You have your eye on an off-plan option as a property investment- but not sure where to start? That’s what we are here for! But first, let us help newbies understand the concept!
What does an Off-Plan Property exactly mean?
Off–plan property is a property before a structure has been constructed upon it. Pre-constructions are usually marketed to real estate developers and to early adopters as developments so that the purchaser can secure more favorable finance terms from their lenders.
So lets jet set go with our tips for you newbies who are looking to invest in an off-plan deal in Dubai!
1. Understand the Main Benefit
Buying Off Plan Property in Dubai has its risks and rewards. The main benefit is typically a lower price. Developers usually offer between 10 and 30 percent lower prices for off-plan and under-construction properties. The closer to completion, the higher the price (typically) becomes. One also benefits from flexible payment plans while investing in off-plan properties.
2. Know the main Risk- Project delays
The most common issue with buying off-plan is that your project will be delayed. It has been suggested that more than 50 percent of projects launched since 2008 in the UAE have been handed over at least one year later than quoted.
Some considerably more. Some have been canceled. Unlike the heady boom days prior to 2008, off-plan payment schedules these days should be linked to construction milestones so the part of the risk relating to delayed handovers is somewhat mitigated. Still not great if you’re renting and planning to move into your new property.
3 Be Aware of Buyer Protection Laws in the UAE
While Off Plan Property in Dubai come at various risks of quality, time, market situation and change in financial circumstances, there are numerous measures taken by RERA (Real Estate Regulatory Authority) and Dubai Land Department (DLD) in the UAE to grant buyers added protection against delays, cancellations or fraud.
One such rule is that buyers must make payments for off-plan property purchases at DLD-approved banks. Developers will only be permitted to access funds until the project has reached a certain stage of completion. This will be verified by a project consultant.
Another law passed recently stipulates that developers must provide 20% of construction funds as bank guarantee along with the 10% guarantee performance bond by the contractor.
Such measures reinforce buyers’ confidence in the off-plan property market, making it a safe climate to invest with certainty that under normal circumstances properties will be delivered.
Feel free to contact us for more details.