off-plan properties dubai

Off-plan Property Dubai: A Complete Guide For Investors in 2023

If you are looking for a lucrative investment opportunity in the real estate market of Dubai, you might want to consider buying an off-plan property. But what is an off-plan property and how does it work?

In this article, we will answer all your questions about off-plan properties in Dubai, from the advantages and risks to the types, locations and the requirements and documents of that you need to invest in off-plan projects.

We will also provide you with some tips and guidance on important topics such as how to buy an off-plan property in Dubai, the different types of financing options & payment plans and important factors such as the return on investment when you start the process of acquiring a off plan property.

What Is An Off-Plan Property?

An off-plan property is an unconstructed property purchased directly from a developer. It’s a property that is yet to be built or in some cases is in the early stages of being built.

In the UAE, off-plan property means purchasing real estate during the construction phase, before facility commissioning.

In this case, the value of housing is usually 10 – 20% lower than in completed projects. The off-plan property market offers numerous new residential projects under construction in Dubai, so the choice is always yours.

What Are The Advantages Of Buying Off-Plan Property?

Buying an off-plan property in Dubai has many benefits for investors, such as:

1. Low Prices And Great Payment Options

One of the main reasons why investors choose to buy off-plan properties in Dubai is the lower price compared to ready properties. Developers usually offer attractive discounts and incentives to attract buyers and secure funding for their projects.

• Moreover, off-plan properties come with flexible payment plans that may include post-handover payments in order to maximize the ROI.

This means that you can pay a small down payment (usually 10% to 20%) and then pay the rest in installments over several years.

2. High Return On Investment

Another advantage of buying an off-plan property in Dubai is the potential for high return on investment.

• Since you are buying the property at a lower price than the market value, you can expect to sell it at a higher price once it is completed and delivered.

Depending on the location, quality, and demand of the project, you can earn up to 30% profit on your investment.

3. High Rental Yields

Dubai is one of the most popular destinations for tourists, expats, and business travelers in the world. This means that there is always a high demand for rental properties in the city.

• By buying an off-plan property in Dubai, you can take advantage of this demand and generate a steady income from your investment.

According to a report by Property Finder, the average rental yield in Dubai was 6.6% in 2020, which is higher than many other global cities such as London (3.5%), New York (2.9%), and Hong Kong (2.4%). Some of the areas that offer the highest rental yields in Dubai are International City (9.9%), Arjan (8%), Jumeirah Village Circle (7.7%), and Discovery Gardens (7.6%).

4. Huge Variety of Projects

Dubai is known for its innovative and diverse real estate projects that cater to different tastes, budgets, and lifestyles.

• Whether you are looking for a luxury apartment with a stunning view of Burj Khalifa, a spacious villa with a private pool and garden, or a cozy townhouse in a gated community, you can find it all in the off-plan market.

You can also choose from different types of off-plan properties such as freehold or leasehold, furnished or unfurnished, serviced or non-serviced. You can also customize your property according to your preferences and needs.

What Are The Risks Of Buying Off-Plan Property?

While buying an off-plan property in Dubai has many advantages, it also comes with some risks that you should be aware of before making a decision. Some of these risks are:

1. Construction Delays

One of the most common risks of buying an off-plan property in Dubai is the possibility of construction delays. Due to various factors such as weather conditions, labor shortages, material shortages, design changes, or legal issues, the developer may not be able to complete and deliver the project on time.

• This can affect your plans and expectations as an investor, especially if you are relying on rental income or capital appreciation.
• To avoid this risk, you should research the developer’s track record and reputation, and check the contract terms and conditions carefully.

You should also look for projects that have an escrow account, which is a legal arrangement that protects your money in case of any disputes or defaults.

2. Developer Insolvency

Another risk of buying an off-plan property in Dubai is the possibility of developer insolvency. This means that the developer may go bankrupt or run out of funds before completing the project.

• This can result in the cancellation or abandonment of the project, leaving you with no property and no refund.
• To avoid this risk, you should choose a reputable and reliable developer that has a strong financial backing and a proven track record of delivering quality projects.

You should also check the developer’s registration with the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA), which are the authorities that regulate and monitor the real estate sector in Dubai.

3. Changes In Market Conditions

A third risk of buying an off-plan property in Dubai is the possibility of changes in market conditions. The real estate market in Dubai is dynamic and influenced by various factors such as supply and demand, economic growth, population growth, tourism, government policies, etc.

