You’ve decided to take the plunge and invest in Dubai real estate. With thousands of properties, you consider buying off-plan or in the secondary market. Both options have advantages and disadvantages that can dramatically impact your investment returns and experience as a property owner in Dubai.
Let’s compare off-plan vs. secondary properties across key factors like pricing, completion risk, amenities, rental yields, and resale value. You’ll learn insider tips to help you make the right choice based on your investment goals, timeline, and risk tolerance.
Whether you prioritize cost savings, rental income, or easy resale, you’ll gain the knowledge to invest confidently in the Dubai property market. Let’s dive in and shed light on the off-plan vs. secondary properties debate so you can invest wisely for the future.
Off-plan properties in Dubai offer many benefits for smart investors. Here’s a quick rundown:
Off-plan means you buy property directly from the developer before construction is complete. This allows you to purchase at a lower price point.
Payment plans are flexible – you can pay in installments rather than all upfront. This helps ease the burden.
High rental yields – new builds often garner top rents, especially in popular areas. Steady tenants mean healthy returns.
Capital appreciation – property values tend to rise as construction progresses, giving you equity.
Customization may be possible if you buy early on. Make it your own.
Developer incentives like free appliances or no service fees for two years. Don’t leave money on the table.
Of course, there are risks, too. Construction delays or changes in market conditions can impact valuations. Do your due diligence before investing in off-plan property in Dubai.
Benefits of Buying Off-Plan in Dubai
Purchasing off-plan in Dubai can offer access to new and innovative developments that may not be available in the completed property market. This can give buyers a unique investment opportunity and potentially higher returns on investment.
Buyers can often choose the property’s layout, finishes, and other details to suit their preferences. This can result in a property tailored to the buyer’s needs and desires. Access exclusive and innovative architectural designs for modern living unavailable in the secondary market.
Lower Market Price
Off-plan properties are nearly 20% cheaper than comparable ready units. You buy at today’s price for tomorrow’s property.
Developer Promotions & Flexible Payment Plans
Enjoy attractive offers like waived DLD fees, accessible appliances, and extended payment schedules to ease cash flow. Developers typically offer flexible payment plans that allow buyers to pay for the property over time, often in installments. This can make it easier for buyers to finance their purchases and manage their budgets.
Higher Return on Investment
Capitalize on tremendous appreciation over the construction period. Completed units typically see 25-40% gains. This is because initial prices for off-plan properties are lower than for completed properties.
As the development progresses and the project nears completion, the property value typically increases, resulting in a higher return on investment for the buyer.
Low or No Refurbishment Cost
Brand new units mean little to no renovation costs. Move right in upon completion versus fixing up an old property.
Going off-plan allows buyers to maximize value and customize units in Dubai’s newest projects for less. With strategic timing, you can profit before even taking possession. Just partner with an experienced agent to navigate the process.
Drawbacks of Off-Plan Properties
While off-plan properties can offer some advantages, there are also some potential drawbacks to be aware of:
Limited supply: There is only a finite number of off-plan units available. As those units sell, your options become more limited.
Possibility of project abandonment: There is always a risk that an off-plan project could be abandoned or delayed indefinitely. Make sure to research the developer thoroughly.
Delivery might not meet expectations: The finished product may not look or function exactly as envisioned or depicted in off-plan materials. Expect some differences.
Changes in market conditions: Market conditions could decline between purchase time and project completion, affecting resale value.
Delayed possession: Projects often get delayed. You may have to wait years longer than expected to move in. Consider interim housing costs.
Speculative investment: As an investment, off-plan properties carry higher risks than existing properties.
Weigh these drawbacks carefully before committing to an off-plan purchase. Consulting with a knowledgeable real estate professional can help you make the best decision.
What are Secondary Properties?
Secondary properties in Dubai refer to previously owned or “used” residential units being resold in the market. These can include apartments, villas, townhouses, etc., purchased directly from a developer and are now up for resale.
The original buyer lived in or rented the property before returning it to the market. So, in essence, you’re buying a property “second-hand” rather than directly off-plan from the developer.
The main advantage of secondary properties is they’re available immediately. You can view, buy, and move into the unit right away.
