Invest wisely in off-plan property to reap good returns
Dubai is the most populous city in the UAE. Once a major transport hub for passengers and cargo, the city is now powered by tourism, real estate and financial services. Though the city started its early development based on oil export revenue, it is now known for its skyscrapers and high-rise buildings — especially the world’s tallest building, the Burj Khalifa.
Off-plan: the best plan
Before a building structure has been constructed, a property is called off-plan. This kind of real estate business is more popular due to its capital gains. Specifically, if the off-plan property is surrounded by infrastructure already present in the locality or is going to be constructed in the upcoming years, the investor’s capital gain is very high. In a city like Dubai, getting an off–plan property at a lower price, with good infrastructure and selling it over a period of time is more profitable than buying an already constructed one. Hence, this kind of real estate has become a major revenue earner in the city.
How to buy
In order to purchase an off-plan property, investors have to approach the project developers. Without the actual physical building in sight, the developers will have to make a sale based on the location of the property and its aesthetic and sophisticated designs. Once the investor is convinced about the property and its value, they need to deposit only the off-plan price which is sometimes only 20 to 40 per cent of the purchase price. The rest of the price is payable after the project is complete.
Off-plan property law
Investing in real estate can be a cause of insecurity for some. To promote more financial security and transparency in the real estate industry, a law was passed in Dubai. The law entails that anyone purchasing an off-plan property in Dubai will make payments to banks approved by the Dubai Land Department (DLD), rather than directly to the developer. Developers will not be permitted to access the funds until certain agreed stages of construction are completed and verified by a project consultant. A few banks such as Dubai Islamic Bank and HSBC have been approved while others are waiting for approval from the DLD. Since foreign ownership has become legal in Dubai, this law has helped investors gain maximum security in off-plan investments.
In case you are looking to accelerate the project’s value, take a look at the following stages:
early purchase
Choosing the correct project which has the possibility of higher gains at the correct time is a major step with respect to off-plan projects. If the project promises greater gains in the near future, its worth would skyrocket. Hence the buyer has to purchase the project at the accurate time.
Location, location, location
The rise in a project’s capital value will depend solely on the locality. If major projects such as transportation or universities are going to be built in the locality, the property’s worth will exponentially increase without fail. Hence, investors need to thoroughly check the area’s profile before making the purchase.
development matures
As the development begins to take shape, the value of the units begins to increase. A completed show home is normally available for viewing at this stage and buyers are taking less of a risk as they do not need to rely entirely on plans.
Unit sales increase
As more units are sold, the price of the remaining units rises. Units sell faster when buyers are able to physically see them. There is often a phased payment structure in place which mirrors the increasing value of the property. To the early investor, this means that if you decide to sell your property, it will be worth considerably more at this stage than when you made your initial purchase and paid the deposit.
Developers will not be permitted to access the funds until certain agreed stages of construction are completed and verified by a project consultant