Purchasing an off-the-plan property may not appear to be the most apparent option, but with adequate research, better understanding, and smart investing, off-the-plan properties can yield higher returns than completed properties.
Here is a complete guide to snatching the best off-plan deal in Dubai. But first, you need to understand what an off-plan property is.
What is an off-plan property?
Off-plan properties are unbuilt properties or properties that are in the process of being developed, purchased directly from the developer, or, in some cases, from the first owner or resellers. As a buyer, you are relying on renderings, floorplans, and virtual tours to help you decide whether this apartment is the correct one for you because you don’t have a completed property to base your decision on. If the buyer purchases directly from the developer at the time of purchase, the buyer usually pays a 10% to 20% advance and signs a SPA (Sales Purchase Agreement). Depending on which developer, the rest of the payment can and does vary, but is generally related to construction and handover.
How to buy an off-plan property in Dubai
Now that you know the meaning of off-plan property, you must understand the process. If the process is not clear and followed properly, it may cause concern, so we would like to elaborate on the following steps.
- Choose your investment: If you’re an investor or a house buyer, it is critical to check your budget and preferences with market availability in various projects when picking an off-plan property. This is where having a reliable and knowledgeable agent can help you get the most out of your investment.
- Know the project: Your next step will be to visit the developer’s sales boutique to gain a thorough grasp of the project’s benefits, as well as every aspect of your future property and project, using demonstration materials such as a Project Miniature Model, Brochures, or Virtual Tour. Some developers will also offer a Show Property that you can visit.
- Booking: After you’ve decided on a unit type, you’ll need to pay a booking fee to ensure that it’s taken off the list of available units for others. The majority of developers want a 5-10% booking fee in addition to signing the booking form for the unit of choice.
- Make your Down Payment and DLD Fees – After you complete the booking procedure, you will be asked to complete your first installment: “Down payment,” as well as pay the Government Registration Fees: normally 4%, however, some developers give DLD exemptions or other forms of discount.
- Sign the SPA: Whether you live in the country or not, the developer will send you the “Sales and Purchase Agreement” for your signature before sending you the dually signed copy after it has been signed by the developer’s authorized signatory.
- Oqood registration: This step is critical to ensure that your purchase is already registered with the government authorities. Once you’ve completed this step, you should receive your original contract of sale from the Dubai Land Department.
- Pay Due Installments: As part of the agreed-upon payment plan, you will be required to pay a certain percentage of the purchase price before your property is handed over.
- Completion Notice: As specified in the SPA, the developer is required to deliver the project and finish the construction before sending the completion notice to all clients at the same time.
- Inspection & Handover: Once you’ve made the required handover payment, you’ll be invited to examine your apartment on a specific date, in collaboration with the developer’s handover team. If you can hire a professional snagging team to accomplish this stage, it will make a significant difference in the condition and quality of your unit for future use.
The benefits of purchasing a property off-plan
Best Bargain: Purchasing an off-the-plan property allows investors to obtain a purchase price as soon as feasible and at the lowest possible price. Payment plans for off-plan properties are usually quite flexible and friendly. A property can be officially booked in your name with as little as a 5-10% deposit, followed by a similar figure within the following 30 days as you sign your SPA (Sales Purchase Agreement) with the developer. Eventually, the majority of the payment is deferred until the project is completed, providing an excellent opportunity for investors to buy a little more time and save up the full unit cost, or at the very least reduce the length of their mortgage repayments.
Great Return On Investment: For intelligent buyers searching for reduced initial outlays and higher long-term financial returns, off-plan properties present excellent investment opportunities. Off-the-plan units are frequently sold below market value (BMV), and will naturally increase in value when the project is completed allowing investors to resell the unit at a significantly higher price once it is built. Additionally, investors can typically make a significant profit by selling off their off-plan property contracts during construction if the market has fared well, and there’s high demand for the project.
Better affordability: Payment plans for off-plan properties can and do vary from developer to developer. The investment required is relatively cheap, with some developers demanding just a 5% down payment and the remainder tied to completion.
Furthermore, new construction projects developed by reputable developers are finished to the highest standards, with a variety of modern amenities that save money in the long term. Increased savings in the years after the handover are possible thanks to the use of energy-efficient building practices, environmentally friendly features, and new technological breakthroughs.
Lastly, Purchasing a brand new home can also help you avoid additional costs such as renovations and repairs that may be required if you purchase a property on the secondary market that hasn’t been well cared for by the previous owner.
Greater choice of property units: When acquiring an off-plan unit, you will have access to the whole inventory of a building. This gives you the best opportunity to select the exact unit type you desire. By the time a project is finished, a large percentage of the top units will have been sold to eager buyers.
You are buying a brand new property: One of the most common reasons for purchasing a home off-plan is that you will be obtaining a brand new unit that has never been occupied. Brand-new properties usually contain the most up-to-date design, technology, and lifestyle features and facilities if done correctly. A brand new unit allows you to lay it out and design it whatever you want after it’s finished. It also significantly decreases the wear and tear that a structure or unit experiences as it ages, which can lead to problems down the road. You will also typically receive a 12-month maintenance warranty from a developer if any maintenance is required during that time.
Potential Risks in buying off-plan property
Delayed Handover: project developments do not always go according to plan, and there have been instances where projects were completed later than expected. As a result, it’s critical to do your research on the project developer. Examine their track record on project delivery, and make sure that any sale agreement you sign stipulates that you will be paid for any delays.
Market risk: Market risk exists in all markets throughout the world, and when you buy off the plan, you run the risk of a general drop in real estate values between the time you give over your booking deposit and the time you receive the keys.
On the other hand, the opposite is also true. If prices rise, you can make a lot of money with a small investment.
With adequate background research, buying an off-plan property is a great investment and bargain likewise. It comes with numerous benefits and little or no risk if the investment is done carefully.
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