With off-plan, you may wait 1-3 years for construction to complete before getting possession. Secondary also allows one to see the actual unit in person before purchasing, not just show the unit.
The downside is secondary tends to be 10-20% more expensive than buying off-plan directly from the developer. But resale values also increase if the market is growing, so it can be a good investment long-term.
Overall, secondary properties offer quicker occupancy and less construction risk vs off-plan projects.
Advantages of Secondary/Ready Properties
There are numerous advantages of investing in ready for possession properties or have been used before. Purchasing a secondary or ready property in Dubai has some key advantages compared to buying off-plan:
Before committing, you can view the actual unit and location firsthand rather than relying on floor plans. This allows you to inspect finishes and assess noise or privacy issues.
One of the primary benefits is that you can move in or put the property up for rent immediately without having to wait for construction or renovation work to be completed. This means you can start generating income or living in your new home without delay.
Another advantage of secondary properties is that they tend to be more affordable than newly constructed properties. This is because the cost of land and construction materials has already been factored in, and the seller may be more willing to negotiate on the price.
Secondary properties are often located in established neighborhoods with an existing community and infrastructure. This means you have access to amenities such as schools, hospitals, shopping centers, and public transportation, making your life more convenient and comfortable.
No need to wait 1-3 years for completion. You can move in on your timeline.
Often, there is more wiggle room for negotiations, incentives, or rent-to-own terms compared to in-demand off-plan launches.
Carefully weigh your priorities like timing, budget, and location when deciding between ready or off-plan property purchases in Dubai. Conduct thorough due diligence to make the best choice for your needs.
Drawbacks of Secondary Properties
Purchasing a secondary property in Dubai does come with some potential drawbacks to consider:
Older properties may require renovations and upgrades to modernize the layout or fixtures—factor in these potential costs.
Esthetics and layouts may be less desirable or efficient with an older building than with newer off-plan units.
Payment plans on secondary properties are usually less flexible than those offered by developers on off-plan purchases. You may need to pay the total amount upfront rather than in installments.
Existing wear and tear or defects could only come to light after you move in. Inspect thoroughly beforehand.
The owner may be unable to provide all the paperwork for permits, maintenance records, etc. This can cause issues later.
If it’s a rental, tenants may not vacate on time—factor in potential eviction costs or lease extensions.
With resales, there is less customization than designing your own off-plan home.
An off-plan property may have better amenities, parking, views, and facilities if part of a new development.
Weigh up these factors before choosing secondary over off-plan. Inspect thoroughly and negotiate prices to account for repairs needed.
Off-Plan vs. Secondary Properties: Key Factors to Consider
When deciding between purchasing an off-plan vs. secondary property in Dubai, there are a few key factors to weigh:
Off-plan properties typically take 1-3 years to complete, while secondary properties are available immediately. So, thinking about how soon you need the property is essential.
With off-plan properties, you can customize the unit’s layout and finishes to your liking, whereas secondary properties usually have limited options for changes. Off-plan allows you to customize unit layouts and finishes—secondary limits changes.
Off-plan properties are usually 10-20% cheaper than comparable secondary units, but you must weigh the savings against other factors before deciding.
The location of off-plan buildings may not be as central as existing buildings, so it’s important to check access to amenities and transportation.
Researching the developer’s track record for quality and timely delivery of off-plan purchases is crucial.
Existing buildings may already have more amenities like gyms, pools, and shops, while off-plan amenities will take time to complete.
Off-plan may require higher down payments. Secondary may offer better mortgage rates. Understand all costs.
Brand new off-plan units may have higher future resale versus older secondary units.
Consider your priorities like timing, customization, price, and location. Seek advice from experienced real estate professionals. Do thorough due diligence before committing to ensure your property meets your needs.
You now have a good understanding of the critical differences between off-plan vs. secondary properties in Dubai. While off-plan can offer significant discounts, secondary properties provide the security of a finished product.
Consider your budget, timeline, and risk tolerance when deciding between the two. Act fast once chosen, as both markets move quickly in Dubai.
With the right research and expectations, you can end up with your dream home in this exciting city. Whether you pick new or resale, enjoy the process and remember – location is always the most critical factor. Happy house hunting!