All you need to know on Off Plan and Ready Homes in Dubai
Posted | On 16-02-2018 | Read time about 5 Minutes
Buy a move-in ready villa or buy an off-plan unit? Is it hard to make a decision here? Apparently not. If you are looking at Dubai real estate market for investment, there are two ways you look at it. One, as a property investor, you would like to reap in the earning right away by letting the property out for rent. Two, you can sleep on it as long as you want to and cash out when the market has peaked.
The secondary or resale housing market reduces risk for time-sensitive buyers from purchasing units in off-plan projects that may be subjected to unexpected delays. On the flip side, new buildings that are ready for possession are more expensive. However, when supply exceeds demand all these can change, benefitting the home buyer. Real estate agents package their service with deals and offers that tempt investors to look at both kinds of properties.
Reputed builders are now offering villas and townhouses in gated communities with amenities that anyone having a family can quickly look at. The homes are built in modern architecture styles that make good use of plot area, giving children enough play area to run around and swimming pools that the entire family can make use of. With well-equipped gyms and community areas, health and wellness of the home owners are addressed. Gated properties also offer the much needed comfort for parents with young children as it gives ample space for their activities and yet give the security they need. Luckily, in a city such as Dubai, crime rates amount to almost nothing and residents have one less thing to worry about. Another selling point of community projects is the affordability. Mortgages are also easier to avail for ready-for-possession residential buildings that are rightly priced for working expats bringing their family into Dubai.
Theme based properties are generally built on large land areas in the outskirts. If they become part of a Downtown project, it becomes considerably more premium and affordability would be in the hands of high networth individuals. Golf course homes and beach homes make great holiday homes but if one is looking for rental yields, smaller units with quicker access to schools, public transit, shopping malls, beach, equestrian sports and other general activities will fetch better ROI (return on investment). If theme based homes are in an excellent location for an active lifestyle, then rental income and capital appreciation are very lucrative for the buyers.
If a buyer is looking at a home in Dubai as a primary residence, then capital appreciation aspects need to be looked at. Some of the questions that need to be addressed for a ready to move/resale/secondary market property:
- Where is it located – is it closer to my workplace or my spouse’s workplace? Is it closer to my kids’ school? Do I have quick access to hospitals? Do restaurants deliver food to my building?
- Size of home – Is it enough for me/my family/guests? What does the maintenance cost look like? Does it justify the amenities compared to competitor’s offer?
- Who is the builder – reputation, rating, loan availability for the project
- How old is the building? How long has it been on the market? Has home inspection done?
- Has the title clearance been looked into for a resale home?
In case, a buyer is looking at a second home for investment only or for a holiday home the below questions should be considered for off-plan units:
- Location: Is this in a new development zone? What kind of development projects are undertaken in this neighborhood?
- Time: When is the project likely to complete? What does the market trend look like for completion of similar projects?
- What is the rental yield % in this area? Anything above 6% is attractive enough to invest. They can go up to 9% in a really good area.
- Track record of builder in delivery of projects on a timely basis and review contract for default clauses. This also helps in securing mortgage from banks who look at builder’s reputation.
- Payment terms: How much is upfront payment? What percentage of the total amount is each installment and how many installments? What is the cancellation policy and enforceable penalties (if any) of the project?
- Financing options: Make sure you have clarity when you talk to your lender or bank about the project, implications if any unforeseen changes in purchasing decision and the extent of loan you will be able to raise for a particular investment.
Ergo, time and budget will become the driving factors for the buyers to narrow down their choice of buying property to live, buy-to-let or invest.
In Dubai real estate investment is fairly straightforward. Real Estate Regulatory Authority (RERA) monitors the property registration and has a centralized database of all property owners to ensure that the property is safe and secure to purchase in the secondary market. Property owner’s right tenancy contract is registered with the Dubai Land Department and as per the law, the rental cheques are to be delivered under owner’s name, protecting the individual’s investment. Also, in Dubai, there are a number of laws and regulations put in place by the government to secure buyer protection in off-plan properties. The construction cycle of the project are stringently monitored by the authorities. Alike ready unit, off plan investments are registered with RERA and Oqood paper is issued to the owner which confirms that the property belongs to the particular investor. And if an investor plans to mortgage off plan construction in Dubai, then that is also possible.
With these insights, an investor will find it simpler to purchase either type of properties – ready or off-plan, in Dubai compared to rest of the world. Visit MyVilla.com for more valuable tips and choice of properties from reputed builders and real estate agencies.