Off-plan properties are ones that are either still under construction or are to be built. Investing in such projects has many benefits, including saving money on the investment, lower prices, capital gains, high rental yields and flexible off-plan payment plans. An off-plan payment plan refers to the schedule of payments for a property under construction (off-plan) set by the builder or developer of the project.
Off-plan payment plans have their own pros and cons. Let’s take a look at types of off-plan property plans before delving into the advantages and disadvantages.
Types of Off-plan Payment Plans
Flexible off-plan payment plans for purchasing property in Dubai include 80-20, 60-40, 70-30, 50-50 and post-handover payment plans. The off-plan payment plans are divided into two stages: during construction and on handover.
For instance, under the 80-20% payment plan, buyers have to pay 80% of the total property price while the project is being developed, and the remaining 20% has to be paid at the project completion at handover.
Off-plan payment plans are offered when the project is in its construction stages. This allows clients to make payments over a period of time before receiving the keys to their property. Clients also have the option to get a mortgage from the bank depending on their financial condition.
In Dubai, the mortgage covers 50% of the total off-plan property’s value. The bank provides this 50% when the buyer has already paid the remaining 50% to the developer. Simply put, the buyer pays the bank in instalments rather than the developer. For more on off-plan properties in the Emirate, go through this list of FAQs for off-plan properties in Dubai.
Moreover, in the post-handover payment plans, buyers can buy the property by paying a certain amount of the total property value and then rent out the property and pay the remaining amount with the rental yields.
Pros of Off-Plan Payment Plans
The real estate market in the UAE is growing at a fast pace and offers several investment opportunities for ready and off-plan properties alike. We have compiled the most common advantages of off-plan payment plans while purchasing properties.
Lower Prices
The off-plan payment plans are usually priced at a lower value because the project is still being developed. The demand for such properties is not as competitive as the demand for ready properties. That said, after completion the prices of off-plan properties generally rise. First-time investors and seasoned buyers can both make use of this benefit.
Flexible Payment Plans
Developers offer a host of flexible plans to buyers including the various types of payment plans mentioned above.
Favourable Instalments
Other advantages of off-plan payment plans include favourable instalments. Buyers don’t have to pay a lump sum amount when buying off-plan properties. With off-plan payment plans they can pay easily in smaller instalments rather than paying a massive amount upfront.
Save Money on Investment
Off-plan projects are in the initial stages, this gives buyers the benefit of choosing the kind of apartment they want from the floor plan at an economical price. This saves money on investment, and in the future, such projects offer higher capital gains.
Cons of Off-Plan Payment Plans
Off-plan payment plans also come with some potential disadvantages. These include:
Risk of delays and hand-over
The checklist of buying off-plan properties includes delays. Simply put, some projects are delayed from the quoted handover date. When considering off-plan property in Dubai the risk of delays is very common. In some cases, the projects also get cancelled. This means that till the project is handed over the instalment paid earlier remains at risk.
Changes to the original plan
There can be changes in the quality of the project when compared with the original plan. The final product might not be up to the buyer’s expectations. Therefore, research the developer thoroughly before opting for off-plan properties. For more information on off-plan properties, here is a list of off-plan property FAQs in the UAE.
Fluctuations in the property market
Fluctuation in the real estate market can decrease the value of the property resulting in lower ROI. This is the biggest disadvantage of off-plan payment plans. The buyer pays in instalments according to the original set price of the property and if it decreases, the chances of getting a better ROI also decrease for buyers.
Those were some common pros and cons of off-plan payment plans. Besides, here is a list of other common payment plans for buying properties in Dubai.
Moreover, if you are looking for ready properties, here is a list of properties for sale in the UAE.
Stay tuned to dubizzle’s top property blog for more on off-plan payment solutions and much more.
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