Expert Advice with H & S real estate: Investing in the off-plan property market in Dubai

Today MyBayut brings back the highly anticipated Expert Advice segment with Emad Haq of H & S Real Estate – a subsidiary of Haqsons Group and second-time recipient of Emaar’s No.1 Agency award. He sat down with us to discuss all the tricks of the trade and tips on investing in the off-plan property market in Dubai.

Watch the video below to find out everything investors should keep in mind when investing in the off-plan property market in Dubai. 

How can investors measure ROI for off-plan projects in Dubai?

The return on investment (ROI) is one of the first things investors evaluate when it comes to the off-plan property market in Dubai. In most cases, it is the deciding factor for an investor. This is why the first thing we wanted to know from Emad, is how can investors measure the ROI for off-plan projects they intend to buy. Emad explains the process of calculating the ROI for off-plan properties in Dubai with a simple example. 

Say you intend to purchase an off-plan property priced AED 1M with a payment plan that requires you to pay 40% until handover and 60% over the next 5 years after handover. This means you will have to pay AED 400k till the handover and the remaining AED 600k after handover. In this specific scenario, if you lease the property for AED 80k for the first five years after the handover, you will get back your initial instalment of AED 400k. 

Let’s say you continue to lease the property out for AED 80k for another additional five years after, with the rent remaining unchanged, this will give you another AED 400k which will pay back part of the AED 600k.  Which means that the cost of your property will only be the AED 200k with an approximate ROI of around 11% to 12%.

This is the main structure of how you can calculate ROI for off-plan in Dubai is calculated. This example highlights that calculating the ROI for off-plan properties in Dubai will be dependant on the structure of your payment plan and the rental value the property will be leased at after handover. 

What are the major trends in the off-plan market in Dubai 

Emad says one of the biggest trends seen in the off-plan market in Dubai for 2019 has been innovative payment plans being offered by developers. This has been a major factor in influencing both overseas and local investors to buy off-plan in Dubai. He also says this has contributed to the fact that 2019 has been the best year in terms of sales in the Dubai real estate market. 

Can off-plan properties in Dubai be resold by the investor before handover?

According to Emad, re-selling off-plan property in Dubai before the handover is possible but is dependant on the terms and conditions set by the developer. Emad states that one of the important steps to re-sell off-plan property in Dubai the handover is to check the Sales and Purchase Agreement (SPA) and the terms and conditions of the contract. This will be able to tell if you are eligible to sell and when and you can do so.

What should potential buyers keep in mind when investing in off-plan projects in Dubai?

Investing in the off-plan market in Dubai is a big commitment and requires a lot of research. When conducting research about off-plan projects, Emad listed a few important factors buyers should consider when buying off-plan in Dubai. That includes: 

• Choosing the right developer – It is important for investors to choose reputed developers in the off-plan property market in Dubai who have a proven track-record for delivering on time. Buying from a reputed developer will also ensure that you won’t be left paying any hidden costs. 
• Payment Plans – With so many post-handover payment plans being offered in the market, it is important for buyers to evaluate their budget and choose one that is most suited for them.

Are there any special incentives for buying off-plan properties in Dubai?

Apart from specialised payment plans, here are the incentives investors can look forward to when buying in the off-plan property market in Dubai. 

• 4% DLD waiver – With this investors can save the 4% land registration charges set by the Dubai Land Department (DLD)
• 5-year free property management services – Investors can save costs of hiring property management services which usually comes up to 3 to 3.5% of the rental value. In certain cases, investors even get free maintenance services which can cost up to AED 16 – AED 27 per sq. ft. 

That brings us to an end of this Expert Advice feature with Emad Haq on the off-plan property market in Dubai. If you’d like to know which off-plan projects are currently in-demand, check out the top off-plan projects in Dubai for 2019.

ABOUT EMAD HAQ

Emad Haq is the Vice-Chairman of Haqsons Group which owns H & S real estate. He is part of the visionary family that brought Haqsons Group to the leading position in Dubai in just 5 years. He and the other Haq brothers now call the UAE home and are vested in contributing to the vision of the UAE rulers to make it one of the best countries in the world.

ABOUT H & S Real Estate

H & S Real Estate is one of the premium real estate brokers in Dubai that offer a comprehensive set of real estate services that include sales, leasing, and brokerage services for both commercial and residential properties across the city. Their services also extend to property management services, real estate investment consulting and portfolio management.