Needless to say, Dubai has become the new IT town. It’s quickly taking over New York City, London, Hong Kong, and Singapore with its state of the art architecture, glamorous lifestyle, excellent business opportunities, tax free culture, and high tech, lucrative real estate. Real estate in Dubai is boiling hot. It’s a rising market, bringing along a plethora of investment opportunities for everyone, people of all budgets and from all backgrounds. Moreover, buying off plan property in Dubai is super trending among the real estate market.
People from all around the world invest in Dubai’s off plan properties just for a high return on investment. Of course, off plan properties pay back well.
In this article today, we’re going to cover everything about off plan properties in Dubai. From its advantages to risks, we’ll take you ahead step by step.
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What is an Off Plan Property?
Before we begin, you must understand what off plan properties are and how they can be a great investment for property investors and other individuals. Off plan properties are unconstructed properties that are yet to be built or in the process of being built. They’re purchased directly from contractors and rarely individuals.
Off plan properties are purchased with a 10% to 20% down payment. They also require you to sign a sales purchase agreement (SPA). The rest of the payment depends on the constructor/developer. They can either take monthly payments or quarterly. In other words, after making the down payment, the remaining payment would be at the developer’s discretion.
Benefits of Purchasing Off Plan Property in Dubai
As mentioned, off plan properties in Dubai are quite a hit. Money is pouring into Dubai’s real estate market and good credit goes to off plan properties. Both companies and individuals are investing in off plan properties in Dubai and making great profits on their investments. If you’re looking to make such an investment as well, it would be great to check out its benefits first.
1. You Get a Brand New Piece
Most people purchase second hand properties, especially when it comes to residential properties, penthouses, apartments, houses, etc. It’s the same in Dubai. People often buy and sell properties. Even though there’s nothing old about the property since its value doesn’t decrease in terms of money, we have to admit brand new is brand new. Buying an off plan property gives you the satisfaction of purchasing something new, something that hasn’t been used before.
2. Minimal Up Front Cost
Buying a used property or an old house or apartment is difficult compared to purchasing an off plan property in Dubai because of the upfront cost. Most people who are selling their residential properties demand up front money and usually take more than 50% in advance. Of course, not everyone can afford it. On the other hand, there’s minimal upfront cost to buying an off plan property. It mostly requires you to pay 10-20% upfront while some developers only take a 5% down payment, making it super convenient for the buyer.
3. You Can Sell Whenever You Want
Just because it’s an off plan property, it doesn’t mean you cannot resell it. That’s right. You’re free to sell your off plan property whenever you want. In fact, many investors sell their off plan properties before the completion of the project. It mostly takes place in the case of real estate agents and real estate companies in Dubai. They often purchase off plan properties only to sell them later at a better price. Thus, if the market is performing well and the project is near completion, you can consider selling your off plan property, too, and enjoy your share of the profits.
4. They’re Cost Effective
Off plan properties are usually available at the lowest possible price. As you buy an off plan property before the project materializes, you pay significantly less due to the lower value of the property. It also allows you to pick and choose apartments or houses at a location of your choice, which is not possible otherwise. Even if you get to choose the location, you have to pay more. However, it isn’t the case with off plan properties; therefore, it won’t be wrong to say that off plan properties in Dubai are cost effective and provide you with maximum return on your investment.
Risks Associated with Off Plan Properties
Now that we’ve established that buying off plan properties has several benefits, it’s imperative to consider the risks associated with it. Like any investment, investing in off plan properties has certain risks.
1. Not Getting Expected Results
One of the biggest risks associated with off plan properties is not getting the expected results. When buying an off plan property, two things guide your investment. The first one is the brochure provided by the developer and the second one is your imagination. However, the worst part of the story is that sometimes you don’t get the expected results.
The beach that you imagined in front of your villa doesn’t look like what you imagined or the villa isn’t as spacious as you thought it would be. Of course, you cannot have everything that you imagined but it needs to be close to your imagination to be satisfying at the end of the day.
2. Uncertain Market Conditions
Although the real estate market in Dubai is constantly going up, uncertainty remains in the air. Just because it hasn’t happened till now doesn’t mean it cannot happen. The real estate market can go down at any given point and that can cost you money as it will lower the value of your off plan property. Nevertheless, it affects developers more than investors as it becomes difficult for them to liquidate off plan properties in case their value goes down.
3. Delayed Completion Time
Last but not least, one big risk associated with buying an off plan property is that not every time the project gets completed on time. Projects get delayed time and again, and that is something that affects the investors, especially those who are looking to resell the property after completion. There are hundreds of off plan properties for sale in Dubai all the time due to this reason. Investors avoid purchasing properties when there is a delay in the completion of the project.
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Buying off plan property in Dubai has both advantages and disadvantages. Although this is a great opportunity for the investors, it will be a good step for you to consult with one of the trusted real estate companies, you can opt in the trusted off plan real estate company in Dubai by checking their backgrounds and reviews which are easily available over the internet.
Buying its On one hand could be extremely beneficial in terms of making money and buying a cost effective property. On the other hand, things could take a turn for the worse as it may turn out to be exactly the opposite of what you’ve expected, as mentioned above. To make yourself more secure, ask the real estate agents for the most authentic properties and property developers. However, you can always resell it, so even that isn’t a downside that you cannot handle.