Unbuilt property acquired directly from a developer is referred to as “off-plan” property. It is a property that has not yet been built or, in some cases, is only beginning to be built.
In order to purchase this type of property, buyers rely on brochures and other marketing materials to learn about the project and the specific property they are buying. Typically, a 10–20% down payment and the SPA are required to complete a transaction (Sales Purchase Agreement). The remaining payments can and do vary depending on the developer, but they are typically related to construction.
Advantages of buying off-plan property in Dubai
- Spend less: Purchasing an off-plan property enables buyers to receive a purchase price as soon as possible and at the lowest cost. Additionally, it enables buyers to pick the best apartments within a specific development. This significantly improves the likelihood that they will receive the greatest return on their investment.
- Sell Before Completion: Investors can frequently sell their off-the-plan property contracts before a project is finished. Owners can frequently sell at a sizable profit, provided the market has performed favorably and the project has proven to be popular.
- Less money up front: Different developers offer different payment plans for off-plan property. The required investment is relatively low because some developers only ask for a 5% down payment, with the remainder being paid during construction.
- You Purchase New: Despite the fact that most people detest to admit it, we all enjoy something that is brand-new. Having something that has never been used before, whether it be a new car or a brand-new home, is rather special and satisfying. This is precisely what you get from an off-plan property because it is not only brand new but, if done properly, will also include the newest design, technological, and lifestyle features and amenities.
Potential risks of buying off-plan property
Nothing we do is without risk, and purchasing an off-plan property in Dubai is no different. The two risks that are more serious are:
- Delayed Completion Time: Because things don’t always go as expected, there have been instances of projects finishing later than expected. Both end users and investors may suffer significantly from a completion date delay. It means a later move-in date for end users, which could have emotional and financial repercussions because it might require them to pay rent at another property. For investors, this means missing out on potential profits if the building was finished and rented out as an income source. It is crucial to conduct thorough research on the project developer as a result. Verify that any sale agreement you sign will reimburse you for any such delays by looking at their track record.
- Modification of Market Conditions The value of the property may be lower than what the buyer paid in the event that real estate prices decline. Off-plan properties are not exempt from this risk, but they may be more affected by it because they may be more difficult to sell than ready-to-move-in properties.
- When buying off-plan in Dubai, there is a real risk of receiving less than anticipated. The open-concept living space may not be as large as you initially thought, and the sea view you thought you had might not exactly match what was in the brochure. All of these potential pitfalls exist when purchasing off-the-plan, but they are not always the developer’s fault. The purpose of the brochures and other marketing tools is to highlight the best aspects of the project. It does not necessarily follow that each and every unit in that development has each of those features. Due to this, looking is just as crucial to evaluating a project as the apartment or villa you want to purchase within it.
The risks associated with purchasing an off-plan property in Dubai are real and can have a significant negative impact, but they can be reduced, if not completely avoided. Making smart choices and getting good advice are important and will make it much less likely that these risks will become a problem.
Costs and fees associated with purchasing an off-the-plan property
There are some costs involved with purchasing an off-plan property, just like when purchasing a ready property. The associated fixed costs are listed in the table below.
Please remember that, even though all fees and charges must be paid, it is not always the buyer who does so. Today, many developers offer incentives to buyers by covering half or, in some cases, the entire registration fee charged by the Dubai Land Department. If paid in full, this results in a 4% savings, which when added to the 2% savings from agency fees results in a useful 6% savings.
