All You Need to Know about Buying Off-Plan Property in Dubai?
Dubai is truly the land of dreams. With its prosperous employment opportunities and scenic beauty, the real estate business of the city is one of the most thriving in the world. Every year, people not only from across the Middle East but the entire globe, aspire and look out for properties to buy in this magnificent city.
The presence of reliable property developers leads to some of the most awe-inspiring real estate projects that make waves immediately after the announcement of their launch. This brings us to the topic of our discussion; off-plan properties. With their immense potential and endless possibilities, they are considered prime investments.
In this space, we are going to get you acquainted with everything you need to know about off-plan properties in Dubai, the benefits you can seek from them, their prices, how to buy them, and how to sell them off profitably.
What is Off-Plan Property?
Before we dive into the nitty-gritty of off-plan properties, let us try and understand what it means. Off-plan properties refer to any property that is still under construction when it is offered for sale. Buyers of such properties rely on the credibility of the developers who present them with a blueprint, floor plan, and an estimated completion date before making their purchases.
Usually, one can book the property with a small down payment, making it easier on the pocket. It is followed up by making the rest of the payments during construction and on the handover of the project in numerous installments that are agreed upon beforehand between the two parties.
Benefits of Buying Off-Plan Properties
The popularity of off-plan properties in Dubai is skyrocketing because of the bunch of benefits it provides to the buyers. A significant portion of real estate investors in the city rely on only off-plan properties because of how lucrative they are. Among the many benefits of an off-plan property, the primary ones are as follows.
Relatively Lower Price
As off-plan properties are in their development stage and not fully ready to move in yet, the developers make it up by offering the properties at a much-reduced price compared to readymade properties. Sometimes, the discounts offered on such properties can range up to even 30%, which saves a fortune for you.
The developers value your patience and the level of trust you show to them and therefore they leave no stone unturned in ensuring that your investment in an off-plan property in UAE is an economical one.
Flexible Payment Plans
The affordability of the off-plan properties is not just limited to its listed price. The developers offer various compartmentalized payment plan packages, which makes investing in such properties easier and more manageable.
You need to just make a small percentage of the total price as a down payment for booking the property. The rest of the payment can be made in several small installments throughout the construction stage and on the handover of the establishment. As such, you are not burning a hole in your pocket immediately at once.
High Rental Yields
Dubai, being the economic, tourist, and business hub that it is, grabs the attention from worldwide. The number of expats living in the city is nothing short of astonishing, who are always on the lookout for rental properties.
Off-plan properties are deemed profitable investments because of the high rental yields they bring to their owners. Therefore, you have steady financial support and income from the rental yields of such properties if you choose to not live there and put it out on rent.
High Capital Gains
As the UAE and specifically Dubai is the gateway to the Middle East and hosts some of the largest corporate conglomerations in the world, the real estate sector is always booming here. This makes it the perfect location to invest your money. Smart investments in off-plan properties in Dubai bear the promise of high capital gains for you in the future.
The Return on Investments (ROI) on off-plan properties is pretty tempting. You can invest in an off-plan property in a strategic location in Dubai with a thriving community that has accessibility to modern amenities and a wide network of transportation at a lower price than you would have to pay for a readymade one. When you sell it in the future in its readymade form, the capital gain you will experience will be through the roof.
Safe and Regulated Purchase
At first glance, many people feel that one of the biggest risks of investing in an off-plan property is the uncertainty of the completion of the project. To combat it, the Dubai Land Department (DLD) has implemented strict regulations in place to safeguard investors from fraudulent and delayed projects of off-plan properties. This protects you from cancellations and delays of projects.
The Real Estate Regulatory Agency (RERA) is tasked with overseeing the completion of the project. So, you can rest assured that your investment will not go to waste and no developer can cheat you as the banks will hold off their payment and secure it only after a pre-defined stage of project completion.
Cost of Buying Off-Plan Properties
Off-plan properties are much more affordable than their readymade counterparts. Of course, the cost of an off-plan property depends on its property type (apartments, penthouses, townhouses, villas, commercial units, etc.), unit type (referring to how many bedrooms it has), amenities available, location, and the developer (the higher the reputation of the developer, the higher the cost), among others. And if you buy a unit worth min AED2M, you will get eligible for the UAE Golden Visa, and can enjoy all it’s benefits.
