Off-plan property is an unconstructed property, registered in the Dubai Land Department, and has an escrow bank account. It is sold with a payment plan which might involve post-handover payments to maximize the ROI. Off-plan property could be a villa, apartment, or townhouse sold by an investor (i.e., secondary market) or a property developer such as Emaar, Meraas, Damac, Dubai Holding, etc., (i.e., primary market). You can buy an off-plan property during the planning or construction phase. Usually, investors prefer to buy off-plan projects due to the flexible payment plan and hoping for a capital appreciation and high ROI after the handover. In the case where the buyer is buying directly from the developer at the time of purchase, the buyer usually pays a 10-20% down payment and signs SPA (Sales Purchase Agreement).
- Investing in off-plan property in dubai comes with many benefits. Not only can investors gain early-bird access to an in-demand area, allowing them to jump in before significant growth, but off-plan properties are also often offered at below-market value. 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.
- Investors can sell off their off-plan property contracts prior to a project’s completion. Assuming the market has performed well, and project proved to be popular in the market.
- 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 have never been used before. This is exactly what you get with an off-plan property which is not only new but if done right will feature the latest design, technology, and lifestyle features and amenities.
- Historically, the risk involved with off-plan investment came from the uncertainty surrounding the construction process, such as the reputability of the developer, and what the property would look like on completion. Thankfully, with the latter, developments in the market and technological advancements allow to partially unveil this mystery and give investors a better idea of what their finished product will look like, helping them to have confidence in their purchase.
- Developments don’t always go to plan and there have been cases of projects being completed after their scheduled completion dates. It is for this reason very important to do your research on the project developer. Look into their track record and any sale agreement signed ensures you are compensated for any such delays.
- 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.
Unlike many countries around the world, the Dubai property market is open for all. Whether you are from the UK or India or any other country, there are no restrictions to you buying and owning a property in any of Dubai’s freehold areas.
To help ensure an off-plan project is completed, RERA has introduced numerous measures which must be met by the developer. One of these stipulates that the developer must own 100 percent of the land belonging to the project. Along with this, the developer must either make a down payment of 20 percent as a bank guarantee, deposit 20 percent in the escrow account, or complete 20 percent construction before selling off-plan. Together with the above measures, RERA requests contractors to submit a 10 percent performance guarantee. Along with these measures, it's imperative Buyers do their own research and investigate developers they are considering buying from. We recommend looking at the developer’s track record as well as reputation.
Numerous measures have been put in place in order to ensure the Dubai market is a stable and secure market to invest in. One of these measures has a direct impact on Buyers who look to sell their off-plan property before completion. Dubai’s largest developer Emaar Properties now requires owners to have 40% of their off-plan property paid off before it can be sold to a new owner. This figure of 40% does vary from developer to developer so it’s important to check with each developer. Once the minimum repayment threshold has been met, the process of selling an off-plan property is very similar to selling a ready property. Buyers and Sellers agree to price and terms, sign contracts and apply for NOC where the new Buyer is registered with the developer and ultimately takes over all the outstanding payments once the transfer is complete. The new Buyer will be responsible for the 4% DLD transfer fee regardless of the fact this has already been paid by the first Buyer.
