5 reasons to invest in off-plan property in Dubai
Dubai is a haven for those looking to spend their hard-earned money in the real estate sector. Off-plan property investment, in particular, enjoys immense popularity amongst buyers in the region. Thanks to freehold properties opening to expats in 2002, the Dubai real estate market has garnered much interest from local and international buyers. Want to join their ranks? Here are five reasons for Dubai off-plan property investment.
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Reasons for Dubai off-plan property investment
Here are the five reasons you should consider buying off-plan developments in Dubai.
1. Lower Prices & Flexible Payment Plans
One of the most obvious perks of investing in off-plan property for sale is that these not-yet-constructed projects are offered at significantly lower prices.
Attractive offers and feasible payment plans make off-plan property investment slightly more affordable and practical when compared to ready developments, which are valued at a higher price.
Seasoned investors and first-time buyers benefit from the lower prices and greater financial flexibility that off-plan properties offer. With numerous projects being announced monthly, developers compete mainly on prices and lucrative payment schemes such as paying 50% upfront and 50% upon completion or the “1% per month” payment plans. Some of these go well beyond 40% post-handover, giving off-plan property buyers a major advantage.
2. Capital Gains
The UAE is one of the fastest-growing economies in the world, so real estate investments here are extremely promising in terms of return on investment (ROI). The value of a property is likely to increase once it’s completed, irrespective of the “locked-in” purchase price before construction.
So, even while you’re paying off the investment in phases as per the developer’s payment plan, you could witness a rise in the market value of your property and expect significant capital gains should you decide to sell before or after completion.
The locality and the neighbourhood’s popularity play a role in property market value appreciation. If the surrounding area is under development at the time of your off-plan property purchase but is steadily evolving into a potentially well-rounded community, this would inevitably lead to an increase in the property’s market price.
Off-plan property investors can also profit quickly by selling the unit before completion, provided the project has gained popularity in the market. You can sell off-plan property in Dubai if you know what to do.
3. Off-plan investment offers High Rental Yields
Rental income is one of the key drivers for property investment in the UAE. With a steady influx of expats in the country, a trend showing no signs of slowing down, there will always be demand for housing options in Dubai.
Whether you buy an off-plan flat or villa, you will probably earn a decent rental income from your real estate investment as the property will be new and have the latest amenities. As per Bayut’s H1 2023 Dubai sales market report, the top off-plan villa and apartment developments include Alaya and Equiti Residence.
4. Buyer Protection Laws in Dubai
While off-plan properties come at a risk, numerous measures are taken by RERA (Real Estate Regulatory Authority) and Dubai Land Department (DLD) in the UAE to grant buyers added protection against delays, cancellations or fraud.
One such rule is that buyers must make payments for off-plan property purchases at DLD-approved banks. Developers will only be permitted to access funds until the project has reached a certain completion stage. A project consultant will verify this. Another law stipulates that developers must provide 20% of construction funds as a bank guarantee and the contractor’s 10% guarantee performance bond.
Such measures reinforce buyers’ confidence in the off-plan property market, making it a safe climate to invest in with certainty that properties will be delivered under normal circumstances.
The most common issue facing off-plan property buyers in Dubai is a potential delay in delivery. Here are some ways to deal with a delayed handover of off-plan property in Dubai.
5. Wide Variety of Off-Plan Projects in Dubai
Buyers have an even larger variety today — from Downtown Dubai to newer communities like The Valley and Dubai Hills Estate. Wondering where to invest in off-plan real estate in Dubai? Take a look at some of the most popular off-plan projects in Dubai.
Things to know before you buy off-plan property in Dubai
Before going ahead with any off-plan investment, there are a few things every investor should keep in mind. Here are some things investors can face when considering buying off-plan projects in Dubai.
Prepare for delays
This issue impacts off-plan property buyers and can be a hindrance, especially for those renting and planning to move into their new home. A contingency plan to accommodate delays is good, so you’re not caught off-guard.
Manage expectations
You may buy an off-plan property in Dubai based on brochures, a show-house and some floor plans. The quality of construction materials used may alter the result. Please research the developer you plan to buy from and check out some of their other ready properties to understand what the finished product will look like.
Manage fluctuations
While the current climate points towards opportunities for capital gains and high ROI from property investment, the opposite could also be true. Anything can happen between when you purchase the property and receive the keys. Be mindful of real estate market trends and make an informed decision when investing in off-plan properties in Dubai.
Should you buy off-plan property in Dubai?
Looking for Dubai properties for sale? Everything has two sides, and buying off-plan Dubai properties is no different.
Take a look at some of the pros and cons:
Benefits of buying off-plan property in Dubai:
- Lower prices in comparison to ready construction
- Higher capital appreciation as the property reaches completion
- Attractive and flexible payment schemes
- Lower upfront costs
Cons of investing in off-plan property:
- No immediate ROI since the property is under development
- Buyers cannot move in or rent it out immediately
- Delays, cancellations and sub-par quality pose a risk
- Market fluctuations could go in any direction
Make sure you know the pros and cons of buying property in Dubai before committing!
FAQS ABOUT REASONS FOR DUBAI OFF-PLAN PROPERTY INVESTMENT
Which are currently the best projects under development?
Looking to invest? Consider searching among the off-plan projects in Dubai in 2023, like Bugatti Residences and Como Residences. Alternatively, the popular off-plan projects by Emaar can be considered.
Is buying off-plan in Dubai safe?
While there may be delays in completion, it is safe to invest in off-plan projects in the emirate. Authorities like the DLD and RERA protect buyers.
Do banks finance off-plan property?
Yes, potential buyers can take out mortgages to buy developments like these. However, banks have some requirements regarding the types of properties they will willingly finance.
What happens if you can’t pay your off-plan in Dubai?
You may get a refund if you cannot make the payments. Understanding the possibility of getting into a case like this is crucial. Your Sales Purchase Agreement (SPA) will determine the amount, if there is any.
Can I sell an off-plan property before completion?
Yes, you can. You will need to contact the developer to know the amount that needs to be paid off before acquiring a No Objection Certificate (NOC).
When can I sell my off-plan property?
Generally, a property like this can be sold once buyers have paid off 30% of its price.
What are the service fees for an off-plan property investment in Dubai?
RERA sets this amount and may differ for each project. The fees are the annual costs required to maintain common areas.
WHAT ARE THE MAIN REASONS FOR DUBAI OFF-PLAN PROPERTY INVESTMENT?
The primary reason is that you can get a great return on your investment in the long run. Plus, flexible plans mean you don’t have to pay the entire amount upfront.
Those were all the reasons for Dubai off-plan investment. Check out this guide to guide to buying off-plan property in Dubai for a better idea of the process.
