Expert Advice with fäm Properties: Buying ready vs off-plan properties in Dubai
- Benefits of Off-plan Vs Ready Properties
- Factors to Consider When Buying Off-plan Vs Ready Properties
- Is Off-plan or Ready Property Cheaper
- Rent-to-own Vs Off-plan Properties
- About Firas Al Msaddi
- About fäm Properties
We are excited to return with our Expert Advice segment and for this, we are in discussion with Firas Al Msaddi, Founder and CEO at fäm Properties. Our conversation will centre around the things to consider when it comes to buying off-plan vs ready properties.
In this episode, Firas breaks down the benefits and factors of off-plan versus ready properties in Dubai. He also offers advice on how to reduce risks and which option can provide more value to buyers and investors.
Watch the full video below, or keep reading for highlights from this episode of Expert Advice.
Benefits of purchasing off-plan vs ready properties in Dubai
Firas elaborates that there are benefits of buying both ready or off-plan properties in Dubai. When it comes to ready properties for sale in Dubai, buyers benefit from knowing exactly what the property looks like, in contrast to off-plan properties.
Moreover, investors purchasing ready property can immediately start to generate rental income by leasing out the unit. Buyers can also get a higher loan-to-value (LTV) ratio for ready properties, making it easier to get a mortgage from the bank.
On the other hand, those interested in investing in off-plan property in Dubai have a larger variety of units to choose from within a tower or community, especially if the project has just been launched. Buyers can then lock in on prime units, that will likely yield higher returns once completed.
Many developers are also offering incentives such as Dubai payment plans at no interest, which can help ease the financial burden for property seekers.
Factors to consider when buying off-plan versus ready properties in Dubai
However, Firas does advise buyers to keep a few factors in mind to ensure that they are making a sound investment. When it’s an off-plan vs ready properties scenario in Dubai, it is best to conduct a competitive market analysis (CMA) by checking the current sales prices of similar ready properties. It’s also essential to check the rental prices of similar properties to get a better idea of the rental income investors can generate on their property.
When it comes to ready properties for sale, Firas also advises checking the service charges in Dubai for that particular tower or community, which are recurring fees that need to be paid by homeowners.
He also mentions that it’s important to check the track record of the developer when looking at off-plan properties in Dubai, both from a punctuality and quality perspective. Investors can also reduce the risks of buying off-plan property by having a real estate lawyer check the Sales and Purchase Agreement (SPA) and ensuring that all payments are made to the escrow account.
Is it cheaper to buy off-plan property in Dubai?
Another common question that’s asked by prospective buyers is if it’s cheaper to purchase off-plan vs secondry properties. Firas clarifies that this is dependent on the nature of the property market at the time.
During a buyer’s market, it’s possible to find competitive prices and better deals, including ready and off-plan properties for resale. However, when the real estate market is booming, buyers can take advantage of lucrative offers by developers.
Regarding additional fees for buying property, the expenses are similar for off-plan vs ready properties. Buyers will need to pay the 4% transfer fee to the Dubai Land Department as well as a 2% commission fee.
For ready properties in Dubai, the DLD transfer fee is usually split between the buyer and seller. However, some developers offer incentives such as paying the entire 4% DLD fee, which buyers can take advantage of when purchasing an off-plan property in Dubai.
Before investing in either property type, Firas advises buyers to make sure they are aware of any hidden costs, such as bank or service charges. When investing in off-plan property, he emphasises that it’s important to plan the cash flow in line with the developer’s payment plan.
Are rent-to-own or off-plan properties a better option for buyers?
Rent-to-own schemes in Dubai have also been gaining popularity with buyers who want to take out a mortgage but cannot afford the down payment. With rent-to-own schemes, buyers will pay 20% to 30% of the purchase price as rent for a fixed number of years. This will be considered as the down payment for a mortgage, and they can complete the purchase with cash or a mortgage.
According to Firas, buyers must consider their need for an earlier exit when looking at these extended payment plans. Typically, rent-to-own schemes offer more flexibility, allowing buyers to exit after the initial contract is completed. On the other hand, buyers are obligated to complete the entire payment plan for an off-plan property. Thus, buyers need to take their financial situation into account when deciding between these schemes.
Buyers should also bear in mind that properties with such schemes and payment plans in Dubai are generally more expensive than traditional properties for sale. Firas advises prospective buyers to do their research beforehand and ensure that the sale price is not inflated when compared to financing the property from the bank.
Check out rent-to-own properties for sale in Dubai to see options that best suit your housing needs.
About Firas Al Msaddi
Firas Al Msaddi is the Founder and CEO of fäm Properties and Executive Chairman of the fäm Group. He founded fäm Properties at the age of 25 years and has since become an influential and respected voice in the Dubai real estate market.
About fäm Properties
Established in 2009, fäm Properties is one of the leading property agencies in Dubai. fäm’s real estate agents boast expert knowledge of their areas of focus and can assist with buying, renting and selling property in Dubai. This real estate agency has a massive portfolio of properties in popular neighbourhoods such as Dubai Marina, Downtown Dubai, Dubai Hills and Business Bay.
That concludes our Expert Advice segment! As you can see, Dubai’s property market offers a diverse range of options for property seekers, from those keen on generating immediate rental returns to those looking to purchase their dream home.
Both off-plan and ready properties offer great value to buyers; however, their financial situation and expectations from the property will indicate which option is better suited for them.
If you are looking to buy off-plan or ready property in Dubai, it’s best to look at the benefits of buying property in Dubai before making a decision. You can also read up on the Bayut Dubai Sales Market Report for H1 2023 to find out how prices have evolved in recent years.
FAQs About Off-plan vs Ready Properties
What is the difference between off-plan property and ready property?
Off-pan properties are still under construction and can be bought through a payment plan while ready properties are available on the market for rent and investment. If you are looking for options, check out the listing of ready properties for sale in Dubai.
Is it better to buy off-plan property in Dubai?
The answer to this question varies from person to person. The major factor that decides whether you can buy a ready or an off-plan property is budget. Those with budget constraints and looking for new property should invest in off-plan projects. The payment plan offered with off-plan properties allows buyers to pay the complete amount in instalments.
Can I get a mortgage on an off-plan property in Dubai?
You can certainly get a mortgage to buy an off-plan property in Dubai. It’s similar to getting a loan for a finished house, but you will first need to meet qualifying conditions. To provide you with options, the latest off-plan projects in Dubai bring you the apartments, townhouses and villas of your dreams!
Where can I buy affordable properties in Dubai?
There are many popular areas to buy affordable properties in Dubai, including Discovery Gardens, Dubai South, Liwana and more. You can also scroll down apartments and houses listed on properties for sale in Dubai page for more options.
Disclaimer: The views expressed in this article belong to the interviewee alone and do not reflect the opinions of Bayut.
