When is the right time to buy offplan properties

Why timing is one of the most important elements when investing in real estate. Time and again, our fellow realtors discuss about whether to invest in a ready property or offplan property. However, essentially buying an offplan property totally depends upon its correct timing and the property itself that you are buying.

There have been numerous cases in the past where out of rush of emotions or FOMO effect investors have jumped into a flowing market and bought offplan developments that are not best priced or selected unit that are from the left-over inventory.

In order to simplify the offplan property buying we have categorized the properties into three different segments when it comes to timing. The first and foremost is the launch, now of course there is a reason why there are large queues lined up before the launch of sought-after projects. This is because at the launch, the prices are the lowest, and investors often tend to get additional benefits like DLD waivers and service charges waives. Long term investors who tend to focus on appreciation of their investment, keep an eye on the launches and invest at the launch price. Similarly, the launch prices of a newly planned master community have even higher potential of appreciation than the launch within an established community.

The second category is of buying offplan is when the construction has started or achieved 50%. At the start of the construction, which is generally within three to six months post launch the prices are relatively higher about 5 to 10% only but the investor is analyze the progress of the project and they are assured that all compliance and permissions (which generally take most of the time) are sorted out.  When investing with the 50% construction progress also, the prices usually hike up a little more than previous, but you are closer to the completion which would start earning you rental yields if you intend to rent it out when it is ready.

The third category offplan is when the project is almost ready for completion or soon to be handed over. Here, the developers at times give you post-handover payment plans, which helps in managing the cash flow and for the end users who intend to live-in and investors who would like to rent it out for about next 3 to 5 years, this stage of entry is ideally suited. However, the only drawback at this stage is the fact that you will have limited options to explore since the availability is at times largely sold out.

In Dubai Real Estate market, there are few resale transactions also recorded which are at different stages of offplan development. However, the payment terms in resale and primary sale are very different, which is why, generally the users prefer primary sales over others.

Although, there are various other factors as well that contribute towards the appreciation potential of an offplan project, but the stage of entry surely underwrites your profits in the most prominent manner.