Off Plan Properties in Dubai
Off-plan properties have seen a rapid increase in popularity in recent years. But what exactly is an off-plan property and what are the pros and cons?
What does off-plan mean?
Off-Plan property is a property before a structure (such as a house or a residential complex) has been constructed on it.
What is an off-plan contract?
An off-plan contract is called a Sales Purchase Agreement (SPA). In this document the following details (among others) are present:
- The sum of the downpayment.
- The title deed and the details of the parties involved.
- The payment schedule for the remaining payments.
- Termination clause.
- Details of the Escrow account (the bank account to which the payments have to be made).
- The completion date of the project.
What does buying a house off-plan mean?
When you buy a house off-plan, it means that the building has not yet been completed at the moment of the purchase, or the construction hasn’t even begun. Often these properties are bought directly from the developer and in most cases, buyers will have to pay a 10-20% downpayment while also having to sign a Sales Purchase Agreement (SPA). The remaining payments depend on the agreement with the developer.
Why do people buy off-plan properties?
- Off-plan properties are cheaper than constructed properties.
- Attractive payment plans are available in many forms. There are options to pay 50% as downpayment and 50% on completion but there are also options where you can 1% per month until completion. There are even options that allow you to make payments after completion which are called “post-handover payment plans”.
- High Return On Investment (ROI) as the value of the property is very likely to increase upon completion.
- Buyer protection laws have been created in recent years by the RERA (Real Estate Regulatory Authority) and Dubai Land Department (DLD). These laws protect buyers against delays, fraud, and even cancelations. An example of this is the obligation of the developer to maintain an Escrow account for the payments, which is a bank account at a neutral bank where the developer receives the payments for the off-plan property.
- Abundance of choice in the off-plan market as the number of projects is continually growing.
What are things to consider when buying off-plan?
- Delays are common with off-plan properties and can lead to extra costs if you plan to live in the property yourself, as you will have to pay for additional accommodation for the time of the delay.
- The final result of the property might differ from what you see in the brochure or promotional video. Always do your research when choosing a developer.
- Negative Return On Investment (ROI) is a possibility as the market can change while the property is being built.
- Cancelation of the project could happen in case the developer goes bankrupt or problems with the documentation arise.
What are Off-Plan Properties in Dubai?
Off-plan properties in Dubai are all properties that you can buy before construction or when under construction. At Korter you can simply use the off-plan filter and you have access to the current supply of off-plan properties in Dubai.