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Is it Good to Buy Off-Plan in Dubai?

Is it good to buy off-plan in Dubai? 
What are the risks of buying off-plan?

Is it Good to Buy Off-Plan in Dubai? Much like investing in ready-made properties, choosing the best off plan properties in Dubai can be a wide chase. That said, we consulted Facebook and Reddit forums, and reviewed discussions to find out how people really feel about off-plan properties in Dubai. While many shared their frustrations on massive delays and false promises from developers, some did have success stories on their return on investment (ROI).

Let’s take a look…

“Bought an off-plan villa with Emaar in 2019, was supposed to receive it this September but it was delayed till 2024… This puts a big dent to my plans and finances, as I will have to continue renting for two more years. When I tried to argue with them, they said that they’re within the contract details, because it mentions only the estimated handover date, and not the designated date… Should I just wait? Take it to court? Ask them for a replacement villa instead? If anyone can help, please lmk.”

“I bought off plan in January 2022. The property was supposed to be ready in March but wasn’t available till October 1st. There were loads of problems with getting bad information from the agent, different floor, different layout, confusion around payment schedule, a long snagging list. I was ready to sue them in the summer and take a big loss. The property has however now been handed over and in value risen from 1.8 million to 2.3/2.4 so potentially a 30% rise in less than a year since moving from off plan to complete. So for me, it was a stressful experience and the agents in particular lied about everything. Financially though it has worked out well.”

What we find intriguing is how picture-perfect these new off-plan projects are being marketed, only to hear endless complaints (fair enough, it’s Reddit) on investors’ horrific stories with the developers. Are these deals too good to be true? Can off-plan properties be good investments?

Is it Risky to Buy Off-Plan??

If you’re looking to invest in off-plan properties in Dubai, you definitely want to avoid the pitfalls mentioned earlier and trust us, those were just 2 comments of the many. Plus, it is important to know their benefits and risks, so do your research.

Off Plan Properties Dubai – Advantages

1. Price Discounts– Some waive 4% DLD and/or 2% agent commission
– Ongoing promotions
2. First Choice on Unit– Variety of options, floor plans (esp. after launch)
3. Small Down Payments– 5% -10%
– Gives more time to get finances in order
4. Flexible Payment Terms– Some offer Post Payment Plans (2-5 years after completion)
– Payment plans depending on developer
(10:90, 20:80, 30:70, 40:60, 30:70)
5. High ROI– Capital appreciation
– Rental income for investors
6. Brand New– Modern, smart homes
– Less fixes and maintenance
– Some offer 1-year warranty on repairs and maintenance

Off Plan Properties Dubai – Disadvantages

1. Risk of Delays– Uncertainty of completion
– Paying more rent while waiting for completion
2. Risk of Bankruptcy– Risk of cancellations
– Developer might go bankrupt or fail to complete the development properly
3. Waiting Time– Waiting for the entire development and amenities to finish  
– No immediate ROI
– Opportunity cost of investing your money elsewhere for a quicker return
– Investors can’t move in or rent it out immediately
– Can affect rental potential  
4. Nothing Tangible– Buying based purely on brochures, photos, and videos
– Sub-par quality
– Amendments to floor plans, finishes & fixtures after purchase
5. Market fluctuations  – Slow location growth
– Market appreciation not guarantee
– Pool of buyers may want to sell (reaching completion) to profit or because they cannot settle payment, leading to oversupply
7. Oversupply– Can lead to fall in property value
– High level of competition between investors for tenants

How to Reduce Risk When Buying Off Plan Properties in Dubai

Truthfully, not all off-plan properties are created equal. Here are some important tips:

1. Developer’s Track Record – Research the developer’s delivery and completion time on past projects for punctuality and level of quality.

2. Review Sale Purchase Agreement (SPA) thoroughly – Will you be compensated for any unexpected or unscheduled delays? Is there a late payment fee waiver? Is the developer registered with DLD? Is there an escrow account for funds to be transferred? An escrow account is a government account that collects all investors’ funds to build that project.

3. Hire a property lawyer to review the SPA.

4. For investors, make sure to research and compare rental prices for ROI and cash flow.

5. Get as much information from Facebook and Reddit groups on developers’ reputations and investors’ non sugar-coated experiences. This is seriously helpful.

Last Thoughts

After weeks of vetting through investors’ discussions, off-plan properties can look attractive as investors can enjoy initial appreciation by getting in early during the construction phase.

The reality is, each investor has a unique financial situation and risk tolerance. There are always trade-offs to cheaper off-plan prices, if you can take on the risk, long waiting period and the hassle of unexpected surprises, the capital appreciation on the right development may be worthwhile.

What’s your experience with off-plan property investments in Dubai ? Did you make a killing or still have buyer’s regret? Share with us below!

Next: Which One Do You Pick? Ready Made or Off Plan Properties in Dubai

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