Off-plan properties have generated much interest among people looking to invest in a property in Dubai.
The topic of off-plan properties in Dubai is diverse. While some people want to know the advantages and disadvantages of such properties, some explore how to choose the right property type. It is not the end of the debate. There are already many people who have invested in off-plan projects in Dubai.
Dubai has become one of the most developing cities in the world. Shedding the tag of an oil-based economy, Dubai is now more an innovative business hub, leveraging its advantageous geographical location and diversity of its population. The city figures among the top prominent international commercial destinations.
What is Off-Plan Property in Dubai?
Before exploring the advantages and disadvantages of off-plan properties, it is worthwhile to know the properties that are off-plan in Dubai.
The knowledge will help you to solidify your understanding even if you already know something about the properties.
Off-plan property is an unconstructed property that you can purchase from a developer before completion. You can also buy such property from the first owner if he is willing to sell it.
When you buy such a property, you typically pay 10-20 percent of the property price as the down payment and sign the Sales Purchase Agreement (SPA).
The rest of the payment schedule will depend upon how the developer agrees, and that varies from developer to developer.
Why Do People Purchase Off-Plan Properties?
With the steady development of Dubai, the value of real estate properties is increasing remarkably. People prefer purchasing properties in the city to reap monetary gains.
When it comes to Dubai property return on investment, off-plan properties are the best options for generating higher RoI than the constructed projects.
All off-plan properties are not alike. They differ in terms of suitability. While some of such properties suit the investor, others are good for the users.
Therefore, you should make yourself clear about the reasons for which you are willing to invest in an off-plan property as that will allow you to make a correct decision.
Another reason for the growing popularity of off-plan properties is the flexibility of having a sell-off plan before the completion of the project. In this way, the investor can make a profit.
What are the Factors to Consider Before Buying an Off-Plan Property in Dubai?
With the vast number of off-plan properties in the city, finding the right property can be tedious. So, it is a good idea to go about the search systematically. Here are the essential things to know before buying property in Dubai:
Firstly, decide the type of property you want to buy and the location. Shortlist some areas and types of properties, like apartments, villas, etc.
The seller is an important entity in the property-purchase process. A bad developer can break your property purchase goals. Do adequate research to find out every detail about the developer. Examine the track record and reputation, and to do so, examine the past projects that will serve as a good indicator.
Learn about the overall project before you finalize your purchase. It is not only essential to become familiar with the project but also about the master development. The key factors that you should consider are:
- Size: Number of floors and units
- The construction materials to be used
- The looks
- Facilities and amenities
- Parking facilities
- In and out car access points
- Proximity to other buildings
- Planned retail outlets near the property
- Master development and its impact on the project
Most developers today provide extensive marketing materials that will have answers to most of your questions.
Once you decide on the project, the next step is to determine the property you will buy. Look at:
- Unit size, floor height, and layout
- Unit orientation and position
- Structure of the main living areas as well as bedrooms
How Can You Sell Off-Plan Property in Dubai?
One of the advantages of owning an off-plan property is that you can sell it even before the project completion.
But you need to pay the developer a specified amount of money before you can sell the property. For example, Emaar Properties, the largest developer in Dubai, demands at least 40 percent of the property value before allowing customers to sell off-plan real estate properties before project completion. The amount varies from developer to developer.
The process of selling an off-plan property is similar to selling ready-built real estate. The buyer and the seller have to agree on the price and other terms, following which they should sign the contract agreement.
Subsequently, they should apply for a No Objection Certificate (NOC) and register the new buyer with the developer.
The new owner has to make all the remaining payments of the property price and pay 4 percent of the property value to the Dubai Land Department (DLD) as the transfer fee, regardless of the original buyer already paid it.
What are the Advantages and Disadvantages of Buying an Off-Plan Property in Dubai?
Purchasing an off-plan property in Dubai entails some advantages and disadvantages. So, it makes sense for you to acquaint yourself with those before you are buying one.
Purchasing an off-plan property allows an investor to get the lowest possible price. The investor also can choose the best apartments in a particular development. It increases the possibility of garnering the maximum RoI.
Sell Before Completion
If the market performs well, the investor can sell off the property before project completion, making profits.
Lower Upfront Costs
Payment plans are in sync with the construction progress, and the upfront costs are low. The upfront costs vary from developer to developer.
Delayed Project Completion
Projects do not always go as per the schedule, and there could be retardation. It is, therefore, important for investors to research the developer. And find out if there were any delays in the past projects.
Change in Market Conditions
If the market goes down, then property prices will also decline. And the property price can move lower than the purchase price.
Can People of All Nationalities Buy a Property in Dubai?
If you are a foreigner and the question—can you buy property in Dubai—is doing the rounds in your mind, it will simply amount to a waste of time.
The Dubai property market is open to people of all nationalities. Anyone can buy a property in any of Dubai’s freehold areas.
You should acquaint yourself with the existing procedure to buy property in Dubai before you start the purchasing process.
Moreover, if you intend to buy a property to rent out, acquainting yourself with the Dubai tenancy law will help you know the tenant rights.
Buying an off-plan property in Dubai presents many opportunities. Despite a few disadvantages, which investors can manage with prudence, there are remarkable benefits of owning an off-plan property in the city. Investors can get their dream property at a lesser cost and also get a good RoI.