Frequently asked questions on Off Plan Properties
Dubai has grown to be a popular tourist and investment destination as a result of several benefits including low tax rates and lengthy visas. Off plan properties in Dubai have drawn interest from both domestic and international buyers as they offer a fantastic way for people to invest in Dubai real estate.
The city has the highest rental yield when measured against several other nations. As many individuals are now investing there, Dubai has emerged as the top real estate market in the world. Due to its lower cost and good return on investment, off plan properties in Dubai are in high demand.
Before purchasing an off plan property, many investors may have a number of questions in mind. Hence, consider these frequently asked questions and their responses to get a better idea before investing.
What is an off plan property?
An unfinished property that is bought straight from the developer is known as an off-plan property. It is a building or piece of property that is either under construction or has just begun.
For information on the project and the particular property they are buying, purchasers of this sort of property rely on brochures and other marketing materials. Typically, a 10-20% down payment and the execution of the SPA(Sales Purchase Agreement) is required. There is often a difference between the remaining sums paid based on the developer’s payment plan.
What are the advantages of buying off plan property in Dubai?
- Investors can obtain a purchase price as quickly as feasible and at the lowest cost by purchasing an off-plan property. Additionally, it enables buyers to pick the top units within a particular building. The likelihood of getting the best ROI is significantly increased by doing this.
- Real estate investors can often sell off-plan contracts before a project is complete, but they must pay 30% of the original price. Owners can frequently sell at a considerable profit if the project has been well-received and the market has performed well.
- Developers’ off-plan property payment plans can and do vary. The required investment is relatively minimal, with some developers just asking for a 5% down payment and the balance being paid during construction.
- We all enjoy trying new things, despite the fact that the majority of us detest admitting it. Having something that has never been used before, whether it’s a new car or a brand-new house, is special and fulfilling. If done properly, this is what you get with an off-plan property, which is not only brand-new but also equipped with the newest design, technology, lifestyle features, and facilities.
- The value of your investment in the off-plan property could increase even before it is ready for occupation. Accordingly, if an investor invests 1 million in a property, his investment value will grow by % (based on the current market value).
What are the potential risks in buying an off plan property?
Nothing we do comes without risk, and buying an off-plan property is no different. The greatest risks are
- Delayed Completion Time -As things don’t always go as expected, projects have occasionally been finished later than expected. An incomplete project might have detrimental effects on funders and end users. This entails a later move-in date for the end users, which might have emotional and financial repercussions because it might require paying rent at another residence. This results in investors losing out on possible returns if the building was finished and rented out. Therefore, it is essential to do your homework on the project developer. Check their prior performance, and ensure that any sale deal you sign reimburses you for any delays.
- Change in Market Conditions – The home could not be worth what the buyer paid if real estate values decline. Off-plan properties in Dubai are not exempt from this risk, but they may be more affected by it because they could be harder to sell than ready properties.
While there are risks associated with buying a property off plan in Dubai, they can be significantly reduced, if not completely avoided. Making sensible decisions and seeking the correct guidance is essential and will significantly lower the possibility of such dangers happening.
Can anyone buy a property in Dubai?
In contrast to many other countries, the Real Estate Companies in Dubai are open to everyone. Whether you are from the United Kingdom or India, there are no limits on purchasing and owning a house in any of Dubai’s freehold neighborhoods.
What assurance do I have that my construction will be completed?
The developer must comply with a number of requirements set forth by RERA in order to help assure the completion of an off-plan project. One of them demands that the developer possess all of the land involved in the project. Additionally, before selling the plan, the developer is required to provide a 20% down payment as a bank guarantee, deposit 20% in an escrow account, or finish 20% of the building. Contractors are required by RERA to present a 10% performance guarantee in addition to the aforementioned requirements.
In addition to taking these safety measures, purchasers need to do their own research and look into the developers they are thinking about buying from. We advise looking into the developer’s reputation and track record.
When can I sell my off plan property?
To make sure that the Dubai market is a reliable and secure location to invest, many procedures have been put in place. One of these regulations has a direct impact on buyers who want to sell their unfinished off-plan house.
The procedure for selling an off plan property is fairly comparable to that of selling a ready property after the minimum repayment level is reached. After reaching an agreement on a price and other terms, both parties sign contracts and request NOC. The new buyer then registers with the developer and eventually assumes responsibility for all outstanding payments after the transfer is finished. It is also important to note that, contrary to popular opinion, even if the initial buyer has already paid the 4% DLD Transfer Fee, the new buyer is still liable for it. There are registered forms by RERA that must be signed by both the seller and the buyer as well as where both parties put their terms and condition to finish the deal.
What type of off plan properties can I buy in Dubai?
There are many different kinds of off-plan properties in Dubai. Apartments, villas, and townhouses are the three different categories. Each of these has certain traits as well as clear benefits and drawbacks. Which alternative is best will be determined exclusively by the buyer’s individual needs, preferences, and financial goals.
Can I finance an off plan property?
When working with one of Dubai’s main developers, getting a mortgage for an off plan property is nearly always possible. Although different lenders will set their own requirements, they will be quite comparable to those that would be necessary for a ready property.
It’s important to remember that a loan can only be for a maximum of 50% of the purchase price for an off the plan property.
Can you negotiate the price of an off the plan property?
Yes, you can bargain the price while buying off-plan property in Dubai. The sooner you purchase the house, the less expensive it will be for you because the developer often does not reduce the price to set the benchmark once the property is ready to be put on the market.
How can I be assured my development will be completed?
The developer must adhere to a variety of rules established by the Real Estate Regulatory Authority(RERA) to ensure that an off-plan project is finished. One of them demands that the developer own every piece of land needed for the project. Furthermore, 20% of the project must be finished before off plan sales, 20% must be placed in escrow, or 20% must be paid in the form of a bank guarantee. In addition to following the guidelines, RERA mandates that contractors offer a 10% performance guarantee.
The fact that Dubai is a terrific destination for the development of Real Estate Company in Dubai is the main reason why people purchase property there. The potential to invest in Dubai, which has spectacular historical landmarks, cutting-edge infrastructure, a quickly rising economy, and cultural variety, has already attracted thousands of local and foreign investors.
Off plan purchases are great, but do your homework and double-check everything before making a choice. Don’t forget to ask as many questions as you can think of. This guarantees that no information is missed and that you will get the promised item.