Dubai has become the best place to invest and get double returns, whether you are investing in commercial real estate or residential real estate.
Comprehending the Concept of Off-Plan Property:
When an investor or a buyer purchases an unreconstructed/raw property from the developer or the first owner, it is called an off plan property. Investors or the buyer has to pay either 10 or 20 percent down payment at the time of buying the property. Along with the down payment, the buyer also has to sign a SPA contract (sales purchase agreement).
WHAT ARE THE MANY BENEFITS OF BUYING AN OFF-PLAN PROPERTY?
It Saves Money and Funds:
Buying a fully constructed development or project is more expensive than buying an off-plan property. When you buy off-plan property, you are investing at the earliest stage; this gives you the advantage of buying the property at the lowest possible rates. You can also seek out the best one among the lot, which gives you an edge over all the others. Getting the best among the lot gives you the best returns on your investments.
Selling at the most Optimum time:
The best part of buying an off-plan property is that you can assess the market and sell the property at the most optimum time, even if the project isn’t complete yet. If the market is performing well, and you are getting a hefty profit on your property that it’s the best time to sell it. This is an advantage you don’t get with any other type of property. Many investors have opted for this option and also have received considerable profit on their investment.
Off plan has Lesser up Front Costs Compared to the developed project:
It totally depends on the developer, but most of the time the buyer has to pay 10 or 0 percent down payment at the time of actual buying; the rest of the payment follows the development plan. But even then the up-front cost is relatively lower than developed projects.
Every coin has two sides; every story has two points, so does off plan property. There are potential risks of buying an off-plan property as well.
Delay in Completion of the Property:
There are many factors that affect the development of any property, whether it’s commercial or residential. This is the reason time of completion may vary from what was predicted in the first place. To avoid this, the investor should always check the credentials of the developer before doing business with the said developer. Also, sign a contract to ensure that you get considerable compensation for the delay you faced on your project. The track record of the developer matters as well, make sure that you have researched a lot about the solid background of the development before assigning him the project and before buying from him as well.
Variation in the Market:
Inflation of the property sector can also put a damper on your investment. It can also deem your property worthless or reduce its cost less than what the buyer has invested. Since off plan properties more difficult to liquidate than ready one’s the risk is higher with an off plan when the inflation strikes the market.
To keep the developers in check, the RERA offers many measures. Every developer must meet these measures before taking on any project. For instance, 100 percent of the land must be owned by the developer; the developer must pay 20 percent down payment before selling or construct 20 percent of the project before selling. Moreover, all developers are instructed to give performance guarantee of up to 10 percent.
When to Sell:
To ensure that the property market of Dubai stays consistent and stable, many measures have been put in effect. It’s required to have 40% of the property paid off before selling, the percentage may change from developer to developer, but the gist of selling off plan property is the same. The process after this procedure is almost the same as selling a completed project. You meet the buyer, both parties agree on payment and contracts are drawn. NOC is applied and the new buyer signs and takes over the property.
The best part is the 4% DLD is also paid by the first buyer, and the second buyer has got nothing to do with it.
All in all, investing in Off plan properties is quite a profitable prospect if one is aware of the market as well as the know-how of hiring a developer.