Founder I HR Director
When it comes to buying property in Dubai, there are two main options: off-plan or ready to move in. Choosing between the two can be a hard decision to make. It is primarily influenced by the purpose of the investment and the financial benefits it provides. Both have their pros and cons. In this blog post, we will take a look at the pros and cons of each type of property purchase, so we can help you make an informed decision about what is right for you.
Off-plan properties
Investing in off-plan property involves buying a property before it is built. This is desirable in areas where demand is high and purchasers want to secure a future property. After completion, the investor may decide to sell or hold the property for personal use or rent it out.
Advantages of investing in off-plan property.
- Investors have a variety of units to choose from within a tower or community, especially if the project has just been launched. They can secure the best option to suit their needs and wants.
- Properties still under construction are priced significantly less than ready properties. There is a higher probability of a capital appreciation of the property upon completion. Because of the increase in the market value of the property, it can be sold at a much higher price.
- Buyers can look for prime units that will likely yield a higher return on investment (ROI) once completed.
- Developers offer some easy payment plans at no interest. They can just require a 20% down payment or less, with the outstanding balance to be paid upon the completion of the property. Some projects may have a post-handover payment plan of 2 to 5 years. This can help ease the financial burden for property seekers.
- Some developers in Dubai offer incentives such as waiving 4% Dubai Land Department (DLD) fees when purchasing an off-plan property.
- You can have your preferred set of features and fittings that may not be possible once the construction has finished.
However, there may be risks associated with purchasing an off-plan property.
There may be delays or cancellations of the project. However, in Dubai, this risk is minimized through regulations imposed by the Real Estate Regulatory Agency (RERA) and the Dubai Land Department (DLD), as well as the use of escrow accounts. Developers are required to deposit 20 percent of the project cost as a bank guarantee, and the authorities ensure that the developer has sufficient funds and resources to complete the project.
When deciding on an off-plan property, consider the time it will take you to receive the property, the availability of funds, your preferred location, profitability, the developer’s reputation, and the quality of other completed projects before making a final decision. Choose the option that best meets your current needs, but most importantly, make sure the property you want to buy is being built by a reputable property developer.
Ready-to-move-in properties
Ready-to-move-in properties are the ones that are ready for immediate use or handover. Since it is already completed, payment is usually required all in full. You can opt to purchase the property with a mortgage. However, a 25 percent down payment will be required and the balance of the sale price will be paid over several years depending on your mortgage terms and conditions.
Advantages of buying a ready-to-move-in property
- Buyers can physically see the property and know exactly what they are buying. This enables the buyer to make an informed decision on their investment and eliminate any doubt.
- You can immediately start to generate rental income when you decide to lease out the property.
- Buyers can get a higher loan to value (LTV) ratio for ready properties, making it easier to get a mortgage from the bank.
- Ready properties are often in prime locations with completed infrastructure. You are buying in an established neighbourhood. There will be amenities already available like schools, malls, and restaurants and might not always be available when you buy off-plan.
Disadvantages of ready-to-move-in properties
- The price is generally higher. Therefore it may not be an ideal choice from an investment and appreciation potential point of view.
- The buyer does not have much flexibility to choose the floor or configuration of the property.
- They have less flexible payment terms.
Conclusion
So, which is the better investment for you, buying off-plan or ready to move in? Both options have their pros and cons, so it depends on your specific needs and what you’re looking for. No matter which route you choose, our team at Elan Real Estate can help you make the process as smooth and stress-free as possible.
Give us a call today to discuss your investment needs and let us help you find the perfect property!
