Expert Eye - Off-plan: what to take into consideration

Dhiren GuptaDhiren Gupta

When we talk about property investment in Dubai, off-plan launches are once again gaining momentum.

Dubai’s competitive real estate environment has witnessed the unveiling of enormous off-plan projects that offer attractive payment plans. Developers’ promotional campaigns persuade investors to capitalise on the opportunity that gives better returns.

Off-plan regulations

To make off-plan purchases safer, safeguard buyer interest and encourage transparency in the industry, the Dubai authorities have put laws and regulations in place.

Unlike ready properties, off-plan units get registered at the Real Estate Regulatory Agency (RERA) and an Oqood certificate is issued to the owner. The authorities have done their own due diligence to make sure legal obedience is stringently followed by the developers when it comes to the implementation of promotional campaigns and sales for off-plan units.

With the setup of the escrow account, buyers are assured that their payments go to the account rather than to the developer’s account. The amount received from property sales can only be accessible by the developer once the approved construction milestones are achieved and verified by the authorities.

Therefore, structured regulations boost greater investment in Dubai and protect buyer purchase. Yet, there are some common pitfalls that one needs to be aware of when buying an off-plan development.

Check before signing on the dotted line

An off-plan unit seems more striking to a buyer because it’s always priced around 10 to 20 per cent less than a ready property and is available on flexible instalment which can be paid post-construction.

However, to ensure the best off-plan investment, do some research about the developer and its delivery records before signing the contract. Besides, the Dubai Land Department has made it compulsory for builders to buy the land where they build the project to prevent them from exiting before handover. The fine print in the sale and purchase agreement should be read carefully by the buyer along with the points related to forfeits in the case of project delays and reparation in case of cancellation. Make sure you ask about the annual service charges for communal facilities. And understand the associated buying costs which include DLD and agent fees.

If the process is being undertaken with thought and extra care, then an off-plan investment could be a rewarding endeavour for buyers as it is more susceptible to market fluctuations. Suitability, location, price, payment plan and developer’s reliability amongst underdeveloped or completely developed communities help estimate the property’s future worth or investment appraisal.


If planning to get a mortgage for an off-plan property, the options are open. A lot of research and prior coursework are required as some banks in the UAE are not so keen about financing off-plan projects.

Considering the high level of risk in the past years, the Central Bank regulations allow only 50 per cent loan to value (LTV). Every bank has a set of approved developers and only offers to those. It is prudent to consult with lenders in advance if you plan to get a mortgage for your off-plan investment to avoid difficulties later.

All in all, buying an off-plan property in Dubai is more secure now, but buyers should still be cautious. Look for the one that fits your time frame and budget. By safeguarding every measure during the process, one can make a smart judgement.





Source: Dhiren Gupta, Special to Freehold

Managing Director, 4C Mortgage Consultancy


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