An off plan property is a house or an apartment that you purchase before it is constructed and in some cases it is not even constructed yet. You find their architectural plans, 3D models, and descriptions but not actual units. Such properties may comprise any type of real estate such as apartments and penthouses, townhouses and villas.
The real estate market in Dubai is still expanding, and off-plan transactions have become 63 per cent of all property transactions in 2024 compared to 54 per cent in 2023. Let’s walk through what are off-plan properties and how do they work in Dubai, and why they might be a smart way to invest and build your financial future.
The significance of Off-Plan Properties in Dubai:
No moment can be more thrilling to invest in Dubai in its flourishing real estate market than the present. In February, alone, individuals invested AED 53.3 billion in properties. Although there are fears that houses are becoming too expensive, investors are confident of the long-term prospects of Dubai. Prices are expected to increase since property deals increased by 31.2 percent as compared to last year in Dubai. If that interests you, let’s discuss what you can do with off plan properties in Dubai for success in 2025.
Purchasing an Off Plan Property in Dubai:
In order to buy an off-plan property in UAE, you must pay a fee of 4 percent to register the property and AED 3K to register the Oqood contract. This is an e-system in Dubai that is involved with the registration of the sale of off-plan properties. You should however be aware that in a majority of the cases, the builders themselves contribute 4 percent to make the property more appealing and affordable to purchase. Purchasing an off-plan property in Dubai will look like the following:
Step 1: Study Communities and Newest Projects:
Through market research, you will get to know the kind of off-plan property that you unconsciously want. They might be apartments, townhouses or villas. Instead of the real site, the contractor or the builder will present to you rather 3D rendering and detailed architectural plans because they would be under construction. It is at this stage that you need to examine the sizes of units, number of rooms, finishes and details just to make sure that it is something that you would like to invest in.
Step 2: Know Payment Rights and Legal Rights:
We discussed the 4 percent payment that the builder will do. In addition to that, you are going to pay the Oqood. It is a system that will treat both the buyers and the developers equally and in case of problems, you can run to RERA and sign. It contains a reservation form (containing your details and payment plan), a Sales and Purchase Agreement (SPA), an important document that consists of all the details, including property price, completion date, etc. They would need your passport, Emirates ID, salary slip and bank statements to be able to use the mortgage service in this process.
Step 3: Off-Plan Agents Consultation:
The developer or the builder should be good and the project would be good. This is why, never stop researching on the off-plan agents you deal with. Dubai has some big shot names such as Emaar, DAMAC, Nakheel, Azizi and Roots Heritage. Before you decide whom to work with, you may check their portfolio, past records, budget, timeline and all such things. Today, there are websites online such as Google Business Profiles which indicate the views of the people regarding the businesses.
Step 4: Adhere to Sales and Purchase Agreement (SPA):
It is imperative at this point to follow the provisions of the Sales and Purchase Agreement (SPA). Popular plans are the 80/20 scheme whereby the buyer puts down 80 per cent of the property price when the construction is still in progress and the rest 20 per cent upon completion and the property is handed over. The other alternative would be the 1 per cent per month payment scheme where the purchaser pays affordable monthly instalments during the construction process. Normally, the buyers would be expected to make down payments of about 10-20 percent of the property price, but this can be different according to the developer and the project conditions. Whichever payment plan is chosen, it is still the buyer who has to pay the agreed amount of money as indicated in the SPA.
Pros and Cons of Off Plan Properties in Dubai:
The vibrant real estate market of Dubai still attracts the interest of local and international investors, and off-plan properties are becoming a favorite option. Nevertheless, there are advantages and disadvantages of off-plan properties, as they are listed below:
Advantages:
1) Cheap Prices and Payment Plans:
Competitive pricing is among the key advantages of off-plan properties. The developers can be found offering good prices to the first investors and therefore one can acquire a property at a price that is below the price it will be in the future. Flexible payment plans are also available which mostly last many years. This will help the investors to preserve their money.
2) Potential of Capital Appreciation:
When buying an off-plan property the buyers are able to enjoy the capital appreciation. The property value also tends to increase during construction of the property and this enables the investors to get a huge payoff on the property when it is sold or when it is completed.
3) Tailoring and large Variety:
Off-plan purchase gives a buyer a wide range of units, including preferred location, design and vistas. The developers in particular cases too offer customization where the investors can personalize their interiors and the finishes as per their desire.
4) Modern Buildings and Structures:
New developments are provided with modern and advanced architectural designs and the newest infrastructure, such as smart house technology, energy-efficient systems, and recreational facilities of high quality, to facilitate the quality of life.
Disadvantages:
1) Delay and Uncertainty in Construction:
The risk associated with the off-plan investments is the construction delays as this is one of the main risks of the investments. Unexpected events, such as a change in regulation, financial problems, or the supply chain, may influence the delivery of the project.
2) Market Fluctuations:
The basis of off-plan property is market condition. The economic recession, shift in demand or oversupply in the industry may cause reduction in the property values and this may affect the profitability of the investment.
3) Developer Reliability:
The investor must judge the developer very well in the aspects of credibility and track record. Buyers will face legal and financial problems when the developers default in their promises or when they face financial difficulties.
4) Minimal Sources of Funding:
The off-plan property can be more difficult to finance than a finished property. Some banks are able to use stricter lending criteria or limit the loan to value ratio of properties that are not complete.
Future forecast of Off-Plan Properties in Dubai:
It has been forecasted that the economy of Dubai will increase by a large number in the year 2025 and cross the number of 4 million by 2026. It will result in an increment of 5 to 8 percent in the property prices, and hence off-plan property investment is currently one of the best ventures to invest in. You may contact Roots Heritage Realty and we will advise you on how to go about it.
Final Words:
Investors and homebuyers have a chance to enjoy modern living, a flexible payment scheme, and high ROI via the off plan properties in Dubai. It takes the proper planning that involves researching communities, learning about legal protection as well as selecting trustful developers, but the advantages are worth the risks when applied prudently. And as the population of Dubai is increasing and its real estate market is changing, off-plan investments are about to develop further. This implies that it is high time to consider this opportunity and get a chance to be a part of the next-gen of Dubai.
FAQs
Do I get a guarantee that my development will be completed?
The government (RERA ) has set measures like asking for 20% down payment as bank guarantee and more, ensuring an off-plan project in Dubai will be completed as promised.
How do I verify the credibility of developers in Dubai for off-plan property investment?
They always have a portfolio of their completed projects where you can see their timely delivery details, track record of all projects, and the companies they have previously worked with. To further verify them, check their registration with RERA.
Can I buy off-plan properties in Dubai as a foreigner?
Yes, they can buy off-plan properties in freehold areas like Dubai Marina, Palm Jumeirah, and Downtown Dubai with complete ownership.
Which areas do I find projects for off-plan investment in Dubai?
Here is a list of areas in Dubai with most off-plan projects:
- Dubai Marina
- Downtown Dubai
- Dubai Creek Harbour
- Dubai Hills Estate
- Jumeirah Village Circle
- Business Bay
- Dubai South
- Damac Island
- Emaar South
- Jebel Ali Village
Do I also get a mortgage to finance an off-plan property in Dubai?
Yes, but mortgages are limited to projects of tier 1 developers like Nakheel, Meeras,and Dubai Properties, etc.
What is the meaning of buying an off-plan property at launch?
It means that you have purchased it within 24 hours of its completion.
When can I sell my off-plan property?
Once you have repaid 30% of the property price, you can sell it. Emaar and some big brands charge 30% but it varies from builder to builder.