed.
Is the land registered under the developer's name?
Are there any charges or other interests registered against the property?
If the land is being used as collateral, for example, you need to understand how this could affect the development and your purchase.
This is an area where independent legal advice can be particularly useful.
Read the Agreement Carefully
Take your time with the sales agreement.
Understand exactly what you are buying, how much you are paying, when payments are due and what happens if either party does not meet their obligations.
Pay particular attention to completion dates, penalties, refunds, cancellation provisions, specifications and the process for transferring ownership.
If you are not comfortable interpreting the agreement yourself, consider getting your own lawyer to review it.
Understand the Payment Terms
Make sure the payment plan is realistic for your finances.
If you agree to make monthly payments for several years, consider what happens if your financial situation changes.
It is also important to understand whether the agreement provides any flexibility if you are late with a payment and what penalties may apply.
Do not only look at whether you can afford the payment today. Think about whether you can reasonably maintain it throughout the construction period.
Related: The Additional Costs of Buying a Home in Kenya
Inspect the Property When Construction Is Complete
Once construction is finished, inspect the apartment before taking possession.
Check whether the actual property matches what was agreed and advertised.
Look at the finishes, fittings, fixtures and other details of the apartment, as well as the common areas and amenities where applicable.
If there are defects or differences, raise them with the developer and follow the process provided for in your agreement.
Is Buying an Off-Plan Apartment Right for You?
An off-plan apartment can offer an opportunity to buy at a lower price and spread payments over several years.
But you are also taking on more uncertainty than someone buying a completed property.
The key is to understand what you are getting into before you sign.
Research the developer, verify the land and project, understand the payment plan, carefully review the sales agreement, and make sure the features and finishes you are paying for are properly documented.
Kevin's experience also shows that the process does not necessarily have to be complicated. His purchase started with a site visit and viewing the show house, followed by selecting a unit, receiving an offer letter, paying the deposit, and entering into a sales agreement.
The important part is to take your time before making that commitment.
If you are considering an off-plan apartment in Nairobi, do your homework first. The lower price may be attractive, but understanding the developer, the project, and the terms of your purchase is just as important.
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