Off-plan real estate is residences that are currently under construction. This term applies to almost completed residential complexes as well as recently launched projects. The property market of the United Arab Emirates is actively developing, so the choice of properties is extremely wide. Most can be found in Dubai as it has the greatest number of freehold zones where foreigners may have full private ownership rights on real estate.
The interest in off-plan properties is consistently growing. In Q1 2023, off-plan sales accounted for 59% of the total number of transactions. Let’s consider the advantages of off-plan residences and risk-free investment opportunities.
Contents:
- Advantages of off-plan properties
- Risks of investing in real estate from the developer
- Cost of off-plan real estate
- Is construction completion guaranteed?
- Finding a property in the UAE
Advantages of off-plan properties
The benefits of such a purchase are numerous:
- Bargain prices
At the sales launch, a home costs far less than after commissioning. The prices may differ by double digits, with an average difference of around 20%; - Instalment plans
Developers in Dubai offer convenient plans, where only a 10-20% down payment is required upon reservation. The remaining amount is then paid in various instalments during the construction. A portion of the value is paid upon commissioning of the residential complex or within several years after the construction’s completion; - Variety of options available
As the handover time approaches, the number of available properties decreases. The choice is far greater at the launch of sales, particularly relevant for projects with a limited series of properties. It’s usually far more difficult to find an unsold penthouse or duplex in a commissioned residential complex than a regular apartment with several bedrooms.
There’s only one major drawback: if you’re choosing a property for relocation, it could be inconvenient to wait too long for the construction to finish. For buy-to-rent homes, off-plan projects are still the most lucrative option.
Risks of investing in real estate from the developer
All transactions are documented in strict compliance with legislative regulations and a purchase and sale contract is always signed. Foreign investment boosts the UAE economy and real estate market, so the authorities are striving to protect buyers’ interests by carefully controlling off-plan properties. In Dubai, the projects must be registered with the Dubai Land Department (DLD) and the developer must confirm their ownership of the land plot for the development. This meticulous approach to financial control ensures safe transactions.
The risk of lengthy delays is, however, still valid for customers. It cannot, unfortunately, be fully eliminated in any country, nor can you hedge against all force-majeure circumstances. Major developers, however, value their reputation and ensure their projects are delivered on time.
Cost of off-plan real estate
The prices are at the lowest when the sales are launched. As a complex nears completion, the properties become more expensive. The pricing policy also depends on several other parameters:
- Location
Properties in prestigious resort areas or central districts are usually more expensive; - Type of property and residential complex
Premium residences are priced higher than standard properties. Villas are costlier than apartments but a lavish penthouse may cost more than a small house; - Number of bedrooms and floor area;
- Status of the residential complex and additional amenities provided on the premises.
It’s hardly possible to quote the standard cost of real estate as prices vary from 150,000 to dozens of millions of US dollars. You can view the current value of specific properties on our website.
Most importantly, the buyer incurs additional expenses when closing the deal as a fee of 4% of the property value must be paid to the Dubai Land Department upon registration. Investing in off-plan properties, however, may have an additional advantage as some developers undertake to pay half of this amount or even the entire fee to attract buyers.
Is construction completion guaranteed?
The money collected after the sales launch is not immediately available to the developer; it’s kept in an escrow account. Public authorities control the spending, so the developer only receives the money once certain construction stages are completed. With this approach, the developer cannot rely on buyers’ funds and must have a steady income stream from its investment portfolio before it launches the sales.
If the developer is unable to fulfil the assumed obligations due to a force majeure, the construction is handed over to another contractor. If no construction company is interested, the buyers get their money back. This way, investors are fully protected from financial losses.
Finding a property in the UAE
On our website, you’ll find property from developers in Dubai and other parts of the UAE. You can view the current listings in real time and fill in a callback request form to receive detailed information and assistance with property selection. Our brokers will gladly advise you on any aspects of real estate purchasing.
