What’s a smarter decision to make?
A question that naturally arises in the minds of every prospective buyer while choosing a property is “what’s a better option: off-plan or ready property?”
Over the years we have seen market trends favor both, and truly so as both have their respective advantages and disadvantages and therefore it is important to check the benefits and risks of both. While deciding, it is imperative to look into the current market conditions and make an informed decision that best benefits you. Also one should consider not only the immediate benefits but have a long term perspective and measure them as well.
On an international scale, there certainly is a risk associated with an off-plan property mostly due to delays or cancellations. But in Dubai, these risks are greatly reduced through the Real Estate Regulatory Agency (RERA) and Dubai Land Department (DLD) guidelines alongside the usage of escrow accounts. Authorities monitor the developers’ financial stability and also mandate them to provide a bank guarantee amounting to 20% of the project cost to get an assurance of project completion.
The Benefits of Picking an Off-plan Property
- Easy Entry: One can make a small down payment of 5%-10%.
- Flexible Payment Terms: In certain cases, developers offer post-handover 2-5 year payment plans. The advantage of living in the property or rent it out before paying it off.
- Rental Income: This greatly helps to support paying off for the property; a benefit only off-plan property offers.
- Custom Developer Offers: Developers have custom offers such as waiver of a percentage of the registration fees and/or discounting the service charges for 3 to 5 years period. This again aids in reduction your initial payout to the developer.
- Lower Price Advantage: Properties under construction are priced significantly lesser than ready properties. Early stage buyers can take advantage of this while also enjoying property value appreciation over the course of construction of the project.
The drawbacks of Off-plan property
- Things Can Change: You are forced to make your decision purely on basis of promotional material shown by the builder, such as brochures, promo videos, etc. leading to unpleasant surprises on quality, time of delivery, etc.
- Location Growth Lockdown: Purchasing a project in a neighborhood that is presumed to grow over a short span can have its own challenges arising from much slower growth, thereby adversely effecting your payment plans and leading to discontentment and stress. Another aspect being incomplete infrastructure in the neighborhood leaves you wanting for more all the time.
The Benefits of Picking a Ready To Move-in Property
- What you see is what you get: This helps make best informed decisions as against a project that is at its early stage that leaves you with a lot of guess work. One can check all parameters and make a purchase with complete information leading to joy and peace.
- Location Advantage: In most cases, ready projects are in prime locations wherein all infrastructure requirements have already been met and therefore make living convenient, comfortable and enjoyable.
- Quicker Capital Appreciation: Yes! The cost is going to be higher than an off-plan project, but the returns to are greater. You can expect higher rental revenues and take advantage of constant market value appreciation
- A Set Life: Things are all well put together. Right from day one that you move-in and all amenities add up to fulfilling life’s joys. So does the neighborhood as they provide for the other parameters such as schools, banks, restaurants, entertainment centers, shopping malls, etc. Life is now set.
Given the current market scenarios wherein ready property prices have decreased, buyers are choosing to go in for the ready to move-in options while developers are making it lucratively attractive to the buyers as well. The Expo2020 is around the corner, and surely the real estate market is going to see a surge with over 25 million tourists from over 150 countries coming into Dubai. All of whom would need a place to stay. So, it’s a good time to buy. Whether you opt for the off-plan option or ready to move-in one, it’s recommended you do your due diligence by associating with an experienced broker who is more familiar about the market trends.
There is an equal amount of opportunity for either option that needs to be analyzed to make the right decision. Doing due diligence with the help of experienced brokers is key, keeping in mind the current market trends.
Wish you the best on your plans and stay safe and stay happy.