Investing in Dubai real estate is every investor’s dream but the hike in property prices become a major hindrance that keep the potential buyers away from the market. Even though the prices have not touched the 2014 peak but post-pandemic recovery has enticed several investors to buy properties in Dubai. Not everyone can afford to invest in ready properties in Dubai and here comes the option of buying off-plan properties.
Investing in off-plan properties in Dubai
Investing in ready Dubai properties is a viable option because it offers immediate yet higher returns in form of the monthly rental amounts. However, when it comes to investing in off-plan properties in Dubai, people become sceptical about investing.
The off-plan property is an unconstructed or under-constructed property that can be directly purchased from the developer and in some cases, you become the first owner. Like other property purchases, the buyers pay a 10% or 20% (or the specific percentage that the developer demands) as a down payment, sign a Sales Purchase Agreement (SPA). After which, under certain terms and conditions, the buyers start paying the remaining amount.
Tips to consider before buying off-plan properties in Dubai
Investing in off-plan properties may seem a difficult purchase but it is somewhat easier on your pocket and can bring better returns for you in future. However, it all depends upon several factors such as the developer’s track record, market trends, development status, and project delivery to name a few.
We have enlisted a few tips that can help you reap more benefits from your investment and if you want to stay buoyant, you must read and follow them.
Know the developer
Though the UAE government has imposed strict buyers’ protection laws in the real estate sector but still it is crucial to have thorough knowledge about the developer, before buying off-plan properties in Dubai. Talk to your friends and family members about the developer and take their opinion. For more authentic information, contact Dubai real estate agentsto discuss certain project and developer and they can guide you, whether the developer is reliable enough or not. Moreover, you can also check his track record of what the developer has already delivered in the market and what the construction quality is.
Understand the property prices
The first thing that you must understand is that buying an off-plan property does not mean that you are buying a cheap option. It just means you are getting a good deal, because the property is still in the development phase. Another factor that a majority of the first time buyers ignore is the hidden or associated costs attached with the property purchasing process. For instance, the buyers only focus on the asking price, down payment and the instalment plan and seal the deal. First of all, do not just focus on the total price of the property but compare the per square foot price of different off-plan properties before buying in a certain development. It will help you better analyse whether the property that you intend to buy is affordable or not.
Location matters the most
Yes! Even if you are buying an off-plan property it does not mean you can overlook this important point. Location is still the most important factor when it comes to buying a property because it will impact the demand for property in future, your lifestyle (if you plan to live there), and the returns on investment as well. Do not just rely on what an advertisement material shows, go and check yourself before committing to buy a property in Dubai. It will help you understand the surroundings, distance from the key destinations, and whether the project is located in an established area or not. Buying a cheap property in an unestablished area can be costly for you in future because it will take a long to earn the returns. Even if you plan to live there, you will have to spend a lot on travelling for school, office, shopping, or any other recreational trip. Therefore, think a lot before buying an off-plan property.
Is the project legitimate?
Before investing in Dubai off-plan project, make sure that you are sure about the legitimacy of the project.Though there are strict rules and only registered projects can be advertised in the UAE yet it is better to verify the projects by visiting the RERA website. Moreover, never make payment other than the escrow account of the development. By taking these smaller steps, your payment remains safe, even if the project gets shelved.
Always work with a real estate agent
You must work with an agent, when it comes to investing your hard-earned money in Dubai real estate sector. It is because if you go directly to the developer, you will only get to know about his projects while an agent can help you look through all the available opportunities that you might miss otherwise. He can also assess the project better than you, anticipate market conditions and help you understand the future investment trends. Moreover, it is the agent who knows the market better than you and he can later help you sell or rent this property, so it is better to establish a professional relationship with him.
Understand the payment plan
The higher the post-hand-over payment is, the safer your investment is. Moreover, you must avoid payment plans that are based on dates but go for construction-condition based payment plans. It will help you see the progress of the project and make payment accordingly. However, before committing to such payment plans, you must be sure about your income and savings, otherwise, paying a hefty amount by the end of the project can be problematic.
Read the SPA
The Sales and Purchase Agreement (SPA) is a document that you must thoroughly read to understand the payment plan and what you are supposed to pay before you can sell the property. For instance, a few developers mention that you can sell the property only after paying 30% of the total value of the off-plan property during the under-construction phase, and after the construction, you will have to pay 50% of the total value before being able to sell it ahead. It is the SPA where the developer enumerates all terms and conditions, so before signing this document, you must read it thoroughly and carefully.
Buying an off-plan property can prove to be beneficial for buyers in the long-run but all you need is to do your due diligence and consider all the above-mentioned pointers before undertaking this investment plan.