Off Plan vs Ready Properties in Dubai – Which One is Better?
Generally speaking, the property market in Dubai is typically divided into two categories: off-plan and ready-made properties. Off-plan are new property launches from the developers. Ready-made, as it sounds, are built properties, which can be new or previously owned in matured and established residential areas. So, off plan vs ready properties, let’s take a look.
Off Plan vs Ready Properties in Dubai
According to DXB’ “Off-Plan vs Ready Property Sales”, off-plan properties accounted for 56% (vs. ready-made 44%) of total sales volume in 2022, confirming that investors in 2022 prefer ready-made properties in Dubai.
Did you also notice? Over the 3 years, there has been a shift in demand (charts below) towards off-plan for apartments and villas in Dubai.
Learning the pros and cons of ready-made and off-plan in Dubai, and how they differ from one another, can help you understand your needs, risk appetite, and financial readiness. Below, we have listed the pros and cons of both, so you can have an overview of the two landscapes.
For an in-depth read on “Can the Best Off Plan Properties in Dubai be a Good Investment?” – Click here.
Ready-Made Dubai – Pros & Cons
|✅ Ready-Made Pros||❎ Ready-Made Cons|
|1. Established location||1. Price is generally higher|
|2. Buying a property you can physically see |
(know what you are getting into)
|2. Down payment is higher|
|3. Price is negotiable||3. Old design (May need renovation)|
|4. Investors can move in or rent it out immediately||4. Less payment flexibility|
|5. Immediate rental income||5. Pre-owned property|
|6. Get the highest LTV for bank financing||6. Pre-existing problems |
(Repair / maintenance)
Off Plan Dubai – Pros & Cons
|✅ Off-Plan Pros||❎ Off-Plan Cons|
|1. Price discount||1. Risk of delays (high probability)|
|2. First choice on unit||2. Risk of bankruptcy|
|3. Small down payments||3. Waiting time|
|4. Flexible payment terms||4. Nothing tangible|
|5. High return on investment (ROI)||5. Market fluctuation|
|6. Brand new and modern||6. Oversupply|
Besides the comparison, it is also crucial to keep in mind:
1. Market Cycle & Market Timing
The real estate market is a cycle that never goes away. Once an investor learns to identify this cycle, the old saying ‘buy low, sell high’ becomes much easier to achieve.
During a down market, you will probably get better deals in the secondary market due to an increase in supply, but when the market is booming, the off-plan developers may have incentives to draw in investors that can be a more attractive investment.
2. What are Current Similar Properties Selling For?
No matter what, do your homework and do not speculate. If you are looking to invest in a rental property, check how much the property rents out for so you can calculate the ROI and yearly cash flow. We have created a free cash flow calculator for both long-term rental and short-term rental to help you compare property performances, and ultimately, find that one deal that can offer you the best cash flow.
3. Available Liquidity / Mortgage Offers
What is the current interest rate environment? This will determine your monthly mortgage payments. Regardless, it’s important to know how much you can afford to borrow before you find a property. Ready-made and off-plan properties have different types of payment schemes, so it’s important to compare and understand these payments, and know when they are due to ensure you have enough liquidity and funds for them.
Don’t forget, it’s important to understand just how much funds you’ll need to fork over at the beginning of your purchase. In Dubai, a down payment on a property is typically 20% of the total value, and some off-plan developers can require you to put down up to 50% upfront. These numbers can add up along with extra associated fees, so make sure you have sufficient extra funds prepared.
That being said, look at both pros and cons, and buy within your own means.