Why is it profitable to buy ready-made property in Dubai?

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In 2022, Dubai’s real estate market witnessed record-breaking growth, with the number of transactions having reached a 10-year high of 97,252, according to the Dubai Land Department (DLD). This is a whopping surge of 59.5% compared to 2021. As a result, the number of off-plan real estate purchases doubled from 26,059 to 52,075. However, demand for completed residential and commercial units has remained strong, with the number of corresponding transactions having increased by almost 30% over the years — from 31,790 in 2021 to 41,278 in 2022. Such a strong demand among property buyers clearly illustrates a high investment potential of Dubai’s ready property, the value of which will just keep increasing.

Ready-Made Properties and Off-Plan Projects: Market Trends in 2022-2023

Over the past 3 years, prices of ready-to-use properties, namely apartments, villas and commercial units, have been steadily increasing. Thus, in 2020, the average price per sq. ft. in these types of properties was AED 736 (USD 200), whilst in 2021, this increased by 18.3% to AED 870 (USD 237), and in 2022 — by 15.7%, reaching AED 1,007 (USD 274).

In 2022, apartments were in their highest demand in the completed property sector, with a total of 30,565 transactions concluded, which was an increase of 49.5% compared to 2021. Demand for commercial units rose by 21.7% with 2,770 sales transactions.

The most popular area for buying completed property (apartments, villas and commercial units) in 2022 was Dubai Marina, and overall, the top 5 areas with the most ready-made property transactions are as follows:

In 2023, the overall growth trend of the emirate’s property market has continued, with 9,473 transactions completed in January 2023, which is an increase of around 70% compared to the same month in 2022. At the same time, the number of property purchases under construction grew by 68.4% (from 3,344 to 5,632) and completed properties rose by 73.2% (from 2,218 to 3,841).

NBD! Foreign buyers and investors can only purchase freehold properties in the UAE. The list of freehold areas in Dubai can be found in this article.

Ready-Made and Off-Plan Properties: Main Advantages and Disadvantages for Buyers and Investors

Property in Dubai attracts buyers and investors from all over the world due to the high quality of living in the emirate, which is recognised as one of the world’s top 5 cities, as well as lower real estate costs compared to Europe and other popular destinations across the globe, and the city also has one of the world’s highest rental ROI’s.

The key question facing potential home buyers in Dubai is whether to acquire a completed or an off-plan unit. Both are excellent investment options, however you should take into account your budget, purchase goals and an efficient investment strategy. In general, a completed property is costlier, but provides greater stability and comes with less risk. You can start using it immediately rather than waiting several years for the completion.

An off-plan property could be a better option if you don’t have to move in immediately and are willing to wait several years before making a profit on the resale and rental. The main risks in purchasing off-plan properties are that you are purchasing a property that does not yet exist and is only shown in advertisements.

NBD! Due to measures taken by the Real Estate Regulatory Agency (RERA) and the Dubai Land Department (DLD), the likelihood of construction being cancelled or frozen has been minimised. However, the risk of a delayed construction still remains and that the final result may not correspond to the design presented in the original marketing materials.

Why is it profitable to buy ready-made property in Dubai?

Advantages of Off-Plan Properties

  1. The value of properties in the initial stages of construction is usually lower than that of completed properties, however this will grow as the development is completed. Once the project is completed, or at a later date of construction, you can resell the property at a higher price and make a substantial profit.
  2. More choices. At the project launch stage you can choose the option with the most privileged location in the complex, with the most attractive view, the best area and the most comfortable layout for you.
  3. Advantageous payment plans and incentives from the developer. Most developers offer flexible payment plans to prospective buyers in interest-free installments with a down payment usually not exceeding 5–20%. You will also be provided with additional benefits, such as partial or full exemption from DLD fees, free maintenance for several years, and many other perks.

Disadvantages of Off-Plan Properties

  1. Risk of failing to meet construction deadlines originally stated by the builder.
  2. Not being able to verify the quality of the final product and its compliance with all parameters shown in the brochure, 3D video and other promotional materials.
  3. Risk of changes in market conditions and the price of the property in the long term.
  4. You will only be able to obtain a long-term residency visa in the UAE once the project is completed.
  5. If you are planning to move to Dubai soon, you will have to incur substantial rental costs in addition to regular off-plan property payments.

Pros of Completed Properties

  1. The opportunity to view the property as it is before making an informed decision to purchase.
  2. Exact understanding of additional costs, including maintenance fees.
    Location in developed areas. Generally, ready to move-in projects are located in areas with established infrastructure, such as public transportation, shopping, recreational areas, educational and medical facilities nearby.
  3. Long-term residency visa for UAE residents immediately after purchase. Foreign owners of completed homes priced from AED 750,000 (USD 204,000) are entitled to a 2-year renewable residency visa, and with a minimum investment of AED 2,000,000 (USD 545,000) you can obtain a 10-year Golden Visa, which covers immediate family and household members. Therefore starught after the purchase of ready-made property you will be able to move to the UAE as a family.
  4. Ability to start generating a stable rental income as soon as possible after the deal is signed. It is recommended to use professional property management services in order to set an optimal rental cost and find a reliable tenant as quickly as possible.
  5. Possibility to resell the property at any time.
  6. When buying a completed property from some developers, payment plans are also still available. For example, this option is offered for a number of projects by DAMAC Properties.

Cons of Completed Properties

  1. Higher purchase price compared to properties under construction.
  2. Fewer completed property options in the desired development or community compared to off-plan projects.

NBD! If you do not have all the money you require to acquire a property you like, you have the right to take out a mortgage from a local bank. You can start renting out the property immediately after the deal is signed and cover all or part of the mortgage payments with rental payments.

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