When we talk about investing in the Dubai real estate market, there is one question that comes into our mind: whether you should invest in off-plan property or ready property. One option allows you to get immediate lower profits while the other lets you bank on the future market price.
So, if you are an investor wondering which option to choose, then it is best to have in-depth knowledge about them first. That way, you can decide which option would be more suitable for you.
This article will discuss the differences between an off-plan and a ready property. Not just that, you’ll also learn about the pros and cons of investing in both types of property. So, without further ado, let’s jump right into it.
What is an Off-plan Property?
An off-plan property refers to the property that is still under construction. It has just the framework ready while the structure would then be constructed on it. This type of pre-constructed structure is usually advertised to real-estate developers and early investors.
They are more likely to invest in these developments since developers can access financing on better terms. While the initial investment would be lower than investing in other options, it would require some time before you can liquidate the funds.
The biggest benefit of investing in this type of property is that you’ll have to make smaller down payments. You can make a deposit of only 5% to 10% compared to the requirement of 25% to 30% for ready properties. Additionally, there is a chance of higher return once the property is complete.
However, there is a possibility of changes in the economic situation. The downward movement would mean that the prices can be lower than the initial investment you made, but that is highly unlikely. There is also a risk that the project made be delayed or even canceled. So, there are some important factors to consider when investing in an off-plan property.
What is a Ready Property?
Ready property refers to the house or any other type of residential property that you can immediately occupy. The property is in a condition where it meets all the requirements set by the local government and regulatory authorities.
One thing that many people confuse with ready properties is furnished properties. Both are two separate things since ready properties have all the basic amenities in them and you can move into them. On the other hand, furnished properties have complete furniture and other items in them.
Investing in ready properties can open you up to a wide range of benefits. For instance, you can easily find a tenant for the property and start earning rental income through it. Furthermore, it also allows you to get a more stable return yield from a ready property compared to an off-property.
However, the advantage of the price is subject to market conditions. If you are in a buyer’s market, then it might be difficult to get a good price for your property. So, you would have to wait for the market conditions to change before you leverage it in your favor.
The drawback of investing in ready property is that you would have to make a huge down payment. The UAE Central Bank regulations require you to make a minimum deposit of 25% if you are an ex-pat buying a property that is worth less than AED 5 million.
In the case of a national, the down payment is 20%. Moreover, the upfront transaction costs can also be estimated at around 7% to 8% of the purchase cost.
Which Option Should You Go For?
There is a long debate regarding which option should you choose. Simply put, there is no right or wrong answer to it. Investors would have to consider their investment plans, goals, and objectives to make the right decision.
These factors play a major role in helping you decide which option would be more suitable. You can also discuss it with a real estate broker to get a better idea about it.
Investing in the Dubai real estate market can be a highly lucrative endeavor for you. But it is important to consider different factors when choosing to invest between an off-plan and a ready property.