Foreign investors often wonder which type of property is more beneficial to purchase in Dubai: resale or new construction. The city ranks high among popular relocation destinations and properties here are also actively sought after for investment purposes. Let's consider the pros and cons of move-in-ready and off-plan properties.
Contents:
- Key factors in choosing a property
- Why off-plan properties are better than resale in Dubai
- Advantages of off-plan properties in Dubai
Key factors in choosing a property
Real estate in Dubai is in high demand. Before buying an apartment, it’s crucial to clearly define your objectives. If you need a property for immediate relocation, it’s evident that it should be ready for occupancy. In this case, both new construction and resale properties can be considered based on budget and location preferences.
If you plan to invest in real estate, paying attention to off-plan projects is recommended. The profit potential from reselling these properties after their completion can reach 20-30%.
Rental properties are also highly sought after. The annual return on investment in the metropolis ranges from 5% to 8%. The final figures depend on the property type and its location. The desirability of the property and its proximity to central areas or the coastline play a significant role.
Budget
There’s a significant price range within the city. Currently, the average cost of an off-plan apartment in Dubai is around AED 1.3 million (USD 354,000). It’s relatively easy to find a quality option within the range of AED 2 million (USD 544,500) to obtain a golden residency visa.
When it comes to houses, the prices are higher. A ready villa currently costs around AED 3 million (USD 817,000) while an under-construction villa is priced at around AED 2.3 million (USD 626,000). It’s important to note that prices regularly fluctuate and tend to increase so it’s advisable to research them directly before purchasing.
The cost of secondary housing is generally 10-30% lower but this does not mean that purchasing a resale property always results in savings. Prices of the most prestigious and elite properties in the city centre and along the coastline can reach several tens of millions of dollars.
Location
Dubai offers dozens of freehold zones where foreigners can own property as private ownership. Below are the communities that were most popular among apartment buyers in the first quarter of 2023:
- Jumeirah Village Circle (JVC) - the average cost per square metre in the community is AED 11,700 (USD 3,200)
- Business Bay – AED 22,700 (USD 6,200)
- Dubai Marina – AED 23,500 (USD 6,400)
The most popular community for villas is Damac Lagoons, with an average cost per square metre of AED 13,200 (USD 3,600).
For permanent residency, young and rapidly developing areas such as Motor City, Meydan and Dubai Hills are also commonly considered. When choosing a property for relocation, it’s advisable to live in Dubai for some time to get acquainted with the infrastructure of the communities from within. To consider all the nuances, it’s recommended to use the services of professional brokers who can assist in finding the optimal type of housing based on the buyer's goals and needs.
Repair expenses
What is better, a new property or a resale? One significant difference lies in the freshness of the interior finishes. New developments are delivered with high-quality finishes, often in collaboration with renowned brands. However, if someone has already lived in a resale apartment, there’s a high probability of wear and tear or damages that would require an additional investment. It’s advisable to anticipate possible repair expenses in advance.
Document processing costs
Buyers incur additional expenses when signing a property purchase agreement. Fees for the Dubai Land Department (DLD) amount to 4% of the property value. If the property is purchased directly from a developer, he may cover all or part of the fees as a pleasant bonus, although this is not always the case. Additionally, there’s a registration fee for the property, the amount dependent on the value of the property. The realtor’s commission amounts to 2% of the property value.
Why off-plan properties are better than resale in Dubai
The main advantage of resale properties in Dubai is the ability to move in immediately after the transaction is concluded. However, off-plan properties surpass resale properties in several aspects.
- Energy-efficient infrastructure that helps save on utility bills actively incorporated into projects recently;
- Avoidance of repair expenses;
- Higher liquidity and investment profitability;
- Cost savings when purchasing an off-plan property.
A general rule that applies to any real estate is that newer homes are more attractive to buyers. Therefore, selling an off-plan apartment is much easier than selling an older property.
Advantages of off-plan properties in Dubai
Buyers often wonder if it’s beneficial to purchase an off-plan property in Dubai during the construction stage and how safe it is. Such investments are particularly attractive in terms of pricing. Moreover, investor funds are securely protected as developers do not access them at the beginning of construction. The money is held in a closed account which the developer can access as the work progresses and is approved by a special committee. When it comes to the risk of construction delays, it’s essential to consider the developer's business reputation. Leading developers strictly adhere to their commitments and deliver projects within the agreed-upon timelines.
Another significant advantage of investing in off-plan properties is the interest-free payment plan. Many developers in Dubai offer this option. A portion of the payment is made upon reservation while the remaining amount is divided into equal instalments and paid during the construction phase. Some developers even provide the unique opportunity to pay for the property over several years after its completion. This allows individuals to purchase international real estate without resorting to mortgage financing. Therefore, if the question of immediate relocation is not a concern, considering off-plan properties is recommended.
