What Is Off-Plan Property?     

Off-plan property is defined as a type of property that has not yet been completed.    

Buying off-plan property is exactly what it sounds like(it is buying a property off a plan). This term frequently refers to purchasing property before construction begins, but properties that are part-built or even completed are still considered off-plan.    

While this may appear to be a perplexing prospect for some, there are advantages to off-plan property investment.    

What is an Off-Plan Property Investment?    

When an investor purchases a property while it is still under construction or in the planning stage, this is known as an off-plan property investment.    

And there are numerous reasons why people choose off-plan housing. Indeed, knowing enough about off-plan properties can help you make the right decisions if you decide to invest in them.    

Some Important Factors to Consider When Investing    

If you're thinking about making an off-plan investment, the first step is to define your goals. Before making an investment in real estate, as with any other, make sure you know what you want to achieve. Consider the investment itself, the potential returns, and the risks.    

Once this is established, you must critically identify the property type you intend to finance. Whether it is residential or commercial, you must carefully select the property type in which you will invest – this is especially important when investing off-plan because there will be a long period between the issuance of debt and the completion of the development.    

You must think about the location of your off-plan investment. You cannot think in terms of the short term; you must consider the long-term outlook for the location of your investment. For instance, when considering an off-plan commercial property investment, you must consider the city's development and a plethora of other factors.    

Any property investor looking for something a little different in the market should consider purchasing off-plan property. As always, proceed with caution and conduct thorough research before making such an investment.    

Who Buys Off-Plan Properties?    

Off-plan developments are frequently an attractive option for investors due to the lower purchase price in comparison to the value of the completed state. During the construction period, the value of the investment can increase significantly, especially in sought-after and emerging areas where investors are more likely to invest.    

Why do property investors choose to buy unfinished new construction homes?    

In a nutshell, off-plan property investment is a sound investment for three reasons:    

• Off-plan property is frequently priced below market value. Due to the lower-than-usual property prices available, investors looking to get more for their money will look into off-plan investments.    
• Off-plan properties are in high demand from renters in Dubai who want a brand new property with contemporary designs and features because they are new builds.    

As a result, the investors who are most concerned with these facts are those who purchase off-plan properties.    

Who Develops Off-Plan Properties?     

Property developers create off-the-plan properties. Off-plan property developers identify property demand in a specific area and then build a new development to meet that demand.    

One of the main risks of investing off-plan is that you're putting your money into something that isn't yet finished. That is why due diligence is so important, as you do not want to invest in a property that will never be completed.    

How to Spot a Good Off-Plan Property Developer     

The best property developers to buy off the plan from are experienced and well-known in their fields. Investors should avoid purchasing an off-plan property from any developer who does not have a strong track record of completed projects.    

If you want to buy off-plan property in Dubai, you should do extensive research and due diligence on different off-plan property developers.    

Here are some top tips on what to look for when researching good off-plan property developers to ensure that your investment is in good hands.    

• A portfolio of completed projects that were completed to a high standard.    
• A wealth of experience in the field of off-plan development.    
• A good reputation for customer service, as evidenced by positive client feedback.    
• Press coverage of current or previous property developments on housing market news websites.    

How to Buy Off-Plan Property     

More than half of all off-plan UAE properties have been handed over over the last 12 years, and all projects are subject to strict construction timelines. Understand, however, that there are risks, such as delays that affect the investor's own timing. The Dubai real estate market, like any other, has seen some turbulent shifts, resulting in buying at what is thought to be a good price only to see the market value decrease (of course, the exact opposite can happen, as an investor would always prefer).    

 When purchasing off-plan properties, the SAMA UAE team recommends that all investors conduct extensive research. Investors must be prepared to understand the rules and regulations of buying off-plan properties.    

#1 Hire the Right Agent    

Hiring an agent does not mean hiring the first agent you come across; you need an agent who understands the market and can distinguish between a good and a bad off-plan investment.    

Often, a real estate agent will recommend that you invest in a specific off-plan property and then leave you to deal with the developer on your own once the purchase is completed. Remember that buying an off-plan property is more than just getting a good deal; you will have to deal with the developer for the duration of your investment.    

The agent you hire should be able to assist you with all of your questions and concerns.    

He will also interfere in important decisions such as:    

• Deciding the area    
• Deciding the property type - residential or commercial    
• Deciding the profile, history, plan, and future of the project    

#2 Understand the Costs    

The first thing you should keep in mind is how much money is required to book the property. Just because you saw an advertisement that said "become a homeowner for as little as AED 2,000 per month" does not mean you only need AED 2,000 to begin the process.    

