Off-plan vs completed property in Dubai: Quadruple your money?

An analysis of off-plan properties versus completed properties in Dubai has found that the former offer almost five times more returns than the latter.

The analysis done by Unitas Consultancy and Reidin.com assumed that a property worth Dh1 million would fetch 8 per cent return on investment (RoI) for completed units, while the off-plan unit would offer 58 per cent RoI on a lesser capital.

Earlier this month, Dubai Land Department reported that the total real estate transactions had reached Dh186 billion in the first nine months of 2015.

“The report confirms beyond any doubt that the real estate sector in Dubai is heading towards sustainable growth. This can be ascertained from the continual increases from one quarter to the next, which have been a feature of the market over the last two years,” Sultan Butti bin Mejren, Director-General, Dubai Land Department, had said.

In August 2015, Lookup.ae, a local real estate portal, said a total of 120 new projects have been launched in Dubai in the past 24 months, with investors being drawn to the off-plan market due to attractive prices and payment plans.

Emirates 24|7 spoke to three property experts to know their view on what path investors should follow to make money in the property market. Here is what they had to say on whether it was wise for an investor to buy a ready property now than buy an off-plan unit?

Craig Plumb, Head of Research, JLL Mena

“Ready properties are a more attractive option than off-plan projects for both end users and investors, as either group can benefit from the use of the property or the rental income more quickly and there are less risks involved than with off plan products (which may not be delivered on schedule or to the quality promised).

“The only benefit of purchasing an off-plan unit is the level of price discount that can be achieved.  Purchasers have to weigh up the benefits of buying a completed unit (that they can live in or rent out immediately), against the lower prices they can achieve if they purchase a similar unit on an off plan basis.”

Robin Teh, Country Manager, Chestertons UAE

“That decision depends upon objective of investment. With the attractive rental yield, investors are attracted to buying properties in the region, as for many localities, the rental income is higher than the monthly mortgage payments. However, if an investor is looking for capital appreciation off-plan projects from reputable developers should be considered.”

Erik Volkers, Senior Consultant, Research, CBRE Middle East

“Dubai’s residential sector is now witnessing more widespread deflationary trends, with a three per cent decline in residential rentals recorded during Q2 2015, while the sales market continues to see downward movements in both transaction values and volumes.

“With over 20,000 new units expected to be completed during the course of the year, we expect to see this trend continue during the coming months as new supply is delivered. We expect tenants to be in a strong position to (re)negotiate their rent during the coming months.”

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