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Despite the harrowing experiences UAE investors had in the past, off-plan properties are once again gaining popularity. An off-plan property is a commercial or a residential development which is yet to be constructed, but which investors can book in advance. The payment plan can be construction-linked or time-bound. Most of the recently launched off-plan properties in Dubai will be ready for handover in three to four years.
An off-plan property is more attractive to a buyer because its prices are around 15-20 per cent cheaper than a ready-to-move-in house. Unlike easy mortgage options available for ready-to-move properties, banks in the UAE are jittery about financing off-plan properties. So, off-plan properties depend on the liquidity in the market to attract buyers. Thanks to the current favorable economic conditions in the UAE, there are a sizeable number of customers who have ready cash to invest in off-plan properties and not depend on banks for finance.
While buying an off-plan property is not without its risks since the buyer is not aware of what the finished product will be like, it is important to go through the past delivery record of the developer. The buyer should also go through the details of the sales contract especially the points related to the penalties in case of delays, and compensation when the project gets cancelled.
To prevent developers from making an exit from projects before handover, the Dubai Land Department has made it mandatory for developers to make full payments for the plots. Speculative buying of off-plan properties by property investors rather than end-users was blamed for the real estate crisis a few years ago.
To prevent speculators from holding sway in the real estate market by repeatedly selling off-plan properties, additional fees on registration and restrictions on resale have been introduced.
* Off-plan properties are 15-20% cheaper than ready properties
* Investors should ensure to check the track record of developers
* Dubai has increased the registration fees to avoid speculation
Source: S. Dhar, Special to Properties
The writer is a freelancer