Off-Plan Properties In Dubai vs. Ready Properties – Which One Should You Choose & Why?
According to the top finance companies in Dubai, both off-plan and ready-to-move-in properties are known to fare well in the city’s real estate market. However, there has long been a debate over which option is the best for investors. While some reports claim that most investors prefer ready properties, others state that off-plan properties are the most sought after. The trends can fluctuate based on market conditions and several other factors. However, realistically speaking, both the options are excellent, but they both have some pros and cons. As an investor, before you choose any particular type, you should find out more about both and then make an educated decision.
An overview of Off-Plan Properties In Dubai
Before you go searching for off-plan properties in Dubai, you need to know what they are and how they are different from ready properties. Simply put, off-plan properties refer to real estate before construction has taken place. Off-plan properties are marketed to early adopters and real estate developers as developments. This allows buyers to secure favorable financial deals from the lenders. Property speculators and investors can make substantial financial gains by purchasing off-plan properties.
According to the top finance companies in Dubai, off-plan properties can sometimes be more lucrative as an investment tool than ready properties. That is primarily because developers who deal in off-plan properties often provide discounts and financial incentives to the early adopters. Moreover, in a rising market that has a development cycle of around 12 to 24 months, there is a significant opportunity for capital growth. Off-plan properties can be considered extremely attractive if they are located in an area that has a high level of infrastructure such as important roads, highways, universities and so on.
Much like any other investment tool, off-plan properties have their pros and cons. It is crucial to know these before you decide on getting off-plan properties in Dubai.
- A significantly lower price tag than ready properties
- Attractive discounts and incentives
- Small down payments (anywhere from 5% to 10% of the project cost)
- Flexible payment terms which might include a 2 to 5 year payment plan
- A wide variety of units to select from
- Customized offers from developers
- Shorter purchase timeline & streamlined purchase process
- The risk of cancellations and delays
- Sub-par quality
- Buying decision based completely on 3D videos, photos, and brochures
- Market fluctuations
- Slow location growth
- Inability to earn rental income right away
- No immediate return on investment
An overview of ready properties in dubai
Ready properties refer to properties that have already been constructed. Many of the top finance companies in Dubai advise beginner investors to go for ready properties. There are countless reasons for that. If you are just trying your hands at real estate investment, the chances are that you do not want to take a lot of big risks. As discussed above, off-plan properties do possess some risks that you won’t have to face when investing in ready properties. Besides, buying and selling ready properties is the oldest trick in the book! Below are some of the pros and cons of investing in ready properties:
- The buying decision is made after physically seeing and inspecting the property
- Location advantage in that completed properties are usually set in prime locations
- The ability to use it from the moment you invest
- Immediate income generation through renting or leasing
- Higher LTV or loan-to-value ratio (applicable when you try to get a mortgage from the bank)
- Significantly high returns during market fluctuations (when prices spike)
- Higher prices than off-plan properties in Dubai
- Higher down payment (typically 25% of the project cost)
- Less payment flexibility
- Might be per-owned & limited unit selection
Off-plan vs. ready property – factors to consider before making a decision
Most of the top finance companies in Dubai will tell you that the city’s real estate market is an investor’s dream! Because of so many prime locations, world-class developers, and exciting new projects, investors from around the world get drawn to the city. However, to become a successful real estate investor in Dubai, you would have to make all the right decisions in terms of which properties you choose. When choosing between ready and off-plan properties in Dubai, make sure you consider the following factors.
As mentioned above, both off-plan and ready properties have their fair share of risks. You can reduce your exposure to risks by hiring the right real estate agents such as the ones you will find at RiseUp. A reputed real estate company can help you make investment decisions. However, if you are choosing to go solo in your investment journey, make sure to assess the risks of each property before making the final decision.
Even investors need to stick to a budget. More often than not, the price tag decides which property you can get. Off-plan properties tend to be priced much lower than ready properties. However, as an investor, you need to think long-term. You cannot simply focus on saving money at the present. Make sure you also think about how this decision will affect your future. Hiring a consultant might be a great help to you. At RiseUp, we have investment advisors who can help you make critical decisions such as this one.
You are not an investor if you do not think about the profit! Regardless of whether you choose ready or off-plan properties in Dubai, you should be able to hit your profit margin at the expected time. While ready properties will make you profits almost immediately, off-plan properties will take time. However, some calculations will help you determine whether or not that wait will be worth it in the long term. You can even consult one of the top finance companies in Dubai to arrive at a sound decision.
You might already know that a property depreciates in value if you don’t keep up with fixtures and modifications. Today, developers put a lot of thought into designing buildings, and they make sure that every property comes with the facilities and amenities that buyers want. However, you should also check whether or not these properties offer you the option to make changes in the future. Many investors look for properties that can be modified if and when needed to increase the property value over time.
Few additional things to know
Real estate professionals who deal with both ready and off-plan properties in Dubai have seen the market swing in favor of both. Although the off-plan property sector saw a slump after the 2008 financial crisis, the market has made a comeback now thanks to various efforts made by the government. RiseUp specializes in both ready and off-plan properties. However, we always advise investors to consider their risk appetite and financial situation before making a decision between the two.
Off-plan properties might seem more risky as compared to ready properties. However, thanks to regulations imposed by the Dubai Land Department and the Real Estate Regulatory Agency, these risks are significantly minimized. The law requires developers to deposit 20% of the project cost as bank guarantee. On the other hand, the authorities are obligated to make sure that the developer has enough resources and funds to complete the project on time.
Why you need expert guidance
Dubai’s real estate market can charm both amateur and experienced investors. That means the competition is increasing every day. Navigating the rules and regulations while also battling the competition might be too much work for most investors regardless of how experienced they are. That is why having the expertise of a professional real estate company can prove to be extremely helpful.
RiseUp is one of the leading real estate agencies in Dubai. We have an in-house team of agents and investment experts who can make your job so much easier. We are also among the top finance companies in Dubai. That means we can offer you sound advice regarding your investment decisions. Our in-house talent makes it possible for us to find the properties that will be perfect for you!
Besides real estate agents and investment advisors, RiseUp also has experienced professionals in the field of property management and portfolio management. That means we can continue to offer our services even after you acquire the property. We can manage the day to day and ensure a steady stream of profit is generated. We can advertise your property and help you look for tenants or buyers. If you are struggling to keep up with property maintenance, we are here to do it for you.
On the other hand, if you want to take your investment career to the next level and expand and diversify your investment portfolio, we are here to guide you through that as well. So, no matter what your needs are, RiseUp is the one stop shop for all your real estate investment needs. Get in touch with us today!