Here are the factors to consider when buying off-plan property

Here are the factors to consider when buying off-plan propertyImage Credit: Supplied

Buying off-plan property is a way to sound the alarm bells in the UAE. Much of the property bubble that built up and then burst during the financial crisis was due to overzealous property developers selling villas and apartments to hopeful investors without any form of protection should something go wrong.

While times have changed, the property market in the UAE has evolved and the government has implemented new laws and regulations, off-plan buying should still be approached with some speculation and extra care.

Buying property off-plan is a great way to secure gains in your investment with prices often far lower than those of completed properties. Therefore, if the real estate market continues to grow as expected, investors can even see an increase in value of the property by the time it is completed.

However, an important factor to consider is that off-plan properties are just as susceptible to market fluctuations, in some cases more so. In these cases, it is important to take into consideration the way that the market is changing in the country, factors such as the estimates of economic growth and population expansion as well as the number of other projects under construction within the same or similar area.

As with any real estate investment, the prime consideration is location. Elements that influence the potential performance of an off-plan property will be lifestyle factors such as convenience, its connection to schools, shopping and entertainment outlets; pleasure, the value of a beautiful location or a scenic view is significant and can be negated should future developments in the area arise; and status value, the perceived benefits of a specific location can account for as much as 90% of a property's worth, says Mohanad Alwadiya, the managing director of Harbor Real Estate.

The ever-changing infrastructure of the country is another important factor to consider when buying a property that is not yet completed. The impact of the Metro on property prices cannot be ignored and properties that are well-connected will be far more profitable investments than those that are trapped within endlessly congested roads.

Handy Hints:

• Off-plan property can be a great opportunity to secure gains in investment

• Factors to consider when buying are location and the changing infrastructure

• Also consider economic growth, other similar projects developed in the area

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Source: Nicholas Baker, Special to Properties

The writer is a freelancer


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