COM­MENT

Zaki Ameer, founder of Dream De­sign Real Es­tate (DDP), re­veals how to suc­ceed with off-plan prop­erty in­vest­ment and avoid­ing pit­falls

Construction BusinessNews Middle East - - Contents -

DDP’S ZAKI AMEER TALKS ABOUT HOW TO SUC­CEED WITH OFF-PLAN PROP­ERTY IN­VEST­MENTS

Buy­ing off-plan has been bit of a "dirty word" since the dark days of the prop­erty crash in 2008, when scores of buy-tomip in­vestors were left out of pocket. How­ever, as spec­u­lated, off-plan buy­ing is mak­ing a come­back in 2018. Most ma­jor de­vel­op­ers now of­fer gen­er­ous pay­ment plans for their off-plan projects, yet in a bid to avoid a re­peat of the crash, there are re­stric­tions in place to pre­vent an in­mux of buy-tomip in­vestors hik­ing the prices up for the end-user (the peo­ple that ac­tu­ally want to live in the prop­erty).

For in­stance, the UAE Cen­tral Bank’s rule al­lows only 50% loanto-value ra­tio, mean­ing you need to stump up 50% of the prop­erty value in a de­posit. This avoids in­vestors putting down low 10% de­posits, only to re­sell the prop­erty at a sky­high price at the ex­pense of the per­son who ac­tu­ally wants to live in the build­ing.

When it comes to pur­chas­ing off­plan, of­ten large in­vest­ment com­pa­nies will be given the op­por­tu­nity to buy a num­ber of units for a dis­counted price pre-launch. The re­main­der are usu­ally then opened out to in­di­vid­ual in­vestors at the launch it­self. Some­times, agents do get pre-launch homes to sell and they will try to sell these to se­ri­ous in­vestors al­ready on their data­base. Ei­ther way, the real es­tate agent will pro­vide with all of the rel­e­vant off-plan mar­ket­ing mateprop­erty rial and you will have the chance to as­sess the units on of­fer, usu­ally by in­spect­ing a show home. The show home is de­signed to be a typ­i­cal prop­erty equipped with the level of specil­ca­tion you can ex­pect from your own in­vest­ment.

The ear­lier you get ac­cess to the prop­erty for sale, the greater the chance of se­cur­ing one of the bet­ter units and of get­ting a dis­count on the price. Your ne­go­ti­at­ing po­si­tion should be deter­mined by the de­mand the de­vel­op­ment is at­tract­ing. The higher the de­mand, the less chance you have of ne­go­ti­at­ing the price down. Think­ing of pur­chas­ing off plan? Below are some tips to help your de­ci­sion-mak­ing process.

While you will need a hefty lump sum in sav­ings as a de­posit, the good news is that this doesn’t al­ways equate to 50% of the prop­erty value. In some in­stances, the cash de­posit re­quired can be as low as a 20% ini­tial pay­ment. How? Well, the de­vel­op­ers recog­nise that not many peo­ple have as much as a 50% de­posit saved and are com­ing up with their own pay­ment plans to get would-be buy­ers a foot on the lad­der. These plans in­clude 30:70 plans where you pay 30% lrst and the re­main­der on com­ple­tion, and many pay­ment plans now al­low you to pay in 10% in­stal­ments as each phase of con­struc­tion is com­pleted.

Buy­ing off-plan al­lows you to ar­range your lnances bet­ter and means you don’t have to be lum­bered with a loan for the whole amount of your prop­erty. But there are, of course, ad­van­tages to buy­ing a ready prop­erty: with house prices down, cou­pled with tricky off-plan mort­gage rules, there has been a boom in ready prop­erty sales. How­ever, it’s gen­er­ally cheaper to buy off-plan (up to 30% below mar­ket value), and that gap is ex­pected to get big­ger as de­vel­op­ers work to drive in­ter­est in off-plan in­vest­ment.

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