Three reasons why off-plan property buys can be problematic
It's a sector of the real estate market that remains buoyant but it is not without its own issues, says Michael Burke of Arabian Escapes.
All real estate transactions in Dubai are subject to a registration fee of four percent 1. Pricing trap: Historically, the off-plan model was based on an upward trending market, where you paid tomorrow’s price today knowing the market was going up. But as prices are dropping, properties bought off-plan today could well be worth less by the time they’re completed, especially when you factor in commissions and flexible payment plans that allow developers to charge an even higher price per sq ft. Research here is key. 2. Developer problems: Off-plan can still lead to a dream property, handed over new and to your exact specifications. But that depends on the developer. You might be paying more with Emaar, but you’ll get the quality and assurances of completion – otherwise, you’re buying a concept that only looks great in a brochure. And you might be buying into delays or contractor disputes you didn’t know about, so arm yourself with knowledge. 3. Location, location, location: Until recently, off-plan properties were located in up-and-coming areas. But the opportunities in such locations are becoming fewer and new projects are being pushed further out of the city into areas that are far more of an unknown quantity. Can you take a chance on these locations? Again, watch what the likes of Emaar and Dubai Properties are doing – and where they’re doing it.