Facts You Must Know About Off-plan Properties In Dubai
Facts You Must Know About Off-plan Properties In Dubai
Purchasing an off-plan property in Dubai has its risks and rewards. It allows investors to get a property at the lowest possible price compared to ready properties. The buyer or investor can purchase directly from the developer wherein they offer between 10 to 30 percent lower prices for off-plan and under-construction properties. The offer usually goes with a down-payment and settlement terms which are clearly stipulated in the sales purchase agreement (SPA). Obviously, the closer to completion, the higher the price becomes.
Before we go further into your purchase plan, you just need to understand all corners about off-plan properties in Dubai.
First, What is an Off-plan Property?
An off-plan property is a property before a structure has been constructed upon it. It is an unconstructed or under-construction property which is usually purchased from a developer or in some cases from the first owner. I.e. apartments, villas, townhouses, etc.
These days property developers are using plenty of attractive and flexible payment terms. We have seen a lot of “100% Off on Dubai Land Department (DLD) Fee”… “Pre and post-handover payment plan”… “5 to 10% upon booking”… “Guaranteed rental returns”… 50 to 100% Off on service fee”… and more aggressive advertisements just to keep up with the buyers.
For some developers in Dubai, it is not just about these eye-catching advertisements but to deliver best quality off-plan projects on time with highest expected return on investment (ROI). Being a buyer it is essential to do your research on the project developer, check out their track record, and see their previous projects – how they deliver? if the handover went on time? and how they manage any setbacks or risks i.g. change in market condition, etc.
Here are some of the most reputable property developers in Dubai.
- Emaar Properties – the developer behind some of the most iconic structures in Dubai including The Burj Khalifa, The Dubai Mall, and The Dubai Fountain to name a few.
- Dubai Properties – the developer behind some of the most prestigious residential projects in Dubai. Offering a portfolio of projects in areas such as JBR, Business Bay, Dubailand, and Culture Village. Some of their projects include Dubai Wharf, 1/JBR, The Villa, Manazel Al Khor, and The Executive Towers to name a few.
- Nakheel – the developer of Dubai’s famous man-made islands such as the Palm Jumeirah, the World Islands, and Deira Islands as well as luxury malls and hotels.
- Damac Properties – one of the leading luxury developers in Dubai, delivered over 20,800 homes and a development portfolio of more than 44,000 units across the country.
- Meraas – the developer of various residential and tourist destinations in Dubai including La Mer, Bluewaters Island, BoxPark, City Walk, Jumeirah Bay, and Al Seef to name a few.
Yes, you did research on these developers but have you figured out your reasons and purpose for buying an off-plan project?
What are your Reasons for Buying?
It is certain that you’re going to buy an off-plan project. However, you should clearly know your reasons. Is it purely for investment purposes? Like you’re taking advantage of the current market and sell it in when you see opportunity in the future. Or as an end user where you would want it to be your own home.
Take into consideration that some off-plan projects are more suited to investors while others cater for end users. Once you identify your purpose, it will help narrow down your choices and you’ll be able to get the right property tailored to your needs.
There are Risks, however.
Buying an off-plan property in Dubai has its pros and cons. It is true that off-plan properties have several risks and factors that affect the construction of a particular project.
Here are few things you need to look at when buying an off-plan property in Dubai.
- Project delays – the most common issue is that a project will be delayed. It may take few years after its due date for the investors to receive their property because of certain issues while some projects have been cancelled i.e. construction issues, market condition, etc. Quality risk – do not just rely on well-presented brochures, some developers do cost cutting and it doesn’t always turn out the way you expect it. Go for developers with a strong reputation of providing best quality properties.
- Market risk – this type of risk occurs in all markets across the world. It happens when purchasing an off-plan, you will risk a decline in property values between the time you pay the booking fee and when receiving the keys for handover.
- Financial risk – buying an off-plan property usually comes with a payment plan and you need to keep up with the date of payments. However, the risk can be a sudden change in your financial circumstances i.e. you lose your job, interest rates might increase, and insufficient mortgage loan.
In order to minimise these risks, the Dubai government has introduced numerous measures catering both developers and investors.
The Dubai Land Department (DLD) and its sub-agency Real Estate Regulatory Agency (RERA) deal with all property transactions in Dubai. The sector introduced numerous regulations which must be met by both developer and investor relating to service and transfer fees, breaches of the sale contract, and the role of escrow accounts for every purchase of off-plan properties in Dubai.
Also read: How Does An Escrow Account Work For Off-plan Homebuyers?
Also read: New Law Adjustments For Buyers Who Breach Off-plan Contracts
With so many off-plan property options available in Dubai right now, you’ll definitely locate which type of property will fit your needs and requirements. You just need to educate yourself about the risks and rewards of buying an off-plan property and weigh your options appropriately..