But irrespective of the cost of the property, the constant factors that you need to account for are the registration fee that you need to pay to the DLD, which is usually 4% of the property value, and the Oqood registration, which is the contract fee.
How to Buy Off-Plan Properties in Dubai?
Off-plan properties are available for residents as well as non-residents. So, a foreigner can buy property in Dubai if he fulfils the requirements. When you decide to purchase an off-plan property in UAE, you need to research thoroughly and follow a linear approach to safeguard your hard-earned money. Here are the major steps you need to follow to make sure your purchase is a safe and secure one.
Define Your Searches
First and foremost, you need to have clarity about what you want. Therefore, make a list of your budget, ROI expectations, property size, location preference, payment plan options, need for amenities, and capital gain opportunity, among other factors so that you know exactly what you want when you start looking for a property.
Register with an Off-plan Specialist
The importance of this step can’t be stressed more. When you register and work with an experienced real estate agent, half of your job is already taken care of. He will not only showcase you a variety of projects but will also ensure you get crucial information on the contract, receive project updates, and follow the right steps to stay on the right side of the law.
Find the Right Property
Once your agent provides you with a list of options that match your needs and requirements, you need to zero in on your options. Go through the brochures, floor plans, and videos thoroughly and get a background check on the developer. If a ‘mock property’ has been established by the developer, visit it to inspect the layouts, materials used, facilities available, size, etc.
Booking the Property
After making your choice of the property, you need to book it under your name. To do so, you have to make a down payment, which is usually a small percentage of the total price. You also need to make the registration fee to DLD and the Oqood fee to legalize the property under your name.
Signing the Sales and Purchase Agreement (SPA)
The next step will involve the developer sending you the Sales and Purchase Agreement (SPA). Please note that it will be dually signed by the authorized signatory before being sent to you. We recommend you get legal advice on the contract before you sign it as it will give you clarity on all the terms and conditions of the contract.
Inspecting and Overseeing the Completion of the Project
The developer is obligated to complete the project by the pre-decided date as per the SPA. The developer is required to send a notice to all clients after completion. But you still need to inspect from your end. You can hire a third-party inspection team to inspect the property before the handover. Once you check everything is in order, the developer will hand over the property to you.
How to Sell Off-Plan Properties in Dubai?
To ensure that the selling of your off-plan property in Dubai is a smooth and efficient process, you need to maintain the following steps.
Identifying Potential Buyers
The first order of business is to identify prospective buyers who show a keen interest in the property you are selling. You can leverage online property transaction platforms or collaborate with a real estate agency to help you identify your buyers.
Outlining comprehensive Information
It is paramount that you provide transparency to your prospective buyers while communicating with them the information about your off-plan property. You need to give them a holistic view of the property and mention details of location, unit specifications, offered amenities, covered area, outstanding payments, and history of the developer, among others.
Managing the No-Objection Certificate (NOC)
While reselling your off-plan property, you need to procure the No-Objection Certificate (NOC). This document serves as the single most important testament to your approval of the transfer of ownership.
Negotiating
Once the NOC has been secured, you can enter into a negotiation phase with the buyer to set the price of the property and the terms and conditions of the sale. This will serve as the foundation for the official contract that will contain all minute details of the resale of the property.
Completing Transactional Obligations
The final phase of the selling phase of an off-plan property in Dubai begins after the signing of the official contracts. After this, the buyer assumes the responsibility for all the outstanding payments mentioned and agreed upon by both parties. This includes service charges, installments, and any other allied payments. Both you and the buyer must fulfill their obligation to ensure a fair and hassle-free transaction.
Conclusion
An off-plan property is a lucrative option both in terms of capital gains and rental yields. The opportunities for personalization are also higher in such a property as compared to a readymade one. With their reduced price, they make for excellent investment options. So, if you are on the lookout for a property in Dubai, we encourage you to highly consider an off-plan one and follow the aforementioned process to ensure a fair and safe transaction.