Investment: Off-plan or ready units?

Expert EyeManish Khatri

When it comes to property investment, there has been a long debate whether to invest in off-plan units (under construction or not readily available) or ready properties.

Real estate categorises investors into two: those who are looking for immediate returns from their investments and those who prefer to wait.

What an investor picks largely depends on his individual requirements. And each investment category has its own pros and cons which need to be understood by every buyer before he or she takes the plunge.

Ready properties
Ready units are best suited for investors who are looking to earn returns from their investment right away.

In Dubai, in particular, when one invests in available properties for buy-to-let purposes, the net returns can average to around 7 to 8 per cent for apartments and villas, respectively.

Risks and returns of Dubai realty

Because freehold properties can be owned by any nationality with no property or profit taxes, ready freehold properties are the most sought-after investment type.

In Dubai, RERA looks after the property registration. It has a centralised database where property and owner information is stored to ensure that the property is safe and secure no matter what the condition would be.

When it comes to risks, ready property investments have lesser risks compared to any other investments; however, it is always advisable to deal with RERA-authorised agencies and agents to ensure smooth and honest transactions.

One drawback, however, concerns capital appreciation, which does not grow at a significant rate especially if the community where the property is located is already developed.

Off-plan investments
These kinds of investments are more suited for investors who are looking for better capital appreciation, higher returns on their investments and who prefer to wait until the price reaches a level that is acceptable to them.

The value of the property varies according to the status of its construction.

Usually, when a new project is launched, the construction of the project either has not started yet or it is at the excavation level at which the prices of the properties are about 70 to 80 per cent of the predicted prices during handover.

Although off-plan properties are riskier investments than ready properties, when talking about Dubai, RERA has put together important rules which ensure that all major risks are mitigated and that transactions are made as safe and as transparent as possible.

Similar to ready properties, off-plan investments are registered with RERA.

An Oqood paper is issued to the owner certifying that he owns the property in question.

As per Dubai’s real estate industry standards, generally, 20 to 40 per cent profit is gained when selling the property after handover.

     Why off-plan propeties attract investors

However, some investors prefer to attain returns by renting out their properties. The rents can be more than 10 per cent on average from the investment price.

Adding to this, there is also capital appreciation, which will greatly benefit the investor.

Dubai has a number of ready and under-construction properties for global investors to choose from.

Whether one opts for a residential property or a commercial unit, when it comes to investing in Dubai, the choice rests solely on one’s requirements, budget, purpose and the amount of time he or she is willing to wait for returns of investment.

Source: Manish Khatri, Special to Properties
Vice President, SPF


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