Friday, June 21, 2024

Off-plan vs completed property: which one to buy and why?


Real estate in Dubai forms a property market consisting of built housing and under construction. Demand for both options is approximately equal and quite high. However, the cost of residential property depends on the stage of construction: whether it is a foundation pit or a suitable place to live. Somebody is attracted by inexpensive housing at the construction stage, while others are ready for commissioning. How to choose the most suitable one?

Criteria for choosing a stage of real estate development in Dubai

When you choosing residential property, it’s important to keep track of all the nuances, from data about the developer to legal aspects. But even in the conditions of a detailed analysis, it is difficult to determine the type of real estate. You can choose the most suitable options based on the following factors:

  • the number of current offers – first of all, it is recommended to assess the state and stability of the market, various layouts and sizes of areas;
  • the cost – based on the budget, you need to filter options for buying property, it is worth clarifying that at the construction stage, real estate will be much cheaper than finished,
  • payment methods — firstly you may discuss about the method of transferring money for the purchase. It can be either partial or full repayment in instalments;
  • security — you should check the information about the reputation of the developer and development, his previous projects and general information;
  • profitability — it is worth prioritising in a balanced way.

If you need real estate right here and now, it is better to give preference to ready-made housing stock, despite the overpayments. If it is possible to wait, then you can save money by purchasing housing at the construction stage.

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Real estate yield in UAE

According to statistics for 2021, the average profit from completed property is 9.6%. There’s better for buying an off-plan property – the yield is about 6.4%. Despite the resulting numbers, the second option is more suitable for investing. Depending on the stage of construction at which the purchase was made, the cost may differ by 10-50% down from the finished housing. For more accurate personal miscalculations, it is better to contact specialists.

Stages of real estate development in Dubai

Speaking about the stages of readiness, you need to clearly understand what is at stake. Each developer independently regulates the processes, but the general algorithm is very clear:

  • search and acquisition of a land plot, taking into account geological features;
  • terrain analysis of project creation;
  • obtaining a state permit for construction;
  • comprehensive preparation before construction;
  • direct construction;
  • connection to amenities;
  • commissioning.

Mostly sales open after receiving official permission for construction. This is due to the strict control of developers by government agencies.

Financial aspects of buying property in Dubai at different stages of readiness

Ready-made housing can be purchased at almost any time, and with incomplete property it is somewhat more difficult.  On average, construction takes about 2 years. In this case you can divide the payment into several parts. According to the classical scheme, initially the investor pays about 10-15% of the total amount of property in the UAE as an advance. The property is automatically assigned to the buyer. After a certain time period stipulated by the contract, another 30% must be paid. In the future, it is necessary to pay in equal parts monthly. The guarantors of the purchase of residential property are special bank accounts regulated by the state. Mostly, property owners at the construction stage do not pay taxes.

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What to give preference?

The choice between two formats of real estate should be balanced, reasoned and logical. The buyer must compare the advantages and disadvantages of completed and off-plan property, the risks and the likelihood of success. For a long-term investment with a large surplus, real estate under construction is perfect. Otherwise, ready-made real estate will be expensive, but it will be available immediately after purchase.

Stuart Wagner
Stuart Wagner
"Professional coffee fan. Total beer nerd. Hardcore reader. Alcohol fanatic. Evil twitter buff. Friendly tv scholar."

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