There is always a booking fee that ranges between 5% and 25% of the total property value. Without forgetting the registration fee, agent fee, additional fees such as penalties, deductions, etc.    

How Popular Are OffPlan Properties as Investments?     

Off-plan properties are currently establishing a future investment trend in Dubai. The city, which has a population of over 3 million people and is one of the wealthiest in the world, offers limitless off-plan real estate investment opportunities. The city has a distinct cultural vibe and provides an exotic lifestyle for the wealthy and famous. For good reason, the off-plan property market is a very successful real estate model in Dubai, accounting for 72 percent of all real estate transactions.    

Buying off-plan property in Dubai has numerous advantages for an investor or someone looking to relocate in the near future. To begin with, off-plan sales can be an excellent investment because they are available at below-market prices and sell at a higher rate, potentially earning thousands of dollars!  This higher appreciation as the property nears completion is how investors have made their fortunes.     

As an added bonus, off-plan properties are brand new when completed, eliminating the need for costly renovations, and are frequently customized to some of the buyer's preferences. This is extremely appealing to hands-off investors, investors who want to do as little work as possible. Off-plan property is tenant-ready from the start – nice clean walls, new kitchens, bathrooms, and other internal perks can make your life so much easier when it comes to renting out your property. And, let's be honest, who doesn't want a simpler life?    

Investing in off-plan property could help you achieve all of your lifestyle objectives, whatever they may be. Off-plan property investment has the attributes to do it all and more, whether you want to create income to last your entire retirement, build a valuable estate for your loved ones, or create a passive income stream so you can take it easy.     

The main benefit remains in the fact that you buy off-plan property at the current price and when you decide to sell it, the prices are increased, anyhow. According to studies this revenue can be up to 30-35%.    

By the time you will complete the construction of your house/building, the cost of that property will automatically be higher compared to the time you bought it at. The only thing you are adding to your property is profit as time keeps going by. Whether you plan to complete the construction or plan to sell it before the construction after a cycle of 12-24 months. That is all up to you. The profit of your investment depends on when you decide to resell it.    

It is also beneficial for residential purposes, not just commercial ones. You will be able to get a property at a location you want, with beautiful views or the corner apartments as per your wish.    

You will be able to design the apartment according to your taste and efficiency. You can add and subtract any details from the construction plan as per your taste. You can give in your inputs for like the interiors you want, the equipment you consider efficient for you, types of tiles, the furnishing of different areas of the house and so on.    

To summarize the advantages:    

• Purchasing Dubai  off-plan real estate at BMV discounts(below market prices)    
• The developer gets the sale, you get the discount. It’s a win-win!    
• In Dubai, purchasing off-plan entitles you to a variety of interest-free payment plans and schemes.    
• Lower initial outlays, smaller deposits, and staged payment plans.    
• Purchasing a new, modern unoccupied apartment or property    
• High appreciation is possible with the right property and market conditions.    
• Property can frequently be customized to your liking.    
• The perfect investment today for your future retirement    
• The perfect investment to create a pot of wealth    
• Life-changing income from buy-to-let    
• The perfect legacy investment    
• Maximizing flexibility, and maximizing profit potential disadvantages.    

Few of the Disadvantages of Off-Plan Properties:    

The disadvantages, they can be rare but they will be there.     

• If you are wishing to move in soon, you should keep in mind that off-plan properties can consume a lot of time until they are complete, more probably they will take time longer than stated.    
• If you are planning to sell the property before the construction is complete, then it can be risky as the prices may rise or fall. However, it is highly unlikely that the prices will fall, but always be kept in mind.    
• If you go with the new developers in town, there are high chances that they can run out of funds, in that case, the construction will be ceased and you will not be able to get back your advance deposits as well.    
• When buying an off-plan property, you will not be able to see what you will be getting as the product. The only thing you have is the idea portrayed out of the developer's mind.    
• There is a slight chance that you may end up not liking the finished property as it did not meet your expectations due to several reasons including subjective and low-quality materials or defects.    
• When you buy off-plan property, it is not profitable to you for a while unless it is habitable for living in or renting out for the benefit. However, property inflation is always in the picture, in the case of the long-term run.    

How to Overcome Disadvantages of Off-Plan Properties:    

• Always go with experienced developers.    
• Keep in mind that it will take time, the construction will take longer than what is stated.    
• If you want to re-sell the property, it is better to wait until it is complete to avoid the risk.    

With all that covered, Happy Buying!