Should you invest in a ready or off-plan property in the UAE?

Buying a property is a very important decision that takes considerable financial planning and often involves payments over a long-term period. Most first-time home buyers in the UAE will at some point wrestle with a dilemma: to purchase an off-plan or ready property.

Let’s get the biggest source of confusion out of the way: an off-plan property is one which has not been completed yet; a ready property, as the name implies, is one that has already been built and is ready for handover and immediate use.

This key difference should help make the complicated decision to buy property in the UAE a little easier because if you are buying a property to live in immediately, you will need to buy a ready property. However, if you are thinking of putting the house up for rent or planning to flip it (sell for a profit), an off-plan UAE property can provide you with higher returns.

Let’s take a look at the pros and cons of buying a ready or off-plan property in the UAE:

Off-plan properties

Pros:

·       Can cost significantly less

·       Brand new design and construction

·       Buyer is the first owner of the property

·       Property can be customized

·       Smaller down payments

·       Flexible payment terms – usually without the need for a mortgage

·       Usually: higher lifetime return on investment (ROI)

Cons:

·       Risk of delay and cancellations

·       More vulnerable to macroeconomic conditions and market movements

·       Longer time to completion and often slow area growth

·       No immediate ROI

Ready properties  

Pros:

·       Can be inspected before purchase

·       Can be bought in prime locations where infrastructure is already developed

·       Buyer (or tenant) can move in immediately after the paperwork is completed

·       Can be put up for rent immediately

·       Higher returns when market prices spike

·       Higher loan-to-value (LTV) ratio (when applying for a mortgage from the bank)

Cons:

·       Often cost significantly more

·       Down payment is higher

·       Less flexible payment terms

Both off-plan and ready properties in the UAE have their advantages. As a buyer, it is your responsibility to assess the market, location, and availability of funds toward a purchase.

A good idea is to assess rental prices of similar properties in the area you are planning to invest in. This will help you get an idea of the rental income your property could generate.

Also in case of off-plan properties, due diligence before the purchase, including research into the developer’s reputation and quality of completed projects, as well as the builder’s compliance with RERA guidelines, can help save a lot of expenses (and frustration) later on.

We hope you found this article helpful. Are you considering buying a property in Dubai or Abu Dhabi?  For support in getting your mortgage, start your journey and get pre-approved today with Lenddoo, the most trusted mortgage broker in the UAE.