Purchasing an off-plan property entails committing to purchasing a home before or during the development phase. Off plan property investing, in particular, is quite popular among buyers. Since the availability of freehold properties to foreigners in 2002, the real estate market in the UAE has seen a surge in interest from both domestic and international buyers.
What is Off-plan property investing and does it have any benefits over buying new homes?
Off-plan property investing is the process by which a buyer acquires an apartment after the construction phase of a particular project has been completed. In this article, we’ll explore the benefits of off-plan properties and determine why purchasing one may be attractive.
The History of Off-plan Property Investing in Dubai, UAE:
In order to understand the concept behind off-plan property investing, we need to understand some history first. Prior to 2002, foreigners were restricted from purchasing real estate in Dubai. This changed when upon the announcement of the Dubai real estate industry, there was a huge demand for foreign investment. On 8th July 2002, UAE’s first exclusively for foreign investors property listing in the Marina and Jumeirah Lake Towers was launched. This is the first property to be exclusively available to foreigners on the local market, and has been hailed as a major milestone in the history of off-plan property investing.
The Benefits of Off-plan Property Investing:
As we’ve established, off-plan property investing entails purchasing a home before or during the construction phase of a project. The benefits of doing so are:
1.Setting up an investment property portfolio
This is probably the most attractive benefit of off-plan property investing in Dubai, and one that gets a lot of people excited enough to invest in it. When you plan and buy an off-plan property, you are creating a portfolio that can be used as collateral for a loan to purchase other properties later on.
The prices of off-plan properties are significantly lower than the price of a new home. You’re buying a building with full plans but haven’t been fully constructed yet. As a result, your property purchase is relatively risk-free and you’ll never have to worry about the prices on your property going up or down over the next few years.
3.Location and Ammenties
There is no better way to invest in real estate in Dubai than by purchasing an off-plan property, as the location and amenities are still being built at the time of purchase. Which means you’ll get more for your money. With an off-plan property, you’re getting a home already on the market but in a location that will be more perfect for your family and lifestyle. Plus, if you do decide to go ahead and purchase the finished apartment, you’ll suddenly have a property that is better than it was before it was built.
4.Flexible Payment Options
Off-plan property purchases come with flexible payment options. You can opt to pay a certain amount at the time of purchase and the rest over an agreed period of time.
5.Easy Financing Options
Off-plan properties are usually built and registered in your name, even before you actually close on the project. This gives you the opportunity to access financing avenues more easily than if you bought a completed home.
As off-plan property owners are seen as investors, banks have set up financing options that are specifically catered to them. The process is much simpler compared to purchasing a completed home, making it a lot easier for potential investors to get into off-plan property investing.
6.Buyer Protection Laws in Dubai
While off-plan properties are risky, the RERA (Real Estate Regulatory Authority) and Dubai Land Department (DLD) in the UAE have implemented several procedures to provide buyers with additional security against delays, cancellations, or fraud. One such law requires buyers to make off-the-plan home payments at DLD-approved institutions. Developers will be able to access funding only if the project has achieved a particular point of completion.
There are a few considerations that every investor should bear in mind before proceeding with any off-plan investment. Here are some of the issues that investors may encounter when considering purchasing off-the-plan properties.
– Delays in Completion:
Many buyers are wary of investing in off-plan properties because of the possibility that their home’s completion may be delayed. During the construction process, there is a risk of the project being delayed or cancelled.
– Payment Schedules:
Like any other investment, you will have to consider how you’re going to pay for your property as well.
– Assessing Developers’ Reputation:
You should make sure that your developer has a good reputation for completing their projects and giving a home of high quality standards. You should also see if there are any pending legal actions against them or any other related issues that might affect the completion and delivery schedule of your home.
For further expert guidance on how to go about Investing in Off Plan Properties in UAE, you can reach out to us!