The Soaring Demand for Off-plan Properties

Despite the risk associated with off-plan properties, buyers are willing to invest in them for a variety of reasons. REM TIMES finds out more

April 05, 2024 | Deepa Natarajan Lobo | UAE | Developers

The Soaring Demand for Off-plan Properties

2024 has been an outstanding year so far for the property market of Dubai. In February alone, the emirate witnessed a staggering 12,475 transactions, totalling AED 48 billion. Of these, the off-plan sector has constituted approximately 27% of total transactions accounting for a substantial AED 13 billion in value.

As per a recent report, there has been a significant uptick in demand for off-plan properties, marked by a year-on-year volume growth of approximately 25%, totalling 6,000 transactions. Furthermore, the values of these transactions surged by around 21% compared to the previous year, reaching approximately AED 15 billion, contrasting sharply with the AED 12.2 billion recorded in January 2023.

The primary reason for the high demand of off-plan properties in Dubai is the low-entry point and availability of supply at affordable prices, according to Samer Chehab, Founder & CEO, PropertyGuru.ae, a firm that deals exclusively with off-plan projects. “More importantly, because of the guidelines around financing such projects, including having escrow accounts, off-plan properties give buyers a lot of confidence. Today, many developers have also introduced flexible payment plans, with some even including a post-handover period. This means that buyers are well protected from any downside risk. In the end, buyers get brand new properties, with no need to invest in upgrades, along with strong capital appreciation and ROI between 6-10%,” he elaborates.

Today, many developers have introduced flexible payment plans, with some even including a post-handover period. This means that buyers are well protected from any downside risk.

Samer Chehab, Founder & CEO, PropertyGuru.ae

Breaking Records

Liam Chase, Senior Developer Property Consultant, Allsopp & Allsopp, points out that in 2024 so far, there has been a new off-plan property launch every 17 hours – already a record after 2023’s impressive launch every 20 hours.  “Coming off the FATF ‘Grey List’ earlier this year has also quickly made the real estate market almost irresistible for large global investments to enter. As a result, we can expect to see acceleration in the release of off-plan projects available for investment during the year,” he observes.

The off-plan projects here offer superior amenities and a simple purchase process with a range of payment methods, no agency fees, no in-person requirements, or a POA for property registration.

Liam Chase, Senior Developer Property Consultant, Allsopp & Allsopp

Chase believes that Dubai’s offplan projects are far more affordable when compared to their counterparts in other major international cities, making them all the more appealing to international and local investors. “Moreover, the off-plan projects here offer superior amenities and a simple purchase process with a range of payment methods, no agency fees, no in-person requirements, or a POA for property registration. Coupled with economic stability and strong government policies such as the Golden and Green Visas, the market continues to attract large amounts of investment.”

Battling the Risks

There is no doubt that a developing project could pose several risks, such as delays, and discrepancies between what was promised versus what was delivered. However, experts believe that working with reputed agents and developers who have a strong track-record, can ensure that property buyers get the dream home that they are looking for. 

As a developer, ensuring transparency entails outlining risks, potential rewards, and scope. Moreover, if buyers receive exactly what was advertised to them, it will help a developer establish a strong, successful track record.

 Milos Antic, Vice Chairman of DHG Holding and Founder of DHG Properties

“Building confidence between developers and real estate firms requires transparency; this is key, as providing detailed and clear information about the project – while ensuring that investors and end-users receive exactly what they expect upon handover – will demonstrate that a developer doesn’t just ‘talk the talk’,” says Milos Antic, Vice Chairman of DHG Holding and Founder of DHG Properties.

 

Gaining the trust of investors is of utmost importance too as Antic points out, “As a developer, ensuring transparency entails outlining risks, potential rewards, and scope. Moreover, if buyers receive exactly what was advertised to them, it will help a developer establish a strong, successful track record. Financial stability is a major key as well, as savvy investors notice that business alliances and funding are what nurture the longevity and value of their real estate investments. These are some of the key criteria that help build long-lasting trust and mutually beneficial relationships.”

A Booming 2024

According to Allsopp & Allsopp, property prices have already experienced a 1.1% increase so far this year. With experts projecting a further 6.6% rise by the end of the year, off-plan sales will continue to be much sought-after constituting 60% of the transactions. “With interest rates and the cost of borrowing falling in 2024, we will also be seeing the off-plan investment appeal extend to first-time buyers as a way of escaping the increasing rents in Dubai,” Chase sums up.

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