The term off-plan is very common in Dubai real estate and it is an integral segment of the real estate market. Off plan properties have also gained attraction from global investors. Therefore, we have complied a list of most frequently asked questions about off plan properties in Dubai.
1. What is an Off-Plan Property in Dubai?
An off-plan property in Dubai is acquired directly from the developer before the completion of the construction. Investors purchase these properties either before construction starts or during the construction phase. Typically, investors or buyers initially make a down payment of 10-20%, with the remaining amount paid through monthly installments.
The term “off-plan” signifies that buyers are investing in a property based on the developer’s proposed plans, designs, and specifications rather than a completed structure. In a nutshell, buyers are committing to a property that has not yet been built or finished.
Read the Full Guide on off-plan properties in Dubai.
2. Are There Additional Costs Besides the Price of Off-Plan Properties in Dubai?
Apart from the initial price of the property, buyers should also consider extra costs like the Dubai Land Department (DLD) fee. This fee is 4% of the property’s price plus AED 40. To make their offers more appealing, many developers now cover part or even the entire DLD fee for buyers.
3. What are The Benefits of Buying Off Plan Properties in Dubai?
Following are notable benefits of investing in off plan properties in Dubai.
Potential for Greater Returns: Off-plan properties are often priced lower than completed ones. It can lead to significant value increases by the time construction completes.
Flexible Payments: Developers typically offer payment plans that let buyers pay in installments throughout the construction process.
Choice and Customization: Buyers may have the option to select their preferred units and customize features like finishes or layouts.
Early Investment Benefits: Buying off-plan property in Dubai lets investors enter the market early, possibly getting a better deal and seeing higher returns as the property value grows.
4. How Long Does It Take to Complete an Off Plan Property in Dubai?
Smaller projects typically finish in 2-3 years, while it may take 4 to 5 years to complete the bigger ones. Delays in approvals, economic issues, or construction problems can extend the completion time beyond what was initially promised. Therefore, buyers should ask about the expected completion date before making a purchase.
5. Are Off Plan Properties Cheaper Than Ready-To-Use Properties?
Off-plan properties are usually less expensive than ready-to-move-in ones in Dubai. Developers often offer these properties at a lower price initially because of the risks involved, such as possible construction delays or market changes. As the project moves forward and demand grows, prices for off-plan properties usually go up, which can result in savings for early buyers.
6. Are There Any Risks in Buying Off-Plan Properties in Dubai?
The main potential risks of buying off-plan properties are:
- Changes in government regulations or policies might affect the project’s completion or the terms of your contract.
- Economic changes or fluctuations in the real estate market may affect property values.
- The project might take longer to finish than anticipated, delaying your move-in date.
- It may be more challenging to sell an off-plan property compared to one that is already completed.
7. How do Payment Plans Work for Off Plan Projects in Dubai?
Payment plans differ among developers but generally start with an upfront deposit, which is 10-20% of the property’s value. The rest of the payment is made in parts based on the key stages of construction, such as finishing the foundation, floors, or other major steps.
The last payment generally comes when the property is completed and handed over. Some developers also provide options to pay a large part of the price after you take possession of the property.
8. Can I Get a Mortgage for Dubai Off-Plan Properties?
Yes, buyers can get a mortgage on off plan properties, but they can only borrow up to 50% of the property’s value when buying off-plan properties in Dubai. For example, if the property is worth AED 1,000,000, the maximum loan you can get is AED 500,000. This 50% limit applies to off-plan apartments, villas, and townhouses.
9. Can I Sell an Off-Plan Property in Dubai Before it is Finished?
Yes, you can sell an off-plan property in Dubai before its completion. This process is called “assigning” or “reselling” the contract. However, developers usually have specific rules and fees for this. They may allow transfers but might charge a fee or set certain conditions for the new buyer. It is important to check your contract and get advice from a legal expert to understand the process and any costs involved.
10. What Legal Protections do Off-Plan Buyers Have in Dubai?
Dubai has laws and rules in place to protect off-plan buyers. The Dubai Land Department (DLD) manages real estate transactions and has specific rules for off-plan properties. Some of the protections include:
RERA Registration: Off-plan projects must be registered with the Real Estate Regulatory Agency (RERA) to ensure transparency and adherence to rules.
Clear Contracts: Contracts should clearly state payment plans, project details, penalties for delays, and expected completion dates.
Escrow Accounts: Developers must put buyers’ payments into escrow accounts. This means the money is kept separately and can only be used for the construction of the project.
