3 facts you need to know about OFF-PLAN properties

3 facts you need to know about OFF-PLAN properties

(Article by Richard Miklos, CEO of Smith & Great)

The meaning of OFF-PLAN, from an investor’s perspective, is nothing but buying from the designer’s table. At this point, the property you purchase only exists on blueprints, and its construction takes place over the following years. The boom in this area started in Dubai in recent years and has now become the primary mode of sale.

But why would you buy a property that doesn’t even exist yet? Here are some arguments in favor of this new investment method:

At the moment of purchase, you can fix a purchase price without having to pay 100% of it immediately, only a fraction of it simultaneously with signing the contract. These fixed prices represent unit prices below current market rates at the start of a new project. The payment schedule consists of two parts:
– one during construction and
– the other at handover (or often after). 
Generally, the first installment is 20% of the total purchase price. Subsequent payments vary by developer, but there are investments where the apartment purchase price can be paid over 80 months with monthly payments of 1%. In summary, OFF-PLAN PROPERTY SALES ARE MADE AT A FAVORABLE FIXED PURCHASE PRICE, BELOW MARKET RATES, IN INSTALLMENTS.

In the Dubai real estate market, the average annual price increase is approximately 13%. In addition, there are highlighted areas, a good example being the JVC, popular among Europeans, where apartment prices rose by an average of 25% in 2023. This means that during the 2.5-3-year development period of OFF-PLAN projects, the value of purchased properties often increases by 50% at handover compared to the moment of purchase. The 50% increase applies to the total purchase price of the apartment, but let’s not forget that until now, in many cases, only part of the apartment’s purchase price has been paid. Therefore, our return on investment is proportionally higher than this.

As we maintain close business relationships with developers, in many projects, properties can be PRE-PURCHASED OR RESERVED before they hit the market, e.g., through Smith & Great. This is important for buyers to access the best apartments within the building, catering to their preferences, whether it’s the floor, orientation, view, or layout.

In summary, the Dubai real estate market, especially in the case of such properties, may be favorable for investors seeking high returns and a diverse portfolio. Due to the city’s dynamic growth, strategic location, and iconic developments, it is an excellent choice for savvy investors (or with savvy professional assistance).

Are you ready to explore this world? Contact us today, and let’s make your real estate aspirations come true.

Richard Miklos, CEO, Smith & Great