A Complete guide to buy an Off Plan Property in Dubai

It is essential to understand the real estate market from different dimensions so that you make an informed decision which you do not regret in the future whether you are a new investor, contrarian investor, or a home buyer. Some important points that have to be taken into consideration are:

• Off-plan V.s. Ready properties.
• Mortgage V.s. Sale properties.
• Dubai property investment map.
• Property market performance.
• Actual prices of the sold properties.
• Dubai property supply.
• Property price index.

Let’s split the tips into a few sections below:

1. The Prices of Off Plan Properties in Dubai:

• The price is one of the most important factors. Do not just look only at the property ticket-price. Make sure to know the price per Sq.ft of the property.
• Buying a low-ticket price property does not mean that you are getting a good price. Usually, it means that you are buying an expensive property when you calculate the price per Sq.ft. For example, in Dubai suburbs, you can buy a 1-bed apartment for 499,000 AED, but you are paying 1,158 AED per Sq.ft (approx.) since the size of the unit is 431 Sq.ft. whereas you can pay 1,192 AED per Sq.ft (approx.) and buy a property in Business Bay that is a developer community. 
• The fact is that you might be paying for an off-plan unit at the same price as a ready property. Hence, it is important to check the prices of the ready properties in the same area and have a look at the historical property transactions in the location of your interest. 
• First, understand the value proposition of the project you are buying in, then ask yourself, "Do I want to pay a premium amount for this value." e.g., Are you ready to pay this extra amount to invest in this luxurious development? Or you can have the same lifestyle in an adjacent building and pay less amount for that investment?"
   
• At this phase, it is advised to buy during the project launch because, for the last two years, developers have been giving great offers on the projects, such as 2- 4% of DLDwaiver or post hand over payment plans on the property. Hence to buy a property during launch might, later on, mean competing with owners who are ready to sell for an amount which is similar to your purchasing price value.
• Make sure for what you pay for. Are you paying for the Net Area which includes the liveable/internal area plus the balcony? Or, you are paying for the Total Area which includes the Net Area plus the utility area. Make sure that the price of the balcony Sq.ft is lower than the sq.ft price of the internal area while buying a unit with a large balcony or terrace.

2. The Developer of Property:

• If a developer has achieved success in a few projects, it does NOT necessarily mean that this developer will continue to succeed in all projects. So, always make sure to do your research when dealing with all developers.
   
• The delivery rate of the projects that were supposed to be handed over by 2017, H1 is 9.6% as per SIM (Smart Investment Map). So, try to find a developer with proven delivery time. You can check all the real estate developers with their project information on offplandeal.com.
   
• You should not go directly to a property developer. Instead, use a property real estate agent. The reason is:
• Dubai is a land of opportunities for investing in off-plan properties. First-time property buyers who are willing to buy an off-plan property directly from the developer of the property without consulting a real estate agent can be a bit risky method. The main objective of the real estate agent is to present properties based on the client’s interests. Free consultation from a real estate agent boosts client awareness on the finest projects among developers.
• Property developers are more interested in selling their projects by limiting the client’s ability to compare different projects by competing developers. A developer will not recommend a competing developer’s project even if the project is more suitable for the client and matches the client’s requirements. Agents work meticulously to satisfy their clients, hoping the client seeks to rent or resell the property.
• An agent’s consultation aims to understand the long-term financial goals of the client and develop an investment plan.  Agents study project developments, market supply & demand, developer reputation, floor plans and property locations. Understand the client and agent’s interest are the same because an agent’s future income relies on referrals and returning clients seeking to reinvest in the market.
• The agent fulfils total management of the transaction process, searching the best promotions offered by developers, negotiating prices, securing the best finances and interest rates on behalf of the buyer’s interest. Clients should likewise consult a real estate agent before purchasing a property.
• It is the agent who will sell or rent your property after the handover; so, we can establish that the agent will advise about the best property. Hence, it is wiser to build relations with agents in advance.
• The primary role of the property agent is to understand your needs and preferences and advise you accordingly based on his knowledge of many developers, projects, and the market landscape.
• Some developers have proven record in delivering specific living standards. e.g., Emaar mainly develops luxury property. You should avoid developers that haven’t delivered any project. You can also search for Google to know the reviews on the property developer that you think you should buy from.

3. The Area | Location:

• Never buy a property without visiting the location. Research on your own and also ask the property developer about the upcoming projects in the immediate vicinity which may also block your property’s views.
  