11. Can I Rent Out My Off Plan Property Before Its Completion?
Usually, you cannot rent out an off-plan property before its completion because it is not ready to live in. Lease agreements typically require that the property be available for occupancy. However, some developers might allow renting before completion based on their policies or specific contract terms. Buyers should check with the developer and review the contract to understand the rules.
12. What Documents Are Necessary to Buy Off Plan Property in Dubai?
Before buying an off-plan property in Dubai, make sure to check these important documents:
Sales Purchase Agreement (SPA): This document covers the terms and conditions, expected completion date, payment plan, penalties for delays, and property details.
RERA Registration Certificate: Verify that the project is registered with the Real Estate Regulatory Agency (RERA).
Developer’s Track Record: Look at the developer’s previous projects to see their completion history and how well they stick to deadlines.
Master Plan and Floor Plans: Review the proposed design, layout, and property specifications.
Escrow Agreement: Check that the developer has an escrow account to keep your payments safe.
13. How Can I Verify The Developer’s Credibility?
Do thorough research on the developer before entering in an off plan agreement. Here are some important things you can do.
- Look into their past projects, reputation, and how well they have completed their projects.
- Make sure they are registered with RERA.
- Check online reviews and testimonials, and visit their completed projects if you can.
- Consider talking to real estate experts or legal advisors to get a better understanding of the developer’s trustworthiness and reliability.
14. Are There Any Hidden Costs Related to Dubai Off Plan Projects?
Although the initial price of off plan properties might be very attractive, buyers should expect extra costs such as:
Service Charges: Ongoing fees for maintenance, amenities, and shared areas after the property is handed over.
Oqood Fee: A registration fee paid to the Dubai Land Department for off-plan property transactions.
Transfer Fees: Charges from developers if you sell the property before its completion.
Agency Fees: A commission fee if you use a real estate agent or broker.
Utility Connection Fees: Costs for setting up utilities like electricity, water, and gas once you take possession.
15. What Are the Financing Options Available for Buying Off-Plan Properties in Dubai?
You can find multiple financing options for off-plan properties through banks and financial institutions in Dubai. However, not all banks offer mortgages for off-plan purchases. Those who offer these services might require a significant down payment, often around 20-30% of the property’s price. Buyers should compare different banks and understand their terms, interest rates, and eligibility requirements.
16. Are there any Limitations on Foreign Buyers When Buying Off-Plan Properties in Dubai?
No, foreign buyers can purchase off-plan properties in Dubai without major restrictions. People from many countries can buy freehold properties in certain areas. However, it is important to check the specific rules, any visa requirements, and any limits based on nationality or property type before buying.
Also read the risks of buying off-plan property in Dubai.
17. What Happens If the Developer Delays the Completion of the Off-Plan Property in Dubai?
If the developer delays completing the property, the Sales Purchase Agreement (SPA) usually specifies penalties or compensation for the delay. Buyers may receive compensation, such as a refund, fee waivers, or other arrangements based on the contract. The contract should detail the remedies for such delays.
18. What are the Major Steps in Buying Off Plan Properties in Dubai?
Here are the usual steps to buy an off-plan property in Dubai.
Choose a Property and Sign a Reservation Agreement: Pick the property you want and sign an agreement to hold it.
Pay the Initial Deposit: Make the upfront payment to secure your purchase.
Review and Sign the Sales Purchase Agreement (SPA): Go through the detailed contract and sign it.
Make Installment Payments: Pay in installments as the construction progresses.
Complete the Final Payment: Pay the remaining amount when you receive the property.
It is important to work with legal advisors, do thorough research, and make sure all paperwork is completed correctly during this process.
19. What are Some Famous Areas for Off Plan Projects in Dubai?
Some of the famous areas for off plan projects in Dubai Include:
Dubai Marina: Famous for its waterfront living and tall skyscrapers.
Arabian Ranches: A community suited for families with villas and townhouses.
Downtown Dubai: Features landmarks like the Burj Khalifa and offers upscale living.
Jumeirah Village Triangle (JVT) and Jumeirah Village Circle (JVC): Provide affordable options for apartments and townhouses.
Dubai South: Noted for its closeness to the Expo 2020 site and upcoming developments.
Dubai Hills Estate: A well-planned area with golf courses and plenty of green space.
Discover some of the best off plan projects in Dubai.
20. Do Off Plan Projects in Dubai Offer All Amenities?
Yes, off plan projects in Dubai provide all common amenities, including:
- 24/7 security and concierge services
- Gyms and fitness centers
- Swimming pools
- Parks and recreational areas
- Playgrounds
- Sports facilities
- Retail outlets
- Restaurants
- Event spaces
- Community centers