An off-plan property is one that is for sale or purchase before its construction has been finished. That being stated, you are acquiring a property based on its floor layout.
Off-plan properties are popular among both international and domestic investors owing to their simple payment plans and high Return on Investment (ROI). However, a variety of factors influence the destiny of these off-plan projects.
We’ve compiled a list of everything you need to know before buying an off-plan house in Dubai.
BEFORE BUYING OFF-PLAN PROPERTIES IN DUBAI, WHAT TO KNOW
Off-plan property is a profitable investment option, and there are many benefits to invest in off-plan properties in Dubai. However, before making any decisions, be aware of the following aspects of buying an off-plan apartment in Dubai.
A CHANGE IN MARKET DYNAMICS
The market dynamics shift is an important factor to consider when acquiring an off-plan property. Real estate values change as a result of market shifts. Depending on the change, this might be either beneficial or bad for buyers.
If the market turns downward, the value of the property will fall, and investors will not be able to obtain the promised ROI. Similarly, as the market improves, the property value rises, resulting in higher ROI.
Investing in a market that has the potential to increase in the near future is thus a preferable decision. Projects in ideal locations are also preferable since they are less impacted by market trends.
COMPLETION DELAY
Delayed handover and completion are frequent issues with off-the-plan properties. The worldwide situation, pandemics, and financial problems in the sector can all contribute to this delay. RERA Dubai has prepared rules and regulations on the delayed handover of off-plan property to address this issue.
A clause addressing this problem is included in the sales and purchase contract signed by the building authority and the buyer. If the builder fails to complete the project on schedule, the clause should explicitly specify the conditions and options. In light of that provision, you have three options: file an action, settle, or demand money back.
RESALE OF PROPERTY
Reselling an off-plan property before the project is completed is inconvenient for buyers. Builders typically prohibit customers from selling their home before paying a specific percentage of the entire value.
The builder determines this number, and buyers are legally required to abide to it. However, after the necessary sum has been paid, the buyer is free to sell their off-plan property.
PROPERTY EXPECTATIONS AFTER COMPLETION
Every project does not have to fulfill the buyer’s expectations after completion. The completed product may differ from the project shown in the brochure. This is entirely up to the project’s builder.
Reliable builders closely identify the completed project with their market reputation, and their projects fit to the specifications outlined in the brochure. Investing in projects by reputable builders is one approach to prevent this issue.
You may also use the Dubai Rest app, which will bring you with real-time information about off-plan residences.
RETURN IMMEDIATELY
Off-plan properties are long-term investments, and buyers must wait for the ROI until the project is finished. The ROI of completed properties, on the other hand, begins as soon as the property is rented.
Despite being a long-term investment, off-plan houses are preferred due to the initial discount and the financial benefit that increasing markets may provide.
CHANGE IN THE BUYER’S FINANCIAL STATUS
The off-plan property is acquired only on the basis of the floor plan, and buyers must pay 20% to 80% of the entire sum in instalments while the project is under construction. The balance is required after the project is completed. If you pay in cash, the likelihood of the aforementioned risks is decreased. However, if you are financially dependent on the mortgage, the risk to your financial situation is increased.
In Dubai, the mortgage only covers half of the entire value of the off-plan property. Furthermore, the bank provides this 50% sum after the customer has already paid the remaining 50% of the entire cost. As a result, before acquiring an off-plan property, ensure that you have the funds to pay the 50% down payment.
TIPS FOR BUYING OFF-PLAN PROPERTY IN DUBAI
To reduce property risks in Dubai, buyers must spend wisely in the project.
CHECK AND VERIFY THE PROJECT
Before investing in any off-plan project, be certain that the project is legitimate. Only real and authentic initiatives are authorized to advertise under RERA rules. Examine all of the project’s specifics by using the Dubai Rest app.
BE AWARE OF THE PRICE STRUCTURE
A number of buyers, particularly first-time buyers, just enquire about payment plans in Dubai and then close the sale on that basis. However, the project may or may not involve a number of other components and hidden expenses.
Always inquire for the project’s per-foot price to get an idea of how much you’ll have to pay. Along with that, make sure you have at least 50% of the whole amount in cash to pay the price, as the mortgage will only be granted once you have paid 50% of the total sum.
Furthermore, select a 50/50 payment plan in which you must pay 50% of the total sum during construction and the rest 50% when the project is completed. This will assist you in securing 50% of the sum in the event of an unforeseen incident.
THINK ABOUT THE LOCATION
Prefer the property’s location over its price. This is due to the fact that projects in good locations are less likely to be affected by market concerns. Furthermore, the ROI will rise once the project is done.
GO OVER THE CONTRACT
Builders and buyers are legally required to sign a contract, similar to the RERA tenancy contract. This contract has several terms addressing various aspects of the off-plan property. Read the contract carefully and discuss any unfavorable clauses with the builder.
SEEK PROFESSIONAL HELP.
If you are new to the real estate industry, it is recommended that you seek expert guidance. Real estate agents in Dubai can assist you with this. They have expert experience and can provide reliable guidance on several elements of the property.
This is all the information you need to know before buying an off-plan property in Dubai. Off-plan property is a profitable real estate investment choice, despite certain hazards. The ROI, however, is long-term, and you will have to wait until the project is done. Finished homes are more profitable if you seek frequent ROI. You may go through these UAE properties for sale and buy finished apartments or villas.
