The post-pandemic era has witnessed a surge in the desire to own property in Dubai, resulting in increased demand surpassing supply.
To cater to this demand, numerous off-plan projects are being launched aggressively. However, investing in such properties necessitates thorough research and consideration to ensure the security of both property and investment. Evaluating the developer's track record is crucial among several key factors in navigating this process.
Developer's reputation
When considering off-plan property investments in Dubai, prioritize developers with a proven track record for reliability and timely project completion, says Samer Chehab, Founder & CEO, PropertyGuru.ae.
Ensure they're registered with the land department. Consulting multiple experienced real estate agents and selecting one who prioritizes your needs over commissions is crucial. They should offer diverse options from various developers, aligning with your requirements. Thorough diligence and selecting reputable partners are key to successful off-plan property investments.
Evaluate financing options carefully
Off-plan properties in Dubai attract investors with flexible payment plans, offering extended periods post-handover for generating rental income. It's vital to compare payment plans, ensuring they align with your budget and considering potential construction delays. Assess the area's financial potential, focusing on rental yields and growth prospects for long-term value. Investors should be wary of risks such as payment defaults, potentially leading to loss of payments and property. Insuring loans can provide protection against unforeseen circumstances affecting repayment capacity. Thoroughly review legal agreements and plan for additional fees to mitigate legal and financial risks.
Delayed project
Potential buyers should carefully consider the projected completion date and current market conditions to align with their investment horizon. Delays in construction, as experienced by Clementina in the Golf Views Seven City project in Jumeirah Lakes Towers, can impact investment timelines significantly. Despite initially launching in 2018 and facing construction halts, the project's completion has been extended, emphasizing the importance of patience and flexibility in off-plan investments. Understanding payment plans and considering both direct and secondary market purchases are crucial factors in navigating such situations.
Monitor construction
Effective communication with the developer is essential in off-plan projects to address concerns like handover delays and construction schedule shifts. Regular site visits and updates help investors stay informed about progress. However, there's a risk of final property quality not meeting expectations, underscoring the importance of vigilance. Investors should be aware that rendered images and plans may not accurately represent the finished product, potentially resulting in discrepancies in quality. It's vital for homebuyers to stay vigilant throughout the process and seek clarification on any concerns regarding the final property.
Importance of escrow account
Samer emphasized the importance of using escrow accounts to safeguard investments in off-plan projects, cautioning against investing without one. An escrow account ensures funds are securely held by a trusted third party until the developer fulfills their obligations, providing recourse for buyers if the project fails.
The experience illustrates the potential risks of investing without proper understanding, emphasizing the need for thorough research. They advised investing cautiously and prioritizing developers with favorable payment plans. They cautioned against high upfront payments, suggesting smaller initial investments for reduced risk. Huspy's General Manager recommended checking RERA's approvals, ensuring payments go into escrow accounts, and consulting experienced real estate brokers for guidance.
Red flags to watch out for
There are a few things every off-plan buyer needs to look for when investing in a property.
- Absence of escrow account
- Lack of developer reputation and track record
- Delayed construction or previous project delays
- Variations in the market
- Payment plan too tempting
- Hidden costs
- Project plan changes
- Uncertainties in the law and regulations
- Financial instability of the developer
- Unclear or unfavourable contract terms
- Quality issues
Paying attention to these crucial aspects can significantly mitigate the potential risks and enhance the likelihood of a successful off-plan investment journey.
Offering his final advice, Fouad Chemlati stressed the importance of thorough research when purchasing a home. Understanding the market, developments, and the desired area is essential, as homebuyers typically invest substantial amounts. With ample supply across all categories of homes in the UAE and affordable home financing options starting from as low as 3.89%, buyers have a wide range of choices, emphasizing the need for informed decision-making.
News Source: Khaleej Times
