Which Should I Buy in the UAE: Off-Plan or Secondary Properties?
At the start of your Dubai property search, you’ll need to decide between off-plan, primary, and secondary properties. This is a critical choice for any property buyer.
If you don’t know what is the difference between Off-Plan and Secondary Properties? And not having the right understanding can cause problems in choosing. Here are some articles that can help you understand!
By explaining these terms and outlining the advantages and disadvantages of primary and secondary properties, we aim to equip you to make a better decision.
What is a Primary Property?
As the name implies, primary properties are properties constructed by a developer. You can purchase a new-build property directly from the developer’s sales team or through a real estate broker.
Buying a primary property means it has never been owned before; you’ll be the first owner. New-build properties can be either “off-plan” or “ready-to-move-in.”
It’s important to note that not all off-plan properties are primary properties. Some individuals buy off-plan properties from developers and then resell them before construction is finished. This makes the property a “resale” or “secondary” property, even though it’s still off-plan, because you’re not buying it directly from the developer.
What is an Off-Plan Property?
In Dubai, an “off-plan” property is one that is still under construction. This includes properties in the early planning stages or actively being built. Off-plan real estate can be a good investment option because it often offers benefits like competitive pricing and the chance to secure property in desirable locations before they are fully developed.
Typically, buyers who invest in off-plan properties anticipate significant value increases once the property is completed. This makes it a popular choice in Dubai’s vibrant real estate market. In contrast, a “ready-to-move-in” property is fully constructed and available for immediate occupancy.
To summarize the terms used in the Dubai real estate market:
- Off-plan Property: The property is still under construction, and the developer has a set completion date.
- Ready-to-Move-In Property: Construction is complete, and the property is ready for immediate occupancy.
What is a Secondary (or Resale) Property?
Conversely, a Secondary (or Resale) property is one that has been previously owned. The current owner (not the developer) is selling it, often seeking a profit.
Essentially, Secondary properties are those currently rented out, occupied by the owner, or available for rent or Secondary (or resale) Property.
These properties are often located in established neighborhoods. However, sometimes, someone who bought an off-plan property may choose to sell it before completion, meaning some resale properties can be off-plan in developing communities.
Which is better off-plan vs. Resale properties? A Comparison
Off-Plan Properties:
Modern Designs
Buying a Off-Plan property means you’ll get contemporary designs and up-to-date amenities. There are also often financial advantages to buying new.
Potentially Lower Initial Price
Off-plan new-build properties can sometimes be priced lower than comparable completed properties. Developers often offer discounts and deals to attract early buyers.
Developer Incentives and Flexible Payment Plans
Some developers may cover certain legal costs, such as the Dubai Land Department fee. Many also offer flexible payment plans.
Potential for Higher Return on Investment
The factors above can lead to good capital appreciation (an increase in market value) even before construction is finished. Buying at a lower price and potentially selling at a higher price can lead to significant profit.
Minimal or No Renovation Costs
Because these properties are brand new, you likely won’t need to spend much on renovations.
Disadvantages:
Limited Availability
Demand for new-build properties can be high, and units may sell quickly after being released.
Risk of Project Delays or Abandonment
There’s a small risk of project delays or abandonment if a developer faces financial difficulties. However, Dubai has regulations in place to protect off-plan buyers, such as requiring developers to deposit a percentage of the project cost into an escrow account.
Potential Discrepancy Between Expectations and Reality
With off-plan properties, the finished product might not perfectly match the initial renderings. It’s crucial to buy from reputable developers with a history of delivering quality projects.
Secondary (or Resale) Properties:
Advantages:
Established Property and Location
Resale properties are often ready-to-move-in and located in established areas. You’ll have a clearer understanding of the neighborhood, amenities, and living conditions.
Wider Selection Options
Compared to the fast-paced new-build market, there’s often a broader selection of resale properties available.
Potential for Price Negotiation
While developer incentives aren’t available, you might be able to negotiate the price of a resale property.
Developer Incentives and Flexible Payment Plans
Some developers may cover certain legal costs, such as the Dubai Land Department fee. Many also offer flexible payment plans.
Potential for Higher Return on Investment
The factors above can lead to good capital appreciation (an increase in market value) even before construction is finished. Buying at a lower price and potentially selling at a higher price can lead to significant profit.
Negotiable & Lower Price
While developer promotions are typically not associated with resale properties, these properties may present a more economical option compared to new developments. Engaging the services of a qualified real estate agent can facilitate effective price negotiation, thereby optimizing your investment.
Disadvantages:
Potential Renovation Costs
You might need to budget for renovations, depending on the property’s age and condition.
Potentially Outdated Design
The property’s design might not be as modern as a new-build.
Less Flexible Payment Options
You won’t have access to the same flexible payment plans offered by developers.
FAQS
Can I sell my off-plan property in Dubai?
Yes, It’s possible to sell your off-plan property in Dubai even if it’s currently under a mortgage or financed through a loan. However, selling a property with an existing loan involves a few extra steps because the outstanding balance must be settled before the sale can be finalized and a No Objection Certificate (NOC) issued.
What is the opposite of off-plan property?
if you don’t want to buy off-plan, You can choose a Ready property
- Off-plan properties are purchased based on architectural plans and are not yet complete, yet to be constructed.
- Completed properties, whether available for immediate occupancy or currently occupied, are considered ready properties.
To summarize, there are trade-offs to consider with both primary and secondary properties. Making the right choice requires careful consideration of your financial standing, individual requirements, and risk tolerance. Utilizing a mortgage calculator can provide valuable insights as you evaluate your options. Furthermore, consulting with experienced mortgage advisors through platforms such as Mortgage Finder can help you secure the ideal financing for your purchase.
Now that you’re familiar with key market considerations, discover over 100,000 primary and secondary properties listed on Property Icon Real Estate (iconre.co).
Should you require further advice before starting the process of buying property, we offer valuable insights in our guide to purchasing property in Dubai.