New developments commonly offer off plan in Dubai to attract investors in under-construction projects. These off-plan investments are tricky and somewhat risker. A first-time buyer may find the off plan property attractive but need to be vigilant for many factors.
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Off plan property Dubai meaning?
Off-plan property is a type of real estate that developers offer for sale before the construction process has been completed. This means that, often, the property will not be ready to move into and may have only partially been built.
While investing in any real estate project in Dubai, it is essential to research new projects and other aspects of the investment for savvy property investors.
There are different types of properties to invest in Dubai, and off plan properties are the ones most property investors look for. Investors search for an off-plan apartment in Dubai by renowned developers. Since Dubai is one central hub of UAE’s economy, the Dubai real estate market has significantly outperformed over the past years, and investors from different countries look for such investment opportunities.
In Dubai, the off-plan property market has experienced rapid expansion. According to the Dubai Land Department (DLD), in 2021, about 17,081 purchases for off-plan developments in Dubai were made. These transactions totaled 30.9 billion AED in value.
What is Off–Plan Property?
In Dubai, a pre-construction property is an undeveloped or unfinished property that is often purchased straight from a developer or the former owner. If you are purchasing directly from a builder, you will be required to pay a 10% to 20% down payment on the property and sign a Sale/Purchase contract.
Off-plan property investment happens when a buyer purchases an apartment or townhouse while it is still planned or built. There are two significant benefits of investing in this property. Firstly, there is a large selection of apartments, and secondly, it has lower prices.
When a real estate investor purchases an off-plan property, they do so while it is still being built or in the planning stages. Due to the advantages they provide to investors and become increasingly popular in Dubai’s central areas. Once they know the off-plan properties, investors become keen and curious to look for such properties.
An investor pays 10-20% of the property value at the initial purchase stage. This helps him to choose the property and do fixtures accordingly. The main objective of investing in these properties is to create-
- Future income
- Value Preservation
- Mitigation of Future Financial Risks
Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.Warren Buffett
Reasons to Invest in Off-Plan Properties
The main aim of investing in off-plan properties is to reap the benefits it comes with. However, it is essential to look for a credible developer in Dubai who can guarantee of timely completion of the project. Other than these, there are more reasons for investing in such properties.
Flexible Payment Plan
Off-plan projects enable you to retain your rest payments in a way that guarantees you keep your liquidity throughout the construction period rather than paying all at once. Most builders only want a 10% down payment plan in Dubai and let purchasers pay the remaining 90% in 24 to 48 months. Some real estate developers offer flexibility for longer tenor or post-handover payment plans. It makes funds raising easier and enables you to make financial plans. Be aware that sometimes there is additional development cost is charged at the time of handover by the developers.
Better Capital Appreciation
Offplan properties offer capital gains in the form of capital appreciation. Since real estate can appreciate quickly, you will be purchasing the property at its current price, and as building work advances, the value of your house or apartment will rise. However, it also depends on the locality development and facilities nearby.
Off plan projects in Dubai are very common. By the time the development is finished, the value of the properties within it tends to be much greater than the value at which they were purchased off-plan. It results in capital appreciation. This type of situation causes an increase in the value of properties in that neighborhood.
Payments in Installments
Purchasing an off-plan apartment or villa also allows you to pay in installments as the building is completed, allowing you to manage cash flow and avoid selling off other assets to pay the property in full.
Options to Invest in Brand New Dubai Properties
Off-plan properties mean you’ll eventually own a brand-new home constructed with top-notch materials, contemporary fixtures, and modern architectural features like smart home functionality or energy-efficient appliances. Since everything is new, you won’t have to pay for maintenance, saving you money. New homes also draw renters who are frequently ready to spend a good amount, which translates to increased rental revenue if you purchase property as an investment.
Options to Pick from Preferred Location
Choosing one’s desired site inside a given development is another benefit of buying off-plan real estate, particularly if one can look into the development early. It contrasts with the scenario of a built-up property, which already has a defined location.
Buying off plan property in Dubai process?
The developer and Dubai Land Department require the following documents for registration:
- Passport and visa copy of the buyer
- Emirates ID copy of the buyer
- No Objection Certificate from employer (NOC)
- title deed
- Sales contract
- Mortgage contract (if applicable)
- Occupancy certificate
- Utility connection (electricity and water)
- Insurance policy
- Reservation Form
After you have provided the developers with the required documents, they will send you a reservation form. The form should include all of the relevant details—for example, project name and number of units, unit type, and price per square foot—as well as your payment plan options.
