Top 5 Reasons to Consider Investing in Dubai's Off-Plan Real Estate Market

Unveiling the Top 5 Reasons to Consider Investing in Dubai's Off-Plan Real Estate Market

The off-plan segment in the emirate exhibited an exceptional performance, registering a remarkable surge of 144%, thereby significantly contributing to the overall boost in the UAE's real estate sector.

Dubai's real estate sector experiences significant growth in 2022 with off-plan properties leading the way, registering a remarkable 144% increase in performance. This trend is set to continue in 2023 with the construction of 115,000 new units, of which 34,000 are already over 70% completed and slated for delivery by year-end.

Despite potential economic downturns caused by global events, such as ongoing turbulence in Europe and the looming global recession, changes in consumer behavior have contributed to the thriving real estate sector in the UAE.

With one-third of the population aged between 20-30 and 90% of this group preferring to rent properties in the early stages of their careers, affordable off-plan developments are now becoming an attractive investment option.

Additionally, Dubai's successful hosting of the Fifa World Cup in Qatar in 2022 had a significant impact on the emirate's off-plan growth, with HNWIs transiting through Dubai gaining a better understanding of its offerings and global reputation. The increased interest in off-plan properties can be attributed to various market factors such as:

Maximizing Returns

Investing in off-plan properties offers several advantages, including the opportunity to purchase a property at a lower price point and access to a wide range of unit choices during the development phase. In addition, the required down payment of around 10 percent is often more affordable compared to the standard 20-25 percent required for completed projects.

Instalment Plans

In the off-plan real estate market, investors and end-users can take advantage of convenient payment structures that offer an added element of affordability. Typically, these schemes involve a 40-60 allocation, whereby the buyer pays an initial 10% of the property cost upon signing, followed by 30% in installments over an 18-month construction period, and finally 60% upon handover. This payment structure alleviates the financial burden on investors, enabling them to structure rental contracts that are both profitable and appealing to potential tenants.

High-rental yields

Upon the completion of a development, property owners who choose to rent out their purchased units can take advantage of the steady influx of expatriates into the UAE. Landlords can anticipate a guaranteed annual minimum net return of 5%, even in upcoming areas of Dubai such as Jumeirah Village and Al Furjan, which remain among the most appealing choices for high-quality affordable housing.

Protection protocols and adherence

Dubai's Real Estate Regulatory Authority (RERA) has implemented a robust regulatory system to ensure the protection of buyers against project cancellations and delays. A law introduced in 2017 provides buyers of off-plan real estate with legal protection against developers who fail to fulfill their contractual obligations. Consequently, investors can purchase off-plan properties with their best interests safeguarded, as installment payments are only deposited into regulated accounts that developers can access only after meeting construction milestones.

Reassurance in the Investment

If an off-plan property is being purchased with the intent of eventually inhabiting it, the buyer can be confident that they will be the first to experience their purchase. Similar to the development itself, their unit will be delivered to them in pristine condition with a one-year Defects Liability Period. This ensures that the developer takes responsibility for any issues that may arise and will address them promptly. In addition, developers and contractors have a 10-year obligation to maintain the structural integrity of the building.

Furthermore, new developments often boast upgraded designs, technology, and amenities. For instance, Al Furjan is currently home to the first LEED Gold certified and Well-Being integrated development. Upon completion, ZaZEN Gardens will promote healthy living through sustainable modern design, high-quality finishes, easy connectivity, and a variety of community-focused amenities. These features align with Dubai's 2040 Urban Master plan and the UAE's 2050 Net Zero commitment.