The Guides

Navigating Dubai's off-plan market

Luxhabitat gives you a step by step guide to investing in Dubai's luxury off-plan properties.

Words by D. Prakash in The Guides · Jun 21st, 2016

Here's a few pointers on how to choose the perfect off-plan property in Dubai. In Dubai, Off Plan Investment is now a firmly established mode of purchase and experienced investors are engaged fully in the methodology and the opportunities it presents.

What Classifies As An Off Plan Property?

Take advantage of the growing Dubai skyline and a maturing real estate market.

An off-plan development in a nutshell, is a property before the structure has been constructed upon it. Pre-constructions are usually marketed to real estate developers in the form of developments. Examples in Downtown Dubai include the following:

Why Invest In Dubai?

Dubai is due to outperform the UAE economy this year.

An improved economic outlook as a result of rising oil prices, rising property prices and strong returns from key asset classes have helped Dubai emerge as a prime location for real estate investment.

The Dubai real estate market has been experiencing a number of positive signs recently especially in the last quarter with selected prime real estate locations such as Downtown Dubai, Dubai Marina, Palm Jumeirah and Dubai Hills, where investment activity and property values are currently rising again.

The Economist Intelligent Unit forecasts that Dubai’s growth will outperform the wider UAE Economy in 2016 helping to cement Dubai’s position as a ‘safe haven’ for property investors. This fact is reflected in the recent sell out of off-plan schemes, within 24 hours of launching on projects such as 52|42 at Dubai Marina and Fairway Vistas at Dubai Hills.

Things To Consider While Investing In Dubai Off Plan Properties:

1) Choose a well-established developer, a good location and a strong local market. Off plan property investment is a good way of securing good returns from Dubai’s property market.

Buying off plan allows you to select the best units within the development, whether it’s a villa or an apartment. You will have a greater choice of units if you enter the investment stage early.

Investors shouldn’t feel disheartened if they enter the investment at a later stage, as it has been known for some Developers to hold back their ‘premium’ units to tempt investors at a later stage of the build. To have first pick, it helps to create a partnership with a trusted real estate agent who will be able to get you into the launches for various developments.

2) Do your research

If you decide to buy off plan property, make sure you do your research on the developer and the development. Look at their historic projects and transactional performance. Is the standard of the completed product good? Did they deliver the project on time? Our New Developments advisory service can assist you with your due diligence.

Tips For Purchasing The Right Unit:

1) Purchase as early as possible.

Prices rarely stay low for long and as development progresses prices begin to rise. Early investors inevitably see the greatest returns.

2) Identify the right unit

Pick the best units with the right layouts, positioning and views offer highest capital appreciation in the smallest time frame.

3) Watch the price increase.

- As construction begins the value of the unit rises.

- Completed show homes tend to mean buyers are taking less of a risk as they can see the finished product.

- Price appreciates as more units sell.

- Units transact faster as people see them. With more units sold prices of remaining units rise.

- A early investor selling now even before construction has completed could see gains of more than 30%.

-When the construction is completed Investors can expect to see significant capital appreciation. Case studies indicate in some cases capital appreciation rates of between 40%-100% due to:

a) The greater appeal of a completely finished, brand new property, which has been well constructed with collateral warranties in place.

b) A property that is ready to move into.

c) A percentage rise in the wider property market over the term of the construction.

Financing And Tackling Payment Plans

Creekside 18 offers a payment plan where you pay 30% on completion.

Developers have put in place some very attractive payment plans with percentage payments over the term of the construction. Payment plans tend to differ from project to project, with some more attractive plans offering 40% post completion payments over two years.

Third Party Bank Funding finance is also available for off-plan projects normally on a 50% Loan to Value (LTV) basis. Our New Developments Advisory team would be more than happy to assist with your funding enquiries.

Real estate investment is all about asymmetric risk and reward. As Russell Sage said “Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity had devised. It is the basis of all security and the only indestructible security.”

In Dubai, Off Plan Investment is now a firmly established mode of purchase and experienced investors are engaged fully in the methodology and the opportunities it presents. Off Plan investment can be a sound financial decision and can deliver a robust asset class diversification, which has been known to outperform all other asset classes over time.

If you are interested in off-plan investments please contact Luxhabitat.