• Buying in a non-established area involves a higher risk when it comes to returning on investment. You cannot expect a good return until the area is established properly. In simple words, the return should increase once the community is ready or complete.
• Understand the current infrastructure and the future of the area of interest, e.g., upcoming parks, waterfront, brigades, schools, landmarks, Masjid, shops, metro stations and all the other location benefits.
  
• Buying off-plan or any properties next to landmarks have greater potential for capital appreciation or value, e.g., Blue Waters Island, the home of Dubai Eye, and Dubai Creek Harbour, the home of the next world’s tallest tower.

4. The Off Plan Project:

• Visit the project construction site to get an idea of the construction progress. Do not take it for granted, not all projects in Dubai are equipped with Gym or swimming pool. Moreover, not all of them have shops or a walk. Examine the uniqueness of each and every project you shortlist like for eg: City walk is offering freehold building in Jumeirah.
• Especially when purchasing a villa or townhouse, know the approved usage of the nearby plots by the municipality, e.g. DEWA, mosque, park, school, community centre, etc. Once the facilities and utilities are developed completely, it will enable you to avoid surprises and forecast future value.
• Old V.s. New, the demand deviates from current (old) projects to the new projects. Hence, the prices of the old projects will go to decrease. So it is advised to avoid buying in an area that has a massive incoming supply. This shows the number of new properties in each location in Dubai.

5. The Off Plan Property: 

• Inspect the layouts that define the livability, rentability, and saleability of the property. It is also recommended that you should avoid units with an extra number of bathrooms which do exist and also make sure that the balcony size is reasonable.
• Try to buy in a project where a show property is available. That will help you to get a better idea about finishing. In the case of villas, most probably your unit will have a different floor, view, plot or layout. 
• Request the approved site plan of the property by DLD. This will help you to see the dimension, the position, exact building, exact view and the direction of the unit with total size breakdown. In a care the actual layout or dimensions do not match the site plan, refuse to take the handover of the property.

6. The legality of the Property:

• Understand what payments you must make to be able to sell the property e.g., If you buy in Dubai Creek Harbour, you can sell the unit ONLY after you pay 30% of its valuation, and after the construction, the progress of property reaches 50%. Check the service charges, parking slots location and to any constraints or unusual clauses. The law gives the developer only one year if they delay the handover but in some case, they can delay the handover for up to two years. 
• The new property advertising law allows only registered projects to be advertised; however, visit RERA website or use our website to check the number, escrow account, status, and the construction progress of the project. Make sure that the property developer and the Master Developer are on the same page, and there are no conflicts between them.
   

7. The Payment Plan of the Off Plan Project:
    

The higher the hand-over or post-hand-over payment is, the safer your investment is, and the lower your opportunity cost is.  Opt for construction progress based payment plan instead of date based payment plan.  Nshama offers properties in Town Square Dubai with 90% on a hand-over payment plan for a limited time. Be careful when this kind of payment plans comes as they might bring the project prices down, as we know the fact that many buyers do not manage to make such big handover payment which may cause them to exit by selling their property for a lower price than the market price of the property.
 

8. Investment Return:

• Get familiar with the investment ratios such as ROI, NPV, IRR, and others. Some agents might present your ROI without including the service charges and the closing cost in the equation.
• Study the supply and demand. Around 26 projects shaping 4,968 units met the delivery deadline by 2017, H1 and, H1, 2017 launched 43 new projects composing over 13,708 new units. It is clear that the supply exceeds the demand currently. You might get a chance of negotiation as there is a strong competition between property developers. 

• Examine the capital appreciation and the expected ROI of the property, and consider the service charges; note that some developers charge separately for the parking maintenance.  

9. The Agency and Broker:

• Avoid dealing with agents who try to express the sense of urgency and scarcity.
• Try to deal with a large agency for dealing with small agencies might make you a “step in their learning curve/phase.” Dealing with a large company grants you a good opportunity which can benefit from the synergy of their big sales team and seamless process.
• Do not stick to only one agent, and always try to meet and listen to others, and most importantly do NOT betray your agent as you are going to lose more than what you think you saved.
   

10. Others:

• Have Plan B. You should buy a property that can be used later on in case it does not get rented or sold. Read buying property guides available online.
• Some developers try to charge 1,040 AED for Oqood again when you want to sell your off-plan property.
• Moreover, check offplandeal.com to know all the latest off-plan properties in Dubai with detailed information as we offer you all the latest off-plan properties in Dubai as soon as the developers announce it. Our expert agents will assist and guide you towards investing in an off-plan project that meets your requirement as well as budget as they have over 100+ years of experience in the off-plan market with no consultation fee.