Mastering Off-Plan Property Investments in Dubai: A Comprehensive Guide

Guide to Off-Plan Properties in Dubai

An off-plan property is an unconstructed property purchased directly from a developer. It’s a property that is yet to be built or in some cases is in the early stages of being built. Buyers rely on brochures and other marketing material to learn about the project and the exact property they are buying. Purchase is usually made with a 10-20% down payment and the signing of the SPA (Sales Purchase Agreement). Depending on which developer the rest of the payments made can and do vary but are usually linked to construction.

• Advantages
• Risks
• How to Buy
• Costs
• Frequently Asked Questions

Advantages

• Save Money – Buying an Off-plan property allows investors to get a purchase price at the earliest and lowest possible price. It also allows buyers to choose the very best apartments in a particular development. This plays a big part in increasing the chances of gaining the maximum return on their investment.
• Sell Before Completion – Quite often investors can sell off their off-plan property prior to a project’s completion. Assuming the market has performed well and the project proved popular owners can often sell at a considerable profit.
• Lower up Front Costs – Payment plans for off plan property can and do vary from developer to developer. With some developers only requiring a 5% down payment and the rest linked to constructions the outlay required is relatively low.
• You Buy Brand New – As much as most of us hate to admit it, we all love something new. Whether it’s a new car or a brand-new property there is something rather special and satisfying about having something that has never been used before. This is exactly what you get with an off plan property that is not only new but if done right will feature the latest design, technology and lifestyle features, and amenities.

Risks

• Delayed Completion Time – Developments don’t always go to plan and there have been cases of projects being completed after their scheduled completion dates. A delay in the completion date can have a significant negative impact on both end users and investors. For end users, it means a delayed move-in date which can have emotional as well as financial impacts as it means potentially having to pay rent at another property. For investors, it means a loss of returns they could be getting if the property was finished and rented for an income. It is for this reason very important to do your research on the project developer. Look into their track record and ensure any sale agreement signed ensures you are compensated for any such delays.
• Change in Market Conditions – A downward move in property prices can result in the property being worth less than what the buyer has paid. This risk is not limited to off-plan properties but can affect them more as they may be harder to liquidate than ready properties.
• Not getting what you expected – This is a real risk of buying off plan in Dubai. The sea view you thought you had may not exactly match what was in the brochure or the open-plan living area may not be as big as you first imagined. These are all potential pitfalls when buying off plan however they are not necessarily the fault of the developer. The brochures and selling marketing materials used are there to showcase the very best of the project. It does not mean that every single unit within that development comes with each of those features. This is why it’s important to evaluate not only the project but even more so the actual unit you are looking to buy within that particular project.
• Other Developments – This is a risk that can also apply to a ready property however it is even more important to consider when buying an off plan property. New developments next to or close to your property can have a detrimental effect on yours. For example, a great big tower a street down from your villa or right infant of your apartment balcony wouldn’t exactly be ideal. For this reason, it’s imperative that you consider the surroundings of the property you are looking to buy as well as learn about what’s planned in the future.

While these risks of buying an off-plan property in Dubai are real and can have significant negative effects they can be minimized if not avoided altogether. Choosing wisely and getting the right advice is crucial and will go a long way in miming the likely hood of such risks being an issue.      
 

How to Buy an Off-Plan Property in Dubai

Follow these steps to purchase an off-plan property:

1. Familiarize Yourself with the Dubai Market: Start by gaining a baseline understanding of the Dubai real estate market and the laws at play. Research different communities and stay updated on the latest projects and developments.
2. Consult with an Expert: Engage with experienced off-plan agents or agencies who can provide in-depth insights into the market. They can keep you informed about the most current projects as well as upcoming opportunities.
3. Determine Your Preferences: Clearly define the type of property you want to invest in and where. Decide on either an apartment, townhouse, or a villa, and specify your preferred communities.
4. Explore Suitable Options: Explore the available options in your chosen category and location. Consult with your agent to narrow down your choices and select the property or project that best aligns with your investment/buying goals.
5. Reservation and Contract Signing: Reserve the unit you’ve selected and proceed to sign the relevant contracts. The Sales and Purchase Agreement (SPA) is a crucial document that outlines the terms and conditions of your purchase.
6. Payment Schedule: Follow to the payment schedule as outlined in the SPA. Off-plan properties typically involve a series of part payments spread over the course of the construction period.
7. Take Possession and Enjoy: When the property is completed, undergo the handover process of inspecting the property to ensure all is in order. Once you are happy with everything you take possession and enjoy your new home or investment.

Costs of Buying an Off-Plan Property

Much like buying a ready property, there are certain fees associated with buying an off plan property. The following table will outline all the main fixed costs associated.

Frequently Asked Questions