Off-plan properties are under construction or still need to be fully developed. You will get the numerous benefits of investing in 0ff-plan properties, including high returns, good rental yields, and flexible payment plans. Investors looking to invest low amounts with long-term installment settings are more likely to invest in off-plan properties.

Another notable aspect of off-plan properties is their luxury amenities and modern designs. These are all based on contemporary ideas meant to improve the residents’ overall living and facilities.

Pros of Investing in Off-Plan Properties

Off-plan property investments increase opportunities to gain good returns. Here, we compiled a list of benefits of such investments.

Lower Costs Than Usual

Dubai’s attractive off-plan properties start by offering among the lowest entry points in the market in cash down payments- almost 20% at times. It drastically reduces the initial financial burden. Structured payment plans let the investors pay in installments at intervals relating to milestone construction commissioning events, furthering the cash flow availability until handover.

Off-plan property prices are comparatively lower than secondary properties. Developers offer discounts and affordable installments. Since off-plan is a long-term investment option, the developers spread installments over approximately 3-5 years with 10-20% down payments.

Potential for Higher Returns

Everyone wants good returns for their investments. Off-plan properties are a great way to achieve higher ROIs. Even if the property is taking time for construction, you are gaining an 8-10% increase in returns annually. Selling the property after 3-4 years can benefit you significantly in terms of capital appreciation. You can also sell the property before the handover and during the construction process after paying the specific amount of installments.

Flexible Payment Plans

The most attractive aspect of off-plan investments is flexible payment plans. Only some developers offer 10 90 payment plans in Dubai. However, investors usually must pay 20% of the total amount as a downpayment. The remaining payment will be made in mutually agreed-upon installments. Off-plan properties are the best way to own property with little investment.

High Rental Yields

Off-plan property investment often results in high rental yields. All areas are in demand, and people are rapidly moving and starting their lives in Dubai. Properties with multiple tenants, such as apartment complexes, office spaces, self-storage units, and RVs, often yield the highest return on investment. So, if you start investing in off-plan property today, it will give you high rental yields in a few years.

Contemporary Amenities

Developers incorporate contemporary amenities into the off-plan properties to attract investors and tenants. Approximately all off-plan projects from renowned developers offer smart home technologies, state-of-the-art fitness centers, luxurious swimming pools, and more. Additionally, the off-plan properties feature access to high-class educational institutions and recreational centers.

Cons of Investing in Off-Plan Properties

Off-plan property investment is a great way to achieve long-term benefits, but sometimes, things go differently than we expect.

Changes in Market Dynamics

One key challenge of investing in off-plan properties is the potential for changes in market dynamics. If property values decrease after the initial purchase agreement, the original price may also reduce the potential return on investment. The original prices were used to calculate installment payments.

Delayed Construction or Handovers

The other disadvantage of buying off-plan property is that the handover may be delayed. There are several reasons for the delay, such as a developer’s miscommitment, economic factors, or natural disasters. However, this rarely happens in Dubai because of the strict rules and regulations set by the RERA.

How to Finance Off-Plan Property in Dubai?

You can easily finance off-plan property in Dubai with a mortgage financing option. But obviously, specific terms and conditions will apply. Dubai banks help to finance off-plan properties with mortgage options. However, these loans are subject to a 50% loan-to-value ratio, meaning buyers must cover half the property’s cost upfront and then apply for the mortgage. Financing is often restricted to projects developed by well-established companies like Emaar, DAMAC, Nakheel, and Dubai Properties.

Tips for New Investors

We have some tips for new investors considering the above pros and cons. Here are a few.

Do Your Market Research

The first and most important thing to do is conduct market research. Learn about ongoing and upcoming property developments, price comparisons, developers to consider, and the latest real estate trends. You should also research market forecasts and whether it is the right time to invest.

Understand Legal Regulations

Dubai has unique legal rules and regulations as a global real estate hub. Understanding the legal framework is mandatory for both experienced and new investors. Thankfully, the UAE government has a strict and favorable legal framework that ensures the security of the money you invest. Key considerations include the distinction between freehold and leasehold areas. Everyone can get ownership of freehold areas, while long-term leases will be allowed for Leasehold areas.

Choose the Location Wisely

When it comes to the location, it’s all about your preferences. Dubai has all premium locations that attract investors. However, some areas are closer to the top landmarks, some have serene views, and some are entirely island-like, such as Palm Jumeirah. Now, if you want to rent out your property, choose the one where renting out property is usual. If you intend to sell the property in a few years, then it should be where prices increase quickly to make maximum profit.

Setting Investment Goals

Before exploring Dubai’s real estate market, it is essential to define your investment goals. Whether you seek long-term capital appreciation through ROI, steady rental income, or a mix of both, your objectives will make your investment strategy easy. Additionally, considering the preferred rental yields will help you identify the most suitable properties that align with your financial aspirations.

Plan Your Budget

Planning your budget and keeping room for extra or sudden expenses is essential. However, your budget depends on your evaluation and requirements. You must break down your budget for a downpayment, mortgage fees, monthly installments, and brokerage. Monitor your income and expenses to understand your financial situation.

Now Make Your Decision!

Knowing the pros and cons of investing in Off-plan properties would help you consider the factors you may have yet to learn. Make your decision wisely and choose the best brokerage company to get what you want. Our experts at 100 Keys will be more than happy to assist you in investing your amount in the best ongoing off-plan property.

FAQs

How does off-plan payment work in Dubai?

Dubai offers the best payment options for off-plan properties. Developers usually require a 20% downpayment, which means the buyer will pay 20% of the total amount as a downpayment. The remaining 80% will be adjusted in mutually decided installments.

Is it worth buying off-plan in Dubai?

Dubai is a hub of growth, and project developments are increasing rapidly. Considering this situation, Dubai is the best city to invest in off-plan properties and enjoy higher capital appreciation and strong rental yields.

What is the 60/40 payment plan in Dubai?

The 60/40 payment plan is a popular option for off-plan properties in Dubai. It requires buyers to pay 60% of the property’s price during construction and 40% upon handover. Reputable developers like Emaar, DAMAC, and Nakheel often use this plan.