Buying luxury properties off-plan: what to ask

Buying luxury properties off-plan: what to ask

Joseph Ghossoub, Chairman, G&Co

It’s hard to believe it is only 19 short years since Sheikh Mohammed unveiled the vision for Dubai’s real estate market. In that time the city and its economy have transformed – several times – and its model for internationally-owned, freehold property, adopted across the Gulf.

In the early days, the market was built on off-plan developments and investors from across the world put their money in the Manhattan of the desert. Today, as the region prepares for its 2020 and 2030 visions, off-plan once again sets the pace.

G&Co has recently launched the final phase of development in Mohammed bin Rashid City (MBRC), Cassia, which forms part of the Fields development, and are now available for purchase with handover expected in 2019.

The Fields is the largest of three developments G&Co has introduced to MBRC and Meydan, the other two developments, Millennium Estates and Grand Views are already sold-out.

In addition to Cassia, The Fields features two additional components – Jade and Viridian – with all 1028 homes due for handover in 2019. Only Cassia’s luxury four-bedroom family villas featuring gardens and garage, priced between AED2.9million and AED3.7 million, remain

These properties offer something different in Dubai. High quality, centrally located close to both Downtown and Dubai International Airport, Meydan is an area that has garnered a lot of interest in the past and is expected to receive high levels of interest over the coming years.

Data from Chestertons MENA shows off-plan transactions in Dubai increased 60% YoY, 2016 – 2017, with the highest sales volumes achieved in Meydan, Mohammad Bin Rashid City, Dubailand, Business Bay and Al Furjan and the highest values achieved in the Lagoons, Downtown Dubai and Business Bay. Similar trends are evident in Abu Dhabi.

A large share of the additional sales can be attributed to the rise in affordable units across the market, and the popularity of studio and one-bedroom apartments in off-plan developments confirm this. As a result, these units are now factored into a growing number of developments to sustain the new sales trends, with 45% of the five-year pipeline priced below AED 1,000 per sq. ft.

However, the remaining 55% is ear marked for the luxury real estate market Dubai built its name on. With developers now offering everything from interest-free periods to luxury cars as a matter of course, it’s easy to be carried away in the excitement of owning a beautiful property in one of the world’s fastest growing cities.

There are many benefits to buying off-plan – from high capital appreciation to exclusive locations and breathtaking design. But perhaps the greatest benefit today’s investors have, is the wisdom of others’ experience. Here are two questions every off-plan investor should ask before signing on the dotted line:

Who is the developer? Dubai’s major developers are well-known, reputably firms, with many successful projects in the portfolio. While this does not guarantee their future success, delivery rates are a proven indicator of a safe investment in most cases. Agents provide impartial advice, often drawing on years of first-hand experience of the market and it’s important to tap into them as a source of insider knowledge; not only on the developer, but on the reputation of contractors and any known issues with infrastructure in the surrounding neighbourhood.

Is the development approved by RERA? In October 2016, new regulations came into force requiring all developers and brokers obtain approval from Dubai’s Real Estate Regulatory Authority (RERA) before advertising property in the media. This offers additional transparency for investors and genuine developers and has renewed confidence in the off-plan market. To streamline the process for potential investors, the RERA website now has a tool to check the number, escrow account, status, and progress of real estate projects.

We should also remember there are many benefits to buying property in Dubai for both investors and end users, both ready and off-plan. Rental returns can be double those seen in other major cities such as London, New York and Hong Kong. With returns reaching 9% in secondary areas and 5-6% in primary areas investors will continue to identify Dubai as one of the world’s leading real estate markets. The guaranteed residence visa for all properties over 1 million is also a large contributing factor in why so many chose to buy property within Dubai.