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