This is, perhaps, one of the most evident benefits of buying off-plan property: the projects that aren’t yet completed are sold essentially cheaper. Moreover, when the off-plan real estate you purchase is finally built and commissioned, it costs much more than it did when you first bought it. Considering the level of quality that developers strive to meet in Dubai in their projects, the final result can become a real treasure chest.
When investing in an off-plan property in Dubai, you don’t have to worry about market fluctuations – you just stick with the price you buy it for. Thus, in case the real estate market grows in value, you don’t have to increase your payments, but the property you’ve purchased goes up in value nonetheless.
One of the most common risks is delayed completion time. There’s no way you can be 100% sure that a project you invest in is completed right on the set completion date. This is why it is very important to do preliminary research on the property developer of the project you’re considering to invest in.
Checking through the company’s track record and ensuring that any sale agreement guarantees compensation in case of such delays is something you might want to do before making a purchase.
Another common risk is a change in market conditions. Downward dynamics in real estate prices may result in the purchased off-plan property being worth less than its initial cost. Although this is also related to ready-built properties, too, off-plan real estates are affected worse, since it may be harder to liquidate them.
Buying off-plan property in Dubai is accompanied by certain fees as well as ready-built estates.
The obligatory fees that must be covered by the buyer include:
It’s also crucial to note that it’s not always the buyer, who pays, although all the charges and fees must be paid. Many developers today tend to pay 50% of fees to incentivise their customers. Some developers even go as far as paying the entire Dubai Land Department (DLD) registration fee instead of the buyer. In case your developer pays it in full for you, you get to save at least 4% on your costs.
Completion of off-plan projects is a crucial matter. So, the Real Estate Regulatory Agency (RERA) has introduced various measures that every developer has to comply with. For example, the developer has to own 100% of the land where the project is being built. The developer also must complete 20% construction, deposit 20% in an escrow account, or make a down payment of 20% as a bank guarantee. Along with all of the above, RERA demands developers to submit a 10% performance guarantee.
Also, in order to get additional protection from fraud, delays, and cancellations, buyers should pay for their off-plan purchases at DLD-approved banks only. The developer you buy property from will only be able to access the funds you’ve deposited upon reaching a particular stage of completion, which is approved by a special consultant.
While these measures seem like an effective and encouraging guarantee, it’s also important that buyers look into companies they are thinking of buying property from. As was already mentioned above, checking through a company’s track record is very helpful and you may want to check its reputation, as well.
Today’s real estate market in Dubai is a secure and stable platform. This has been achieved by a number of strict measures. One of them directly impacts buyers that want to sell their off-plan real estate before it’s completed. Emaar Properties, the largest developer in Dubai, demands its customers pay at least 40% for their off-plan real estate before they are allowed to sell it to new owners. This sum can vary depending on the developer.
Therefore, once this payment threshold is met, the owner can sell their off-plan property – the process is very similar to selling ready-built real estate. Both the buyer and the seller agree on a price and terms, then they sign the contract, apply for NOC registering the new buyer with the developer company, and then the new owner takes over all the remaining payments upon transfer completion. It’s also important to note that the new buyer has to pay the 4% DLD Transfer Fee whether they’ve already been paid by the original buyer or not.
Although buying off-plan real estate in Dubai is a risky undertaking, it holds a lot of opportunities for the buyer. Responsible buyers can protect themselves from many risks by simply following certain regulations and common sense. The least that you can get from buying an off-plan property is saving a whole lot of money. And, if you follow the market and do the calculation, you can even profit from your off-plan purchase.