• These factors can affect the price and value of your property over time, either positively or negatively. For example, if there is an oversupply of properties in a certain area or category, the prices may drop and affect your return on investment.
• To avoid this risk, you should do a thorough market analysis and research before buying an off-plan property in Dubai.

You should also diversify your portfolio and invest in different types of properties and locations.

4. Quality Issues

A fourth risk of buying an off-plan property in Dubai is the possibility of quality issues. Since you are buying a property that is not yet built, you may not be able to inspect it or verify its quality until it is completed and handed over.

• There may be discrepancies between the brochure or model and the actual property, such as size, layout, design, finishing, amenities, etc.
• There may also be defects or faults in the construction or installation that may affect the functionality or safety of your property. To avoid this risk, you should check the developer’s previous projects and reviews from other buyers.

You should also hire a professional inspector to conduct a final inspection (PDI) before accepting the handover of your property.

What Are The Different Types Of Off-Plan Properties In Dubai?

Dubai offers a wide range of off-plan properties for investors to choose from, depending on their preferences, needs, and budgets. Some of the most popular types of off-plan properties in Dubai are:

1. Townhouses

Off-Plan Townhouses in Dubai are multi-story residential units that are attached to one or more similar units by a common wall. They usually have a small front yard and backyard, and sometimes a garage or parking space.

Townhouses are ideal for families who want more space and privacy than apartments, but less maintenance and cost than villas. Some of the areas that offer off-plan townhouses in Dubai are Damac Hills, Emaar South, Dubai Hills Estate, Mira Oasis, and Serena.

2. Villas

Off-Plan Villas in Dubai are detached single-family homes that usually have a large plot of land with a garden, pool, and other amenities. Villas offer more space, luxury, and privacy than townhouses or apartments, but they also require more maintenance and cost more.

Villas are ideal for families who want to enjoy a lavish lifestyle and have a high budget. Some of the areas that offer off-plan villas in Dubai are Arabian Ranches, Jumeirah Golf Estates, The Villa Project, Akoya Oxygen, and Al Barari.

3. Apartments

Off-Plan Apartments in Dubai are self-contained residential units that are located within a building or complex with shared facilities such as elevators, parking, security, gym, pool, etc. Apartments come in different sizes and layouts, from studios to penthouses.

Apartments offer more convenience, affordability, and flexibility than townhouses or villas, but they also have less space and privacy. Apartments are ideal for singles, couples, or small families who want to live close to the city center and have a low to medium budget.

How Does Buying An Off-Plan Property In Dubai Work?

Buying an off-plan property in Dubai is not very different from buying a ready property in terms of the steps involved, but there are some differences and specificities that you should be aware of. Here are the main steps to follow when buying an off-plan property in Dubai:

Step 1: What Type Of Off-Plan Property Do You Want And Why?

The first step is to decide what type of off-plan property you want to buy and why. This will help you narrow down your options and focus on the projects that suit your needs and goals.

• For example, do you want to buy an off-plan property for personal use or investment?
• Do you prefer an apartment, a townhouse, or a villa?
• What is your budget and how much can you afford to pay?

What are the features and amenities that you are looking for? What are the locations that interest you and why?

Step 2: Get A Real Estate Agent With Experience To Help

The second step is to get a real estate agent with experience in off-plan properties to help you with your purchase.

• A good agent will be able to guide you through the process, provide you with valuable information and advice, negotiate the best deal for you, and protect your interests.
• A good agent will also have access to the latest and most reliable data on the off-plan market, such as the availability, prices, payment plans, completion dates, and expected returns of the projects.

Moreover, a good agent will be able to assist you with the legal and financial aspects of buying an off-plan property in Dubai.

Step 3: Research The Developer And Property

The third step is to research the developer and the property that you are interested in buying. This is a crucial step as it will help you avoid any potential risks or problems that may arise later on.

• You should check the developer’s registration with the DLD and RERA, their track record and reputation, their previous and current projects, their financial stability, their customer service.
• You should also check the property’s details, such as the location, size, layout, design, finishing, amenities, and facilities.

You should also visit the site or showroom of the project if possible, or at least view the brochure or model of the property.

Step 4: Research The Financial Requirements For The Investment

The fourth step is to research the financial requirements for the investment. This includes the total cost of the property, the down payment, the payment plan, the registration fees, and the service charges.

• You should also check your eligibility and affordability for a mortgage if you plan to finance your purchase with a loan.
• Mortgage financing isn’t available in Dubai for off-plan properties that are still under construction. Banks will only provide buyers with a mortgage when they can hold the property papers as collateral. When a property is still being constructed, neither the bank nor the buyer can access the property papers as they are held by the developer.

