Question: With so many project launches in Dubai, I’m considering buying off-plan property for the first time. What are the risks and advantages compared with buying a ready property? CM, Sharjah
Answer: Buying off-plan property is one of the most exciting opportunities not just within Dubai, but in other emirates, too. Many investors have made substantial returns from getting in early. However, as with any investment, there are pros and cons to consider.
Advantages:
- Lower entry costs: Off-plan properties are often priced below ready units in the same area, making them more accessible.
- Flexible payment plans: Developers usually allow buyers to pay in stages over two to five years, sometimes even beyond handover, easing the financial burden.
- Capital appreciation: If you buy early in a project’s life cycle, the value often rises significantly by handover, especially if the location or developer has strong appeal.
- Choice of units: Early buyers might pick the best layouts, floors or views.
Risks:
- Delays: Although regulations have improved, some projects still face construction delays. This can disrupt your plans if you were expecting to move in or rent the property out by a certain date.
- Liquidity: Selling off-plan before completion can be tricky. Some developers restrict resale until a certain percentage of the payment plan has been paid. Also, the pool of buyers is smaller than for ready properties.
- Developer quality: Not all developers deliver to the same standard. It’s essential to research past projects by the same developer.
To protect yourself, make sure the project is registered with the Dubai Land Department and that all payments go through the escrow account. This ensures that your money is secure and tied directly to the progress of construction.
Ultimately, off-plan is excellent for investors seeking long-term growth and those with flexible timelines. If you need a home to live in immediately or want certainty or immediate returns, then a ready property might suit you better.
Q: I own a two-bedroom apartment in Dubai Marina with a tenant on a long-term lease. I want to sell the property, but buyers keep asking for vacant possession. Can I sell with the tenant still occupying the unit or do I have to go through the process of eviction? NB, Dubai
A: This is a common challenge for sellers. You can sell your property with the tenant still inside and in fact, many investors prefer this because it provides immediate rental income from day one. However, the issue arises if your buyer intends to occupy the property themselves.
The law states that the tenant’s rights remain valid even if ownership changes. This means the buyer steps into the role of the landlord and must honour the existing tenancy contract until it expires. If the buyer wishes to move in, they must issue their own 12-month eviction notice.
This is why many end users hesitate to buy tenanted units. They may have to wait a year or more before moving in. This might be stopping you from finding a buyer.
If you are keen to sell quickly, you could negotiate with your tenant for an early move-out in exchange for financial compensation. For example, offering one or two months’ rent as an incentive can sometimes resolve the situation amicably.
The key is transparency with your buyer. If you market your property as “tenanted with yield”, you will naturally attract investor buyers rather than end users, and this will save you time and prevent negotiations falling through.
Mario Volpi is senior vice president of investment advisory at Allegiance Real Estate. He has worked in the property sector for 40 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@allegiance.ae
