Investing in off plan properties has several advantages and has proven to be a profitable investment for many investors. On the other hand, if adequate attention is not made to homework and the future, purchasing off plan properties can quickly become a perilous adventure. We recently addressed various strategies for reducing risks when purchasing off-the-plan properties, and now we’ll discuss some of the benefits and drawbacks of doing so.
The UAE and Dubai offer a diverse range of real estate opportunities for both property seekers and investors. Both have the freedom to invest in a wide range of projects, from commercial to residential to new-to-market, all of which are largely determined by three factors: their familiarity with the property market, their budget, and their requirements.
In addition, three groups of buyers typically purchase off plan residences in the UAE:
- Homebuyers who intend to dwell in the property.
- Investors who intend to profit from the property after it is completed.
- Investors who purchase an off-the-plan property to recoup their investment through rental income.
Regardless of whatever category you belong into, you should be confident about the purpose of your off plan property investment for the time being. So, now that you know what the term “off plan properties” means, let’s look at some of the benefits and drawbacks of buying off plan properties.
Pros and Cons of Buying Off Plan Properties
Let’s look at some of the advantages and disadvantages of purchasing off plan properties:
Affordable Investment
Investing in off-plan properties is akin to purchasing a piece of undeveloped property and saving to build it at a later date. Most developers provide a reasonably priced and flexible payment plan and do not want full payment upfront. So, in essence, these flexible payment plans enable the average person to explore investing in real estate by making it an accessible alternative for all types of investors.
Long Term Investment
Off plan properties are typically viewed as a long-term investment in the UAE’s property market due to the lack of control and uncertainty of possession. As a result, when buyers engage in off-the-plan projects, they are considered to be financially committed for a longer period [with a payment plan], which keeps their finances safe and rolling. Unlike other properties, buyers cannot earn from rental income regularly, nor do they have any control over the unit’s sale until it is finally given over.
Possession and Authority
While buying off-plan properties is a cost-effective alternative for all types of investors, no one has authority over the execution, completion, delivery, or possession of the property. As a result, this sort of investment is not ideal for someone who desires complete control over the aforementioned issues. The other type of buyer is unconcerned about entrusting their project to a developer, as long as the project is delivered on time. For other buyers, the uncertainty of possession and lack of control over off plan properties is a huge turnoff because they want a place to call home right away.
Project Delays
One of the most significant disadvantages of purchasing off-plan properties is that development takes place after the sunset period has passed. Given factors such as labor strikes, permits, and other legal procedures, supplier delays – not to mention weather and law and order issues – the developers have little control over the delay. In such circumstances, buyers can only expect the developers to follow up and be certain that the project will be completed. Buyers, on the other hand, can see the good side of the situation and see the delay as an extension of their deadline to pay their dues.
Conclusion
When it comes to risk and loss, however, no investment is safer than investing in real estate items. Off plan properties are also one of the most reliable solutions, despite numerous economic upheavals, due to their entirely adjustable layouts.