Dubai’s Off-plan Market is Booming Due to a Surge in Demand
The off-plan market is rising, signaling a favorable environment. Foreign and local property buyers have increased by 40% to 60%..
The off-plan property market has experienced a remarkable 35 percent surge in demand over the past three months compared to the corresponding period last year. In addition, off-plan transactions now account for a significant 61 percent share of Dubai’s overall real estate market,” analysts said.
In comparison to the Dh4 billion in agreements registered in the same period in 2020, Dubai saw off-plan sales totaling Dh34 billion during the second quarter of this year, an increase of 750 percent. In research, Zazen Properties saw an increase in transactions of about Dh30 billion over the previous three years.
In August of this year, off-plan sales had the largest market share, according to a recent Property Monitor survey. The market today consists of 64.7% off-plan sales. The total number of sales transactions increased by 8.1% month over month, totaling 12,134 sales, the most ever recorded for the month of August.
Property market experts believe that in this current market, it is a great time to invest in off-plan properties for several reasons. “First, the current landscape of rising mortgage rates has altered the viability of purchasing ready properties for investment purposes. Despite increased rental yields, the costs associated with servicing a mortgage have surged, resulting in diminished net yields after factoring in all expenses,” they said.
“Consequently, the economics of investing in ready properties for returns have become less favorable. Second, off-plan investments offer a distinct advantage by enabling investors to allocate funds toward properties still available at their original prices. The flexibility of payment plans mitigates the impact of high lending rates, ensuring greater adaptability in managing finances. Third, Dubai’s population growth serves as a crucial catalyst driving the demand for residential properties.”
According to the Betterhomes analysis, off-plan properties have a substantial chance of increasing in value by the time they are finished because of Dubai’s continual growth and the steadily rising population. “Buying off-plan properties allows investors to purchase a property at a lower price compared to completed units. In addition, off-plan properties typically offer flexible payment plans, which can be advantageous for investors,” said the report.