Buying off plan has its risks and rewards. The main benefit is typically a lower price. Developers usually offer between 10 and 30 per cent lower prices for off-plan and under-construction properties. The closer to completion, the higher the price (typically) becomes.
1. Choose your Estate Agent Smartly: While buying a home there are several tips to choosing a great Real Estate Agent. Initially, you should make sure that your Real Estate Agent for an off-plan property is licensed. Next, you should make sure that you read contracts and documents carefully before signing and enlist the help of an experienced Lawyer. Ask your Lawyer for explanations to ensure you understand –
- The costs involved and what they will cover;
- Any limitations;
- Lease or Settlement time frames and any cool off periods.
2. Secure your Financial Freedom: Financial freedom means that you get to make life decisions without being overly stressed about the financial impact because you are prepared. Developers will not be permitted to access the funds until certain agreed stages of construction are completed.
- Beware of potential financial risks:
- When buying a property off plan you need to pay 20 to 80 per cent during construction with the rest due at completion. Most common these days are 50/50 payment plans.
- If you plan to pay the whole amount in cash your concerns are limited to the aforementioned risk (which is plenty for most), but if you require a mortgage to complete, there is the risk that your financial circumstances may change.
- Location, location, location! :
Buying properties next to landmarks have greater potential for capital appreciation.
The rise in a project's capital value will depend solely on the locality. If major projects such as transportation or universities are going to be built in the locality, the property's worth will exponentially increase without fail. So, the investors need to thoroughly check the area's profile before making the purchase.
If you buy in a non-established area, then do not expect good return till the area is established. In other words, the return should increase once the community is established.
- Be careful of dishonest developers: Before entering into a contract with a developer, performing a background check is essential. You will want to research past projects and assess the chances of the developer going into liquidation before the project is complete. If you are doing this without expert assistance, visit any of the developer’s previous work to inspect the quality, and seek references from previous clients
- Only authorized developers can advertise a property for sale: Since October 2016 regulations came into effect, which requires developers and brokers to get approval from Dubai’s Real Estate Regulatory Authority (RERA) before they advertise a property in the media. The new regulation is aimed at cracking down on fake property ads, protecting both buyers and genuine developers.