Ready-Made Properties and Off-Plan Projects: Market Trends in 2022-2023
Over the past 3 years, prices of ready-to-use properties, namely apartments, villas and commercial units, have been steadily increasing. Thus, in 2020, the average price per sq. ft. in these types of properties was AED 736 (USD 200), whilst in 2021, this increased by 18.3% to AED 870 (USD 237), and in 2022 — by 15.7%, reaching AED 1,007 (USD 274).
In 2023, the overall growth trend of the emirate’s property market has continued, with 9,473 transactions completed in January 2023, which is an increase of around 70% compared to the same month in 2022. At the same time, the number of property purchases under construction grew by 68.4% (from 3,344 to 5,632) and completed properties rose by 73.2% (from 2,218 to 3,841).
Ready-Made and Off-Plan Properties: Main Advantages and Disadvantages for Buyers and Investors
Property in Dubai attracts buyers and investors from all over the world due to the high quality of living in the emirate, which is recognised as one of the world’s top 5 cities, as well as lower real estate costs compared to Europe and other popular destinations across the globe, and the city also has one of the world’s highest rental ROI’s.
The key question facing potential home buyers in Dubai is whether to acquire a completed or an off-plan unit. Both are excellent investment options, however you should take into account your budget, purchase goals and an efficient investment strategy. In general, a completed property is costlier, but provides greater stability and comes with less risk. You can start using it immediately rather than waiting several years for the completion.
An off-plan property could be a better option if you don’t have to move in immediately and are willing to wait several years before making a profit on the resale and rental. The main risks in purchasing off-plan properties are that you are purchasing a property that does not yet exist and is only shown in advertisements.
NBD! Due to measures taken by the Real Estate Regulatory Agency (RERA) and the Dubai Land Department (DLD), the likelihood of construction being cancelled or frozen has been minimised. However, the risk of a delayed construction still remains and that the final result may not correspond to the design presented in the original marketing materials.
Advantages of Off-Plan Properties
The value of properties in the initial stages of construction is usually lower than that of completed properties, however this will grow as the development is completed. Once the project is completed, or at a later date of construction, you can resell the property at a higher price and make a substantial profit.
More choices. At the project launch stage you can choose the option with the most privileged location in the complex, with the most attractive view, the best area and the most comfortable layout for you.
Advantageous payment plans and incentives from the developer. Most developers offer flexible payment plans to prospective buyers in interest-free installments with a down payment usually not exceeding 5–20%. You will also be provided with additional benefits, such as partial or full exemption from DLD fees, free maintenance for several years, and many other perks.
Disadvantages of Off-Plan Properties
Risk of failing to meet construction deadlines originally stated by the builder.
Not being able to verify the quality of the final product and its compliance with all parameters shown in the brochure, 3D video and other promotional materials.
Risk of changes in market conditions and the price of the property in the long term.
You will only be able to obtain a long-term residency visa in the UAE once the project is completed.
If you are planning to move to Dubai soon, you will have to incur substantial rental costs in addition to regular off-plan property payments.
Pros of Completed Properties
The opportunity to view the property as it is before making an informed decision to purchase.
Exact understanding of additional costs, including maintenance fees.
Location in developed areas. Generally, ready to move-in projects are located in areas with established infrastructure, such as public transportation, shopping, recreational areas, educational and medical facilities nearby.
Long-term residency visa for UAE residents immediately after purchase. Foreign owners of completed homes priced from AED 750,000 (USD 204,000) are entitled to a 2-year renewable residency visa, and with a minimum investment of AED 2,000,000 (USD 545,000) you can obtain a 10-year Golden Visa, which covers immediate family and household members. Therefore starught after the purchase of ready-made property you will be able to move to the UAE as a family.
Ability to start generating a stable rental income as soon as possible after the deal is signed. It is recommended to use professional property management services in order to set an optimal rental cost and find a reliable tenant as quickly as possible.
Possibility to resell the property at any time.
Cons of Completed Properties
Higher purchase price compared to properties under construction.