Therefore, you will need to pay at least 50% of the property cost out of your own pocket before you can apply for a mortgage. The loan-to-value ratio for an off-plan property in Dubai is 50%, which means that you can borrow up to 50% of the property value from the bank. You should also compare different banks and lenders and choose the one that offers you the best interest rate and terms.

Step 5: Open An Account And Make The Required Payment

The fifth step is to open an account and make the required payment. Once you have chosen your off-plan property and agreed on the price and payment plan with the developer or agent, you will need to open an account with a bank or financial institution that is approved by RERA.

• This account will be used to deposit your payments for your off-plan property. You will also need to sign a sales and purchase agreement (SPA) with the developer or agent, which is a legally binding contract that outlines all the terms and conditions of your purchase.

You will then need to make your down payment (usually 10% to 20% of the property value) and any other payments according to your payment plan.

Step 6: Final Inspection (PDI) And Handover Of The Property

The sixth and final step is to conduct a final inspection (PDI) and accept the handover of your property. This step will take place once your off-plan property is completed and ready for delivery by the developer.

• You will need to hire a professional inspector to check your property for any defects or faults that may affect its quality or functionality.
• You will also need to obtain an occupancy certificate from Dubai Municipality, which is a document that certifies that your property meets all the safety and health standards.

You will then need to pay the remaining balance of your property value (usually 50% if you are using a mortgage) and receive the title deed from the DLD, which is a document that proves your ownership of your property.

What Is The ROI On Off-Plan Properties In Dubai?

The return on investment (ROI) on off-plan properties in Dubai depends on various factors, such as the location, quality, and demand of the project, the price and payment plan of the property, the rental yield and capital appreciation of the property.

Generally speaking, off-plan properties in Dubai offer higher ROI than ready properties, as they are cheaper to buy and have more potential for growth.

What Is The Average ROI For Off-Plan Property In Dubai?

According to a report by Bayut, the average ROI for off-plan properties in Dubai was 7.1% in 2020, compared to 6.6% for ready properties. Some of the areas that offer the highest ROI for off-plan properties in Dubai are International City (9.9%), Arjan (8%), Jumeirah Village Circle (7.7%), and Discovery Gardens (7.6%).

Area	Average ROI	Rental Yield	Our rating
Arjan	8%	7.29%	Good
Jumeirah Village Circle	7.7%	8%	Excellent
Discovery Gardens	7.6%	6%	Good
Business Bay	6.64%	5%	Average
Downtown	6%	4%	Average
Jumeirah Village Triangle	6%	5%	Average
Jumeirah Lake Towers	8%	10.27%	Excellent
Jumeirah Golf Estates	5%	3%	Poor
Damac Lagoons	4%	2%	Poor

What Type Of Financing Options Do You Have For Off-Plan Property In Dubai?

As mentioned earlier, you cannot get a mortgage for an off-plan property in Dubai until you have paid at least 50% of the property value. Therefore, you will need to have enough cash funds to cover this amount before you can apply for a loan. However, there are some other financing options that you can consider for an off-plan property in Dubai, such as:

• Cash Purchase
• Home Equity Loan
• Seller Financing
• Bank Loan

What Type Of Payment Plans Are There For Off-Plan Properties In Dubai?

One of the financing options that you can use for an off-plan property in Dubai is the payment plan offered by the developer.

Most developers offer flexible and attractive payment plans that allow you to pay a small down payment (usually 10% to 20%) and then pay the rest in installments over several years.

Some developers even offer post-handover payment plans that allow you to pay a portion of the property value after you receive the handover of your property. This way, you can reduce your upfront cost and increase your cash flow.

What Legal Requirements And Documents Do You Need To Buy Off-Plan Property In Dubai?

Buying an off-plan property in Dubai can be a lucrative investment option, but it also involves some legal steps and requirements that you should be aware of. Here are some of the key points that you should consider:

Required documents

The developer and Dubai Land Department (DLD) require the following personal identification documents from you when registering for the initial sale of an off-plan property:

• A copy of a valid passport
• A copy of the visa page (if applicable)
• A copy of the Emirates ID (if applicable)
• A copy of the No Objection Certificate from employer (NOC)
• A copy of the sales and purchase agreement (SPA)
• A copy of the mortgage contract (if applicable)
• A copy of the occupancy certificate
• A copy of the utility connection (electricity and water)
• A copy of the insurance policy

Reservation form

Once you have provided the developers with the required documents, they will give you a reservation form. This form is used to reserve the unit that you wish to purchase. It should include all the relevant details such as the project name, unit type, number of units, price, and payment plan.

