The emirate’s off-plan segment was particularly a bright spot with an eye-popping 144 er cent surge in performance which contributed to the UAE’s overall real estate boost
Dubai’s property sector witnessed significant growth in 2022 as sales transactions rose by 76.5 per cent. The emirate’s off-plan segment was particularly a bright spot with an eye-popping 144 er cent surge in performance which contributed to the UAE’s overall real estate boost. This positive outlook is poised to continue through 2023 as another 115,000 units are being built, 34,000 of which have exceeded 70 per cent completion and are expected to be delivered by the end of the year .
Despite factors that are known to spur economic downturns, like ongoing turbulence in Europe and a looming global recession, the UAE’s real estate sector has thrived as a result of changes in consumer behaviour; one-third of the country’s population is aged between 20-30, and 90 er cent of this group prefers to rent properties in the early stages of their careers, but many of these individuals who have been saving up are now prepared to invest in affordable off-plan developments.
Last year’s Fifa World Cup in Qatar also had a significant impact on Dubai’s off-plan growth. Attendees, many of whom were high-net-worth individuals (HNWIs) that transited in Dubai, were subjected to a better understanding of what the emirate offers, and why it is globally renowned. With the UAE garnering constant attention, and off-plan developments continuing to be long-term and profitable assets to invest in, the reason for increased interest in these unconstructed properties can be attributed to several market factors such as:
Purchasing off-plan enables investors to secure a property at the earliest time, and the lowest possible price, while providing a variety of choices to select the best units under development. Additionally, the approximate downpayment of 10 per cent proves to be an affordable option, especially when compared to the typical 20-25 per cent cost that is associated with purchasing completed projects .
An added element of affordability in the off-plan real estate space is the convenient payment structures that investors, and even end-users, can benefit from. Installation schemes can be split into a 40-60 allocation where the buyer pays 10% of the property cost upon signing, the balance 30 per cent in installments over the construction period of 18 months, and 60 per cent at handover. This lessens the financial strain of the investor and allows them to then structure rental contracts in a way that is still profitable for them but also attractive to tenants.
Upon the completion of a development, owners who rent out the unit they purchase are able to benefit from the UAE’s steady influx of expats. Landlords can expect a guaranteed annual minimum net return of five per cent even in upcoming areas of Dubai like Jumeirah Village and Al Furjan, which continue to be among the most attractive options for high-quality affordable housing.
Safety and regulations
Dubai’s Real Estate Regulatory Authority (RERA) has implemented a system of regulations to protect buyers against delays and project cancellations. A law introduced in 2017 safeguards buyers of off-plan real estate from developers who do not abide by their contractual obligations. Investors can accordingly buy off-plan properties with their best interests safeguarded at all times as installments are only deposited in regulated accounts, which developers can only access as they meet construction milestones.
Peace of mind
If an off-plan property is being bought for the purpose of eventually living in it, the owner can rest assured that they will be the first to enjoy their purchase. Just like the development itself, their apartment will be delivered to them brand new with a Defects Liability Period of one year, ensuring that the developer takes responsibility to rectify any defects that unfold. Additionally, developers and contractors have a 10-year obligation to safeguard the structure of the development.
Additionally, newer developments often come with upgraded designs, technology, and amenities For example, the first LEED Gold certified and Well-Being integrated development is currently under construction in Al Furjan; upon completion, ZaZEN Gardens will help residents live better through modern sustainable design, high quality finishes, easy connectivity and a multitude of community focused amenities, aligning with Dubai’s 2040 Urban Master plan and UAE’s 2050 Net Zero commitment.