Off-Plan Projects in Dubai

Real estate in Dubai attracts buyers from all over the world; it provides high returns and unique business and leisure opportunities. Off-plan properties, in other words, properties under construction are becoming more and more popular. Is it a good decision to buy off plan properties in Dubai? Notwithstanding their obvious advantages, as in the case of any investments, such purchases require a good understanding of the risks.

• What Does the Term Off-Plan Mean?
  
• Benefits and Risks
• Size of the Off-Plan Market Size
• New Off-Plan Projects in Dubai

What Does the Term Off-Plan Mean?

The term “off-plan” is widely used on the real estate market in the Middle East. What does it mean to buy an off plan property in Dubai? It means the purchase of a unit in a real estate project currently under construction prior to its completion. In this case, the real estate tends to be purchased directly from the property developer. In some rare instances, however, they may involve sales on the secondary market. The property developer sells the real estate in accordance with the payment schedule which depends on the type of property and the date of its commissioning.

Practically this is an interest-free instalment plan from the developer. The down payment usually ranges from 5% to 40%. By making a down payment, the buyer books the property, and subsequently signs the sale and purchase agreement. The outstanding amount payable is split into several payments stretched out over a period of one to seven years. In addition, a significant proportion of the funds (sometimes 50% or more) is paid on completion of the construction.

Benefits and Risks

Let's discover the advantages and disadvantages of off plan developments in Dubai. Benefits of an off-plan deal:

• Lower price. This is the main benefit for most buyers who acquire real estate as a place to live or as an investment. At the same time, it should be borne in mind that the percentage of completion of the building has a significant impact on the price: the earlier the deal, the lower the price. On average, a completed property is 20% more expensive than an off-plan one.
• Wide selection. When you buy a home at the start of construction, you have more opportunities to choose the unit that is perfect for you in terms of characteristics such as layout, floor or view. In some instances you can even negotiate adjustments with the developer. The investor is interested in acquiring the best villas or flats in a project, as they generate more profit in future. By the time of the commissioning of the real estate complex, almost all the flats are usually sold and there is limited choice.
• Flexible payment options, discounts and bonuses. As developers offer various payment methods, you can always find a comfortable option. In addition, owing to the competition for customers, companies sometimes cover some of the expenses of property buyers (for example, they pay in part or in full the registration fee to the Dubai Land Department equivalent to 4% of the declared value of the property).
• Resale of off-plan properties. Investors can profit by selling real estate at the final stage of construction at a higher price. At the same time, many property developers establish a certain payment level  that the buyer must contribute in order to be able to resell a property.
• Modern materials and technologies. Construction technologies and materials are constantly improving. New properties are becoming more eco-friendly and energy efficient. Modern residential complexes offer not only a comfortable environment, but also an opportunity to save on utilities.

Risks of an the off-plan deal:

• Waiting for the end of construction. You should not expect to move into your flat or villa soon. For example, completion of many of the projects launched recently is scheduled for 2026 and 2027.
• Project delays. Delays can occur for many reasons: technical problems, a lack of funding or other force-majeure circumstances. At the same time, stalled construction is rare in Dubai, while instalment payments protect the buyer from losing all their funds. Furthermore, as a rule the stringent controls of the State help the investor to recover all investments. In particular, according to the requirements of the Dubai Real Estate Regulatory Agency (RERA), the land under property must be owned by the developer, and at least 10% of the value of the property must remain in an escrow account should any shortcomings in the property need to be addressed.
• You cannot inspect the property before the purchase. Notwithstanding the high level of modern computer visualisations and 3D tours, some buyers prefer to visit a property in person before making a decision, and to assess its real, and not future, characteristics. After all, there is always a risk that imperfections or defects in the completed property may be discovered at a later date. However, the risk of this happening in Dubai is low. Should it happen, you can expect to receive compensation in the form of additional services or a decrease in some of your expenses.
• Risk of opting for the wrong property. More competitive projects in terms of price and quality may appear nearby – as a result, the purchased property will lose its appeal. This issue is of paramount importance for investors.
• Risk of negative developments in the global economy. One cannot rule out the possibility of the sudden outbreak of a new global financial crisis or developments similar to the coronavirus pandemic. Such situations affect all sectors of the economy, including the construction industry.

How to protect yourself when deal with offplan projects in Dubai? To minimise your risks, you need to look into the activities of the developer and study the project documentation carefully. If you have any doubts, you should contact real estate specialists.