Sales contract

Once you have finalized the developer, the next step is to read and understand the sales contract. This is a legally binding document that outlines all the terms and conditions of the purchase.

Important data like the payment schedule, completion date, penalties for delays or defaults, warranties, and dispute resolution mechanisms are added to these contracts. You should review this contract carefully and seek legal advice if needed before signing it.

Escrow account

An escrow account is a special account that is set up by the developer to ensure that your money is protected and will only be released when the project is completed as per the agreed schedule.

The developer must register the project with the DLD and the Real Estate Regulatory Agency (RERA) and obtain an escrow account number before collecting any payments from you. You should verify this information with the DLD and RERA before making any payments. 

Legal due diligence

Before buying an off-plan property, you should also conduct your own legal due diligence to protect yourself from any potential risks or frauds. This includes:

• Analyzing the long-term market trends and expected return on investment (ROI) of the project.
• Assessing the risks involved in buying an off-plan property, such as delays, cancellations, defects, and disputes.
• Doing a background check on the developer’s track record, financial stability, previous projects, delivery timeframes, and customer reviews.
• Selecting the right location for your property based on your preferences, budget, and future plans.

Where In Dubai Can I Buy An Off-Plan Property?

Dubai has many areas and districts that offer off-plan properties for investors to choose from. Some of these areas are:

1. Arjan

Arjan is a mixed-use development located in Dubailand, near Sheikh Mohammed Bin Zayed Road and Umm Suqeim Road. Arjan is known for its affordable and spacious off-plan properties, as well as its proximity to popular attractions such as Miracle Garden and Butterfly Garden. Arjan off-plan properties exist out of various types such as apartments, townhouses, and villas.

2. Business Bay

Business Bay is a central business district located along the Dubai Water Canal, near Downtown Dubai and Sheikh Zayed Road. Business Bay is known for its luxurious and modern apartments, as well as its vibrant lifestyle and amenities. Business Bay off-plan properties consist mainly out of apartments, ranging from studios to penthouses.

3. Downtown

Downtown is a prestigious and iconic district located in the heart of Dubai, near Burj Khalifa and The Dubai Mall. Downtown off-plan properties are known for their high-end and exclusive styles, as well as its stunning views and attractions. Downtown mainly offers apartments and penthouses, with some villas and townhouses.

4. Jumeirah Village Circle

Jumeirah Village Circle is a residential community located in Dubailand, near Al Khail Road and Hessa Street. Jumeirah Village Circle is known for its affordable and diverse off-plan properties, as well as its family-friendly environment and facilities. Jumeirah Village Circle off-plan properties consist out of various types such as apartments, townhouses, and villas.

5. Jumeirah Village Triangle

Jumeirah Village Triangle is a residential community located in Dubailand, near Al Khail Road and Sheikh Mohammed Bin Zayed Road. Jumeirah Village Triangle is known for its affordable and spacious options, as well as its green and peaceful environment. Jumeirah Village Triangle off-plan properties mainly consist out of off-plan villas and townhouses, with some apartments.

6. Jumeirah Lake Towers

Jumeirah Lake Towers is a mixed-use development located along Sheikh Zayed Road, opposite Dubai Marina. Jumeirah Lake Towers is known for its modern and stylish off-plan properties, as well as its lively and cosmopolitan lifestyle. Jumeirah Lake Towers off-plan properties are mainly consisting out of apartments, ranging from studios to penthouses.

7. Jumeirah Golf Estates

Jumeirah Golf Estates is a luxury golf community located in Dubailand, near Al Khail Road and Emirates Road. Jumeirah Golf Estates is known for its premium and exclusive off-plan properties, as well as its world-class golf courses and amenities. Jumeirah Golf Estates off-plan properties are mainly consisting out of villas and townhouses, with some apartments that are available for investors..

8. Al Habtoor City

Al Habtoor City is a mega-development located along the Dubai Water Canal, near Business Bay and Sheikh Zayed Road. Al Habtoor City is known for its luxurious and sophisticated off-plan properties, as well as its integrated lifestyle and entertainment options. Al Habtoor City off-plan properties are mainly consisting out of a wide range of apartments and penthouses, with some villas and townhouses.

