Off-plan property vs secondary market: better return on investment analysis for Dubai

19.11.2015
Unitas Consultancy analysts revealed what type of property brings the best return on investment in Dubai.

When considering buying a property, any buyer inevitably faces the choice of which option to prefer: property under construction from the developer (off-plan) or ready residence at the secondary market. Unitas Consultancy analysts had counted that, according to mere statistics, off-plan property in Dubai can bring up to 58% return on investment, while secondary market can get you no more than 8% of return. However, things are not as obvious as it might seem at first glance.

Leading experts in the field of Dubai real estate investments shared their views on the matter. Craig Plumb, Head of Research at JLL Mena, believes that ready units are more preferable in terms of risks and returns.

“Ready properties are a more attractive option than off-plan projects for both end users and investors, as either group can benefit from the use of the property or the rental income more quickly and there are less risks involved than with off plan products (which may not be delivered on schedule or to the quality promised),” he said.

And Robin Teh from Chestertons UAE is confident that everything depends on your further plans concerning this real estate item.

“That decision depends upon objective of investment. With the attractive rental yield, investors are attracted to buying properties in the region, as for many localities, the rental income is higher than the monthly mortgage payments. However, if an investor is looking for capital appreciation off-plan projects from reputable developers should be considered,” said Teh.

At the same time, Eric Volkers, a senior consultant, Research, CBRE, has reminded that there is a recent trend to lower prices in the Dubai rental market, which is likely to continue during the coming months as 20,000 new units are expected to be delivered. From this point of view, there are no reasons to count on the further rentals increase, while already affordable off-plan property prices can easily see another decline. Thus, Volkers considers off-plan property to be the most preferred option for a better return on the investments.

Subscribe to our news

Latest Availability
Latest property news
Send us an enquiry or request a call back
Your name *
Phone
E-mail *
Your message *
*- indicates required
Request a call back
Lease process (Rent out)

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership

1 day

Ad placement:

  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.

Up to 2 days

Signing of the lease agreement

Expenses of the seller:

None

Additional services:

Property management

Lease process (Rent)

1 hour

Contract of the lessee and agency.

Up to 5 days

Real estate search.

Selection of optimal options.

Up to 2 days

Signing of the lease agreement

Expenses of the lessee:

-5% agency commission of the annual contract price

Additional services:

None

Purchase process

1 hour

Contract of the tenant and agency.

~ 2 weeks secondary

~ 3 weeks new building

Property Selection

Selection of optimal options

1 Week

Registration of the contract of purchase / sale

Customer charges:

  • 2% from purchase at transaction
  • 4% - registration of the transaction at registration

Additional services:

Property management

Sales Process

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership

1 day

Ad placement:

  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.

Up to 2 days

Signing of the lease agreement

Expenses of the seller:

None

Additional services:

None

the management process

1 hour

Contract of the owner and agency

1 year

Rendering of management services

1 day

Reporting

Expenses of the owner:

5% of the annual rental price

Additional services:

None

Investment Process

1 hour

Contract of the tenant and agency.

From 3 days

Selection of optimal investment options

1 Week

Registration of the contract of purchase / sale

Expenses of the investor:

  • 2% when investing in the secondary market
  • 0% when investing in a new building
  • 4% - registration

Additional services:

Property management