Size of the Off-Plan Market Size

Statistics show that the off-plan market has been becoming more popular recently. According to the website DXBinteract.com created with the support of the Dubai Land Department, the ratio of deals with finished and off-plan properties in 2021 was 55% to 45%, whereas in 2022 it was already 44% to 56%. In total, 17,494 deals with off-plan units were registered in 2022 with a total value of AED 39 billion (over USD 10.6 billion). Compared to 2021, the figures increased by 127.1% and 212.6%, respectively.

In 2023, there will be an increasing number of off-plan deals. The trend is becoming more and more noticeable. According to the results of Q1 2023, off-plan units already accounted for 59% of deals. During the first three months of 2023 17,694 such deals were registered, an increase of 62.7% compared to the first three months of 2022. The volume of sales increased by 85.3%, reaching AED 43.3 billion (nearly USD 11.8 billion).

In total 13,548 deals with flats were registered worth a total AED 29.4 billion AED (USD 8 billion), 4,076 deals with flats worth AED 13.7 billion (USD 3 billion 730 million). Commercial properties accounted for the remaining 70 deals.

In Q1 2023 an off-plan flat cost on average AED 1.3 million  (USD 354,000, up 10.5% in a year), while an off-plan villa cost on average AED 2.3 million (USD 626,200, up 26.8% in a year).

Jumeirah Village Circle, Business Bay, Dubai Marina, Dubai Creek Harbour, and Damac Lagoons were the regions offering the largest number of off-plan properties.

New Off-Plan Projects in Dubai

Are there off plan projects in Dubai? A number of interesting new off-plan projects are being implemented in Dubai right now. We highlight some of them here:

Peninsula Four

Let's discover the Dubai off plan real estate - Peninsula Four. This complex features two 52-storey skyscrapers in the Business Bay area. Here you can find studios, one bedroom to four bedroom flats, penthouses and 16 premium duplex lofts. The floor area of the flats ranges from 46 to 488 square metres, while prices range from USD 684,800 to USD 4.1 million. The project is scheduled for completion in Q4 2026.

Cavalli Couture

Cavalli Couture also offers off plan properties in Dubai. The project with a wave-like facade and stunning cascading waterfall will be situated near Safa Park on the banks of Dubai Canal. The design was created by DAMAC Properties in collaboration with Cavalli fashion house. The complex will feature two 12-storey buildings. One of them will house a hotel, while the second building will consist of residential flats and penthouses with three to six bedrooms. Unit prices start at USD 4.5 million. The project is scheduled for completion in Q2 2025.

Elegance Tower

Elegance Tower is another off plan project in Dubai. This modernist 26-storey tower is being developed in Downtown in the centre of Dubai. The complex features one bedroom and two bedroom flats with a floor area from 69 to 107 square metres. Prices range from USD 492,000 to USD 883,600. The project is scheduled for completion in Q2 2026.

Bay by Cavalli

Let's continue discover Dubai off plan projects with Bay by Cavalli. The complex at Dubai Harbour right next to Palm Jumeirah will feature three 42-storey buildings. One bedroom, two bedroom and three bedroom flats will be available on the lower part of each building (floors 2 to 28). The upper floors (29 to 40) will feature three bedroom to five bedroom flats, while the top floors will be occupied by penthouses.

The prices of one bedroom flats with a floor area of 67 square metres start at USD 796,500, two bedroom flats with a floor area of 119 square metres at USD 1,210,000, three bedroom flats with a floor area of 185 square metres at USD 1,968,000, four bedroom flat with a floor area of 399 square metres at USD 5,370,000. The project is scheduled for completion in Q4 2026.

Beachgate By Address

Beachgate By Address is last but not least Dubai off plan project. Beachgate By Address, a high-rise residential complex, situated next to Bay by Cavalli in the new premium community of Emaar Beachfront, is scheduled for completion by the end of 2026. There are 242 residential units: flats with one to four bedrooms and duplex penthouses.

The prices of one bedroom flats with a floor area 73 square metres start at USD 808,700, two bedroom flats with a floor area of 114.5 square metres at USD 1,300,000, three bedroom flats with a floor area of 148.2 square metres at USD 1,800,000, four bedroom flats with a floor area of 224.8 square metres at USD 2,900,000.

In a Nutshell

In conclusion, this article tells about new off plan projects in Dubai. The number of off-plan property deals in Dubai is growing. The increasing demand of foreigners is triggering new construction projects, while local legislation aims to protect the funds of investors. As a result, when you choose between a finished and off-plan property, everything will depend on your criteria and goals. Is it worth buying an off plan property in Dubai? If you select the property wisely and do not need to move in immediately, the purchase of an off-plan unit can generate a good profit in future and provide you with comfortable living conditions.

Cover photo: piqsels.com