9. Ras Al Khor

Ras Al Khor is an industrial area located along the Dubai Creek, near Al Khail Road and Ras Al Khor Road. Ras Al Khor is known for its affordable and spacious off-plan properties, as well as its proximity to nature and wildlife attractions such as the Ras Al Khor Wildlife Sanctuary. Ras Al Khor off-plan properties consist out of various types of properties, such as apartments, townhouses, and villas.

10. Mohammed Bin Rashid City

Mohammed Bin Rashid City is an iconic and visionary development located in the heart of Dubai, near Downtown Dubai and Business Bay. Mohammed Bin Rashid City is known for its high-end and innovative off-plan properties, as well as its stunning attractions and facilities such as the Meydan Racecourse, the Dubai Canal and the Dubai Hills Mall. The Mohammed Bin Rashid City off-plan properties consist out of various types of properties, such as apartments, townhouses, villas, and penthouses.

11. Sobha Hartland II

Sobha Hartland II is a luxury residential development located in Mohammed Bin Rashid City, near Al Khail Road and Meydan Road. Sobha Hartland II is known for its elegant and spacious off-plan properties, as well as its lush greenery and waterfront views. Sobha Hartland II off-plan properties are currently mainly consisting out of apartments and penthouses, with some villas.

12. Victory Heights

Victory Heights is a golf community located in Dubailand, near Sheikh Mohammed Bin Zayed Road and Hessa Street. Victory Heights is known for its affordable and comfortable off-plan properties, as well as its access to the Els Club golf course and other sports facilities. Victory Heights off-plan properties mainly consist out of villas and townhouses and the supply is relatively limited.

13. Motor City

Motor City is a themed development located in Dubailand, near Umm Suqeim Road and Hessa Street. Motor City is known for its unique and vibrant off-plan properties, as well as its motorsport-inspired lifestyle and attractions such as the Dubai Autodrome, the Kartdrome, etc. Motor City off-plan properties consist out of various types of properties, such as apartments, townhouses, villas, and studios.

14. Dubai Hills Estate

Dubai Hills Estate is a luxury residential development located in Emirates Hills, near Sheikh Zayed Road and Al Khail Road. Hills Estate is known for its exclusive and prestigious off-plan properties, as well as its panoramic views of the golf course and the skyline. Dubai Hills Estate off-plan properties are mainly consisting out of villas and penthouses.

15. Damac Lagoons

Damac Lagoons is a waterfront development located in Dubailand, near Sheikh Mohammed Bin Zayed Road and Emirates Road. Damac Lagoons is known for its affordable and stylish off-plan properties, as well as its access to the Crystal Lagoon beach and other amenities. Damac Lagoons off-plan properties have various types of available properties, such as apartments, townhouses, villas, and studios.

16. Arabian Ranches

Arabian Ranches is a premium gated community in Dubai, developed by Emaar Properties. Arabian Ranches is known for its desert-themed architecture, spacious villas and townhouses, and luxurious lifestyle amenities. Arabian Ranches off-plan properties have various types of properties available, such as apartments, villas, townhouses and studios.

17. Dubai Marina

Dubai Marina is a vibrant waterfront district in Dubai, located along the Persian Gulf coast. Dubai Marina is known for its stunning skyscrapers, marina views, and cosmopolitan lifestyle. Dubai Marina off-plan properties consist out of various types of properties, such as apartments, penthouses, lofts, and villas.

18. Dubai Springs

Dubai Springs is a serene and green community in Dubai, located in the Emirates Living district. Dubai Springs is known for its affordable and cozy townhouses, lakeside views, and family-friendly atmosphere. Dubai Springs off-plan properties offers are mainly consisting out of two to four-bedroom townhouses, with private pools and gardens.

19. Palm Jumeirah

Palm Jumeirah is an iconic artificial island in Dubai, shaped like a palm tree. Palm Jumeirah is known for its luxury hotels, beach resorts, and exclusive residences. Palm Jumeirah off-plan properties have various types of properties available, such as apartments, villas, townhouses, and mansions.

20. Dubai Creek Harbour

Dubai Creek Harbour is a new and innovative development in Dubai, located along the Dubai Creek. Dubai Creek Harbour is known for its futuristic design, cultural diversity, and environmental sustainability. Dubai Creek Harbour off-plan properties consist out of various types of properties, such as apartments, townhouses, villas, and penthouses.

Frequently Asked Questions

Here are some of the frequently asked questions about off-plan properties in Dubai: