Dubai’s real estate market has always been an attractive destination for investors looking to benefit from the city’s economic growth and development. When it comes to property investment, two popular options in Dubai are off-plan and ready properties.
For those who are new to property investment or are unfamiliar with the Dubai real estate market, Off-plan properties are those that are yet to be completed and are still under construction, while ready properties are ready for immediate occupancy.
As an investor, choosing between these two types of properties can be challenging. While both offer different advantages, it’s important to consider your investment goals and risk appetite before making a decision.
Let’s take a closer look at the advantages and disadvantages of investing in off-plan vs. ready. By considering these factors, investors can make an informed decision that aligns with their investment goals and risk appetite.
Off-Plan Properties: Weighing the Pros and Cons
Off-plan properties have become increasingly popular among investors due to their potential for high returns on investment. According to the Dubai Land Department (DLD), the off-plan property market in Dubai continues to show strong growth, with 35370 off-plan sales transactions worth $19 Billion, were recorded in 2022.
The figures clearly indicate that off-plan properties remain a popular choice for investors in Dubai due to affordable prices, growing economy and attractive lifestyle.
However, investing in off-plan properties also comes with its own set of advantages and disadvantages. In this section, we’ll take a closer look at the pros and cons of investing in off-plan properties in Dubai.
Lower Purchase Price
One of the primary advantages of investing in off-plan properties is that they often come with a lower purchase price than completed properties. Developers offer attractive payment plans, such as paying only a percentage of the total price during the construction phase, with the balance paid on handover or post handover. This payment structure allows investors to secure a property at a potentially lower price and benefit from capital appreciation as the property value increases over time.
Potential for High Returns
Off-plan properties have the potential for higher returns on investment, especially if the project is located in a prime location and developed by a reputable developer. As the property value increases over time, investors can sell their property for a profit or earn a high rental income.
Investing in an off-plan property allows investors to customize the property to their liking. They can choose the layout, finishes, and fixtures, allowing them to create a unique and personalized space.
Changes in Market Conditions
Any investment carries a certain level of risk. One of the risks associated with property investing is the potential changes in market conditions. If the market experiences a downturn or the demand for the property decreases, this may impact the investment prospects. However, changes in the market are expected especially when investing long term, as the asset will go through good and bad economic periods.
Potential Delays in Completion
Although delays could occur for off-plan property developments, the investors can take comfort that the Real Estate Registration Agency (RERA) actively monitors the progress of construction works for each off-plan project in Dubai.
To minimize the risk of delays in property construction, the investors should be aware of the developer track record and reputation before making a purchase.
Navigating the Dubai property market and assessing the potential of off-plan properties can be tricky, especially for those without prior experience. In such situations, seeking the guidance of professional services like Asette can be the difference between a successful investment and a costly mistake.
Ready Properties: Discussing the Pros and Cons
Ready properties are properties that have been built and are ready for occupancy or rental. In this section, we’ll discuss the advantages and disadvantages of investing in ready properties in Dubai.
Guaranteed Rental Income
Investing in a ready property in Dubai can provide investors with immediate rental income. Ready properties can attract tenants and generate income from the day of purchase, providing a guaranteed income stream.
According to Dubai Land Department data analyzed by Asette team, average rental yields for residential ready properties in Dubai ranged between 6% and 9% in 2022, depending on the location.
Ready properties are often located in established communities, which can provide a sense of community and amenities such as schools, shopping centers, and recreational facilities. These factors can make a completed property more attractive to potential tenants, resulting in higher rental yields.
No Construction Risk
Investing in a completed property in Dubai eliminates the risk associated with construction delays. Investors can see the finished product before investing, providing a level of certainty and security.
Higher Purchase Price
One of the primary disadvantages of investing in completed properties is the potentially higher purchase price compared to off-plan properties. Completed properties are usually priced higher due to their immediate rental income potential and established location.
According to the DLD, ready property transactions in Dubai totaled AED 11.2 billion in Q1 2022, representing a 74% increase in sales value compared to the same period in 2021.
Investors may have limited options for customization when investing in a completed property. The layout, fixtures, and fittings have already been selected by the developer, limiting the ability to personalize the property to attract potential tenants.
Maintenance and Repair Costs
Investing in a ready property in Dubai can occur maintenance expenses more frequently, which can eat into the rental income. Investors need to factor in these costs when evaluating the investment potential of a ready property.
No upfront payment plans
Investing in a ready property, will require full property price to be paid to the seller. Investors with available funds can settle the payment at once. However mortgage investors will be looking to pay higher upfront costs for mortgage than getting on an off-plan property ladder.
Summing It Up
Both off-plan properties and completed properties have their own set of advantages and disadvantages. It’s essential to consider your investment goals, risk tolerance, and financial position before investing in either option. Conducting thorough research, evaluating the developer’s reputation and track record, and understanding the terms and conditions of the contract are crucial before investing in any property.
Thinking of investing in Dubai off-plan properties? Asette got you covered!
Asette offers a comprehensive property investment solution for the UAE Off-Plan Market. Our platform facilitates vetted and analyzed property options and connects you with legally certified escrow accounts, access to freehold properties for foreign nationals, flexible payment plans with vetted developers, and protection for off-plan investors through UAE laws and regulations. With personalized investment options, exclusive property data, and a commitment to safety and security, Asette is the right choice for your property investment needs.