What Is Off Plan Property?

Real estate is one of the most effective ways of investment among many generations. The popularity of Off-plan property investment is never going to come down anytime soon. Off-plan property can be defined as the act of purchasing a property that has not yet been constructed. It is an agreement between the buyer and the developer.

Therefore, the customer will mainly rely on plans and specifications before the construction is done. The premise of purchasing off plan properties and development projects is their potential for high returns. However, like all investments they have their risks and difficulties. Let us discuss about off plan properties in detail:

Advantages of Buying Off-Plan Property in Dubai

If you are planning to buy an off plan property in Dubai here are some of the benefits:

Save Money

Buying an off plan property allows buyers to get the purchase price at the closest and lowest feasible fee. Additionally, it allows consumers to choose very high-quality residences in a specific development. This plays a big role in increasing the chances of getting the highest return on their financing.

Pre-Completion Sale

 Quite often, traders can market their off-plan properties before the venture is complete. Assuming that the market ended well. Moreover, it turned out that the popular owners of this business can often sell with a full size income.

Reduce Entry Costs

 Payment plans for off-plan properties may vary from developer to developer. With a few builders asking for a 5% down fee at best and the rest going to the buildings, the required expenses are quite low.

You Buy Brand New

 As much as people hate to admit it, we all love something new. Be it a new car or a logo – new things. There is something that is alternatively strange and gratifying about having something that has never been used before. That's exactly what you get with an off-plan property that isn't the easiest new development, but if done right will feature today's design, generation and lifestyle options and services.

How to Buy an Off-Plan Property in Dubai?

Here are some tips on buying an off plan property in Dubai:

Familiarize Yourself with the Dubai Market

Begin with a basic familiarization of the Dubai real estate industry and the regulations in place. Explore various communities and learn what is new and ongoing within the field.

Consult with an Expert 

Seek advice from experienced off-plan agents or agencies that can offer detailed information on the market. They can help you know the current ongoing projects as well as future job vacancies.

Determine Your Preferences

Identify the type of property you would like to invest in and in which location. Choose between an apartment, townhouse, or villa and state your desired communities.

Explore Suitable Options

Check what is available in the selected category and area of interest. Discuss with your agent to make a shortlist and to identify the property or project that fits the purpose of investment/buying goals.

Reservation and Contract Signing

Select the unit you want and book the unit by signing the necessary documents. The Sales and Purchase Agreement or SPA is a very important legal document that details out the terms of the sale.

Payment Schedule

The payment shall be made in accordance with the payment schedule indicated in the SPA. Off-plan property purchases usually showcase a series of part payments throughout the construction period.

Take Possession and Enjoy

When the construction is done, go through the handover process where one inspects the property for any defects. Once you are satisfied with everything then you assume possession and you have your dream house or investment.

Off-Plan Property Vs. Traditional Residential Property - What's the Difference?

It is important to understand that there are certain fundamental differences between off-plan property and completed property purchase. The major areas of difference are that completed properties can be seen in a physical sense and inhabited before it is bought, unlike off-plan properties. The other difference when it comes to buying a completed property against an off-plan property is that every property is bought in a different manner.

In most cases of property acquisition where structures are already built, the buyers or investors are expected to pay some initial deposits. Moreover, the balance through mortgage repayments or one lump sum price for the property. Off-plan properties mean that the payment will often be available in portions where you can make an initial reservation deposit and then the final payment will be made when the property is complete.

The last noteworthy difference between new build properties that are purchased off-plan and older completed homes is that the former are much more environmentally friendly. This is due to the materials that the development is usually made of. Since new-build homes are constructed with the best insulations the use of artificial heating is conserved hence preserving energy.

The type of buyer that completes an off-plan property purchase is often also different. First time buyers are unlikely to buy an off-plan home unless they are buying a property under a shared ownership scheme. Generally, off-plan properties are considered to be more preferred by buy-to-let investors.

Risks in buying off-plan property

As they say, no venture is without its risks and this is equally true when purchasing an off-plan property in Dubai. 

Delay in completion time

The idea is not always going to be perfect and there have been instances where a project has been completed after the stipulated time. Any postponement in the construction period presents considerable adverse effects for end users as well as investors. For the end users it means a delayed occupancy which has an emotional effect but may also have a financial impact as it means that they will likely have to pay rent somewhere else. For investors, it implies a loss of the returns that they would be making if the property was complete and rented out for an income. 

Market Shifts

This is a situation where the property drops in value to an extent that it becomes worth less than the amount paid by the buyer. This risk is not only associated with off-plan properties but can be more affecting them because they are less easy to sell in comparison to ready properties.

Not getting what you expected

It is a real possibility associated with the purchase of off plan property in Dubai. The sea view that you for example, may not be as picturesque as the one described in the brochure or the open-plan living area may not be as large as you had in mind earlier.