Tax-free environment, high ROI, abundant opportunities – these are some of the main reasons that attract foreign investors to the Dubai property market.
Home to some of the most outstanding structures in the world, the emirate is bustling with residential developments in every part. These projects promise a luxury lifestyle with every facility and amenity one can imagine.
Coming to choices available for foreign investment in Dubai, the opportunities for investors, as stated above, are abundant. While this is certainly a positive sign for the emirate, investors can get overwhelmed when selecting the right project that has the maximum potential vis-à-vis ROI. The foremost, and the most important, thing for them is to decide whether they should choose a ready or off-plan property for investment in Dubai real estate market.
In this article, we have highlighted the pros and cons of both these options so that you can decide which one’s right as a foreign investment:
Off-plan properties refer to those units that are still under construction. The demand for off-plan properties in Dubai has seen a growth in recent years. As compared to the previous quarter, off-plan properties witnessed an 8.9% growth in terms of sales.
The biggest benefit and the most attractive feature of off-plan properties is that they are available at comparatively low rates. Since they are under development, they are priced lower than the market value. This makes them suitable if you’re looking for foreign investment options in Dubai.
Most residential projects in the primary market in Dubai are developed by globally recognised development firms. They are leaving no stones unturned to provide every facility to residents. Furthermore, they are highlighting the focal features of their projects aggressively on different platforms, resulting in an increased interest of buyers and investors for such projects.
This is why experts believe that off-plan properties can be sold at better rates once they are completed. Moreover, you may even start getting offers prior to their completion, depending on the project, its features and location.
There are different payment plans available for buying property in Dubai. Particularly, for off-plan properties available in the emirate, developers offer different convenient payment options. Some of them allow buyers to only pay 10% of the total cost of the property, while the rest of the amount is paid in fixed instalments that can last for up to 5 years.
As stated above, off-plan properties can be sold even before they are completed. If the project is located in a prime location and boasts top-notch facilities, interested parties will contact you for your purchased unit and make offers for it. However, it is important to note that some developers do not allow to sell properties before a particular time period.
As these properties are in the construction phase, needless to say, they will take time to complete. There can be delays, and construction work can come to a halt as well. Therefore, generating ROI through such properties can prove to be a time taking endeavour.
The risk factor with off-plan properties tends to be on a little higher side. Projects, as we just discussed above, can get delayed, and in some cases, completely shelved as well. However, bear in mind that you can always get your amount recovered provided the project has an escrow account.
You can find out how to deal with the cancellation of an off-plan project here.
While there may not be a monetary loss with the cancellation of the project, it can still cause a lot of grievance for the investor. They have to start again from the basics again and look for a new project for their foreign investment.
Ready properties, as the name suggests, are fully-constructed, ready-to-move units. It can be an apartment, villa, townhouse, duplex or penthouse. The market of ready properties in Dubai has always been on the higher side. As per the Dubai property market Q1 report, secondary marketing (ready properties) had a major chunk of sales, amounting to 64%.
Ready properties are considered safe for foreign investment as they tend to sell quickly. As the property is fully constructed, there’s no waiting period. The buyer reserves the right to sell their property at any given time, provided it’s not mortgaged.
The biggest benefit associated with ready properties is that they can be put up on rent to earn a passive source of income. Depending on the location of the property, its configuration and facilities available, it can generate a high rental yield.
Another way ready properties make for a suitable choice as foreign investment is that the investor doesn’t have to deposit the entire cost of the property at once. There are easy post-handover payment plans available for them to choose from. However, these plans vary from developer to developer.
There’s always an element of risk in the real estate sector. But, with ready properties, the element of risk is on the lower side. As the price trends in the Dubai property market look favourable after the COVID-19 setback, it can be expected that ready properties will see an increase in value.
Any type of property, regardless of its size, requires proper maintenance. Even if you have rented it out, you will have to take care of its overhauling. This can pose a problem for foreign investors if they do not live in Dubai. The option for hiring property management firms is always there, but it comes with an added burden on the pocket.
If you plan to rent the property you have purchased as a foreign investment, the biggest challenge is to find tenants. On paper, the process may seem easy. You just have to put up an ad, and you will be bombarded with offers. The real struggle starts when you have to screen them. There’s a lot to consider when choosing the right tenants for your property. Again, property management firms can do this job for you as well. But, the drawback is the added expense you will have to bear by taking their services.
In a nutshell, both ready and off-plan properties come with a set of pros and cons when it comes to selecting them as a foreign investment. The ultimate decision comes down to your preferences, and most importantly, the budget.
For more information or if you want to take a look at the best listings for properties in Dubai for both ready and off-plan properties, contact Zoom Property.