Despite the fact that real estate in Dubai is a secure investment option, investors should be aware that some of them may come across difficulties, such as developers being unable to complete the project on time, etc. In some cases, it is considered risky because the investor acquires the property earlier or during construction.
Buying Off Plan Properties Direct from Developers
There are many benefits to buying an off-plan property directly from a developer. One of the main advantages is that you will usually be able to get a significant discount on the purchase price. This is because developers are often keen to sell their properties quickly, so they are willing to offer substantial discounts to buyers willing to purchase off-plan to get a higher return on investment.
Another advantage of buying an off-plan property is that you will have a much wider choice of properties to choose from. Developers often have an extensive portfolio of properties, so you can find something that suits your needs and budget.
Buy off-plan property in Dubai is similar to buying a finished market listed property, but with a few extra steps.
How to sell off-plan property in Dubai?
Developers will often allow the resale of an off-plan property before it has been completed, provided that certain conditions have been met. These criteria are usually set by the developer of the off-plan project. In most cases, developers require owners to have 30-40% of the cost paid off before they can sell their property to a new investor. This value can vary from one developer to another; therefore, if you plan to sell off-plan property in Dubai before completion, be sure to confirm with the developer you are working with before making the sale. Eligibility to re-sell a Dubai off-plan property may also depend on other terms set in your contract by your developer.
The off plan property for sale in Dubai is similar to selling ready properties. You must first find a buyer willing to purchase property for sale in Dubai. The off-plan properties for sale require the buyer to obtain a No Objection Certificate (NOC) from the property developer, which registers the new buyer with the developer. After the price and terms are finalized by both parties, contracts will be drafted with the agreed terms, which need to be signed by both parties. Once the off-plan property sales process is complete, the buyer ultimately takes over all outstanding payments once the transfer has been completed.
Which areas have the best off-plan property in Dubai?
- Business Bay
- Emaar Beachfront
- Dubai South
Here are a few prestigious UAE developers.
- Emaar properties
- DAMAC Properties
- Dubai Holding
Latest Projects in Dubai, UAE
Here is a list of the latest off-plan project in Dubai. These new developments are offering some great new off-plan properties in UAE.
- Park Horizon Apartments at Dubai Hills Estate
- DAMAC Elegance Tower in Downtown Dubai
- Burj Binghatti Jacob & Co Residences at Business Bay
- Elitz Apartments at Jumeirah Village Circle
These are some project launches in Dubai by renowned developers. You can find the latest offplan properties on their websites.
Things you must consider while Investing in Off Plan Properties
Get Advice from Property Agent
Since Dubai offers so many off-plan property options, seeking consultation from property consultants is essential. It will help you to know which part of Dubai or what property is best to invest in and what kind of return you can expect. There are online property consultation experts who will help you with a suitable property investment. The experts will give you a clear picture of off-plan properties.
Research About the Developer
The property you purchased, which is under development, may end up in a halt due to the lack of budget by the developer. It could be a loss for you. Savvy property investors looking to buy should explore the property developer’s history to avoid any future inconvenience. Only invest in the property by a developer with a track record. Avoid investing in the property by a developer with a negative track record. Ensure That the developer has insurance that will reimburse you if he cannot complete the off-plan project to safeguard your money. The best option is to check if the property has the go-ahead permission from the regulatory body of Dubai.
Get Familiar with the Neighborhood
As with any other real estate purchase, thoroughly research the neighborhood and any essential projects currently in the works. To ensure the property is best to invest in and will maintain its value, consider the transportation options, retail options, amenities, schools, and others. Dubai Hills Estate, Downtown Dubai, Dubai creek, Dubai creek Harbour area, and Dubai Marina.
Keeping an eye on the Project Development
Due to the number of factors involved in construction, the development will probably take longer than expected. It is best to make frequent site visits to monitor the development’s progress and keep the lines of communication open with the developer.
Compare Real Estate Prices of Off-Plan Properties
Many property buyers, especially first-time purchasers, merely consider asking prices and the proposed payment schedule. They get motivated and impressed easily and conclude the transaction as a result. You must take every precaution to avoid making this error. Always check the off-plan property’s pricing per square foot. It will give you more clarity on whether the house you’re considering purchasing is genuinely affordable.
Conclusion – Off Plan in Dubai
Purchasing an off-plan property may be a good long-term investment but has many risks. Primarily the delay in the completion of the project by the developer and changes in the market conditions. So, ensure to secure investment, conduct background research of the real estate developer, analyze project details like a neighborhood with any Government or Private developments which can affect positively or negatively on the property, and seek professional advice from a registered real estate broker.
Also Read:- 5 Reasons to Buy Home in Dubai Before 2023