How To Spot A Good Off-Plan Investment Opportunity
An insider’s Approach To Spotting A Savvy Off-Plan Investment Opportunity
Buying off-plan property is an investment strategy many investors adopt to maximise their profits. By looking at an off-plan investment opportunity, you can usually lock in a discount from today’s potential value, giving you an effective safety net should market prices fall, while in a stable or growing market you will have welded-on capital growth. However, as with any property investment, an off-plan investment opportunity is not without its risks or complications.
The procedure for buying off-plan varies slightly from that of buying a completed development. Floor plans, scale models, and computer-generated images replace site inspections and are pivotal to the buying process.
In return for the extra work involved in buying off-plan, there are several notable advantages. Firstly, you’ll be connected to your investment from the outset and will be able to watch it take shape. Secondly, you’ll be buying at today’s prices, an asset which hopefully in several years will potentially appreciate significantly. Thirdly, by planning ahead you may be able to access a prime local development before other buyers do and at a better entry price.
The idea naturally, is to secure the property at a lower price, and as the surrounding area develops sell it for a higher price in few years time. Similarly, investors who can afford to wait on their investments for a year or two can also find pre-construction property to be a good investment option when looking for higher returns.
As with any real estate investment, it is important to buy at the right place, at the right time, and from the right developer, so look to screen your off-plan investment opportunity carefully.
Benefits Of The Off-Plan Path
An off-plan investment opportunity brings with it four main benefits:
- Potential discount
- Paid in installments, optimizing your cash flow
- Lower price plus potentially higher appreciation
- Opportunity to customize the apartment
Following on from the advent of the UAE’s freehold law in 2002, Dubai has emerged as an attractive location for investors to buy, sell, rent or lease property. In their search for a great off-plan investment opportunity, it is important, for investors to understand the off-plan landscape before getting into a property purchase. Here are some essential tips to remember before buying off-plan property in the UAE.
Know The Property Buying Process
When buying off-plan property in Dubai, the developer will require documents including passport copy, Emirates ID and reservation form containing the prospective purchaser’s terms and conditions. Potential buyers also need to pay a reservation or booking fee ranging from 5 to 15 percent of the total purchase amount, which is required prior to drawing up the Sales and Purchase Agreement (SPA), which needs to be signed by both parties.
If you intend to buy an off-plan property from a real estate agent, make sure that the broker is registered with an authority such as the Dubai Land Department.
Look For High Population Growth
High population growth rates support sound property investments. Look for an area where the population is likely to grow rapidly in the near future. Population growth supports inward investment, regeneration, infrastructure spending, and, of course, demand for homes.
Retail Outlets And Opportunities For Relaxation
Never underestimate the retail effect on investment property prices. Properties with access to supermarkets and other shopping options are inevitably priced higher and enjoy better investment potential. People want the convenience of living near to shops.
Prospective residents also want to live near good recreational amenities such as bars, restaurants, cinemas, gyms, and outside spaces where residents can walk, jog, and play their children.
Young couples and families want to live in the catchment area with access to the best schools. An area that offers ‘good’ and ‘outstanding’ schools at different age levels will support a family’s education needs as their children grow without having to move. This factor can reduce costly vacancy periods if you are renting your investment property, as well as boosting long-term property values.
Public Transport Links
The UAE remains a car-centric country, however, the advent of Dubai’s metro and an extensive and efficient bus network is attractive for those who want to use public transport rather than own a car. Commuter developments are perfect investment locations to capture the growing demand from people who work in the city but cannot afford to live centrally.
Commuter suburbs also fulfill the desire to live no more than a few minutes’ walk from a metro or bus station.
Buying off-plan in these areas could benefit from the ripple effect that is helping to create a firmer market a little further out from central Dubai and Abu Dhabi.
Invest Confidently With A Trusted Developer
There are many developers to choose from in the UAE. Always ensure you only invest with a trusted and experienced developer. Ask for evidence that their previous developments and do your own research into their past projects to establish if they have been completed on time and to the standard expected.
Seek Expert Advice
While it is not is legally mandatory, it is always advisable to seek the opinion of a qualified, experienced and transparent professional when it comes to purchasing a property. Taking onboard the views of a legal expert and a real estate advisor can help you frame specific questions you may have about the potential development.
- Research the current outlook on the market’s projected development over the next few years
- Remember, location, location, location
- Consider property style, transport links, local schools access,
- Factor in other similar nearby properties and the likely supply of stock scheduled to enter the market in the next few years
- Seek detailed information about the units you are considering
- Look out for upcoming government plans which could impact the area
- Research other planned developments locally to see what the competition is likely to be, and also to get a sense of how the area is likely to look to potential buyers in years to come.
Let Us Help You Make The Right Real Estate Investments Decisions!
Our advice on real estate investing and ownership in the UAE can help you ensure your real estate portfolio blossoms.
Seeking out an off-plan investment opportunity can produce highly satisfactory profits from your real estate investment. However, like any investment, you need to do your research and trust the professionals to do the job you pay them to do.
Always make sure you are investing in line with your investment objectives, and with a developer that has a long and distinguished track record. Use lawyers and mortgage brokers with deep experience in the off-plan market and heed their advice. If you do all this, you will be well positioned to take advantage of a good off-plan investment opportunity.