Off-plan real estate in Dubai: pros and cons

Owning real estate in the UAE offers excellent prospects for foreign investors: they have the opportunity to become residents of the country, receive passive rental income or use a loyal tax system. Off-plan real estate in Dubai has become especially popular among buyers. But what exactly makes buying real estate under construction so popular? This is an excellent investment that can provide more favorable conditions, as well as offer income not only from rent, but also from an increase in the market price of the object. In this article, we will talk about real estate under construction in Dubai, as well as consider the advantages and disadvantages of such a purchase.

What is off-plan property in Dubai

Off-plan properties are properties under construction that can be purchased directly from the developer. A wide variety gives investors the opportunity to choose housing for every taste and budget. The most obvious advantages of buying off-plan housing in Dubai is that unfinished properties are much cheaper. Moreover, after the property is completed and put into operation, its price increases greatly. After the completion of the construction, the investor receives a finished housing, which can be rented out or resold at a higher cost. Investments in real estate in Dubai under construction will not be affected by market fluctuations, as the investor will not have to increase payments, but the object he pays for will still rise in price.

The pluses also include payment for off-plan real estate in Dubai. Many developers offer their clients housing under construction with various benefits and convenient payment. Developers work in a competitive environment, so they try to offer better prices and convenient payment schemes, such as 50% upfront and 50% upon completion, or a 1% per month payment plan. In addition, off-plan homeowners have the opportunity to participate in the planning of their architecture. Normally, these changes have to be made to a home after purchase, but when investing in off-plan property in Dubai, buyers can shape their homes to suit their needs as developers are open to changes to existing plans.

Risks when buying off-plan real estate in Dubai

One of the most common risks is construction delays. Many investors are not sure that the project they have chosen will be completed exactly on the set date. That's why it's important to research the developer of the property you're considering investing in first. It is a good idea to check the company's track record and make sure that dealing with them guarantees compensation in case of delays. Another common risk is changing market conditions. The dynamics of declining real estate prices may lead to the fact that the cost of purchased off-plan objects will be lower than their original price. This applies to completed properties as well, but unfinished properties suffer more because they are harder to liquidate.

Completion guarantees for off-plan projects in Dubai are an important issue monitored by the Real Estate Regulatory Agency (RERA). It has introduced various measures that every developer must comply with. For example, the developer is required to own 100% of the land on which the project is built, as well as complete 20% of the construction, deposit 20% into an escrow account, or a down payment of 20% as a bank guarantee. Along with all the above requirements, RERA requires developers to provide a 10% performance guarantee. For added protection against fraud, delays and cancellations, buyers must only pay with DLD-approved banks. The developer from whom the off-plan property is purchased will be able to access the contributed funds only after reaching a certain stage of construction, approved by a special consultant.

Taxes when buying real estate off-plan in the UAE

Like ready-made properties, properties under construction in Dubai come with certain fees. This includes:

• A property registration fee of 4% of the value of the property payable to the Dubai Land Department;
• Registration of Oqood in the amount of AED 3,000 to be paid to the Dubai Land Department.

It also happens that 50% of the commissions are paid by the developers themselves in order to attract customers. Some go so far as to pay the entire registration fee to the Dubai Land Department (DLD) instead of the buyer, saving at least 4% on costs.

Although buying a property under construction in the UAE is a risky undertaking, it opens up many opportunities for the buyer. The least you can get from buying real estate under construction is to save money, and in a more successful scenario, even make a profit. Investors can protect themselves from many risks simply by following certain rules and entrusting the task to a UAE Assets specialist. Our company employs qualified specialists who will help you choose the right property and complete the transaction. Thanks to the help of certified agents, buying real estate in the UAE under construction will not be a problem for you. To contact our company, use the contact phone number or leave a request on our website. We will contact you during business hours and answer all your questions.