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Dubai 2023: Real Estate Off-Plan Property Sees Huge Surge

05 Jun, 2023
 Dubai 2023: Real Estate Off-Plan Property Sees Huge Surge

Dubai’s real estate market continues to surge like there’s no tomorrow. The industry is seeing unbelievable developments, and it’s definitely riding the waves of success. Investors have noted this for a while now, and they continue coming to the UAE to make their dreams come true.

Based on a recent report, Dubai's real estate market is experiencing a notable increase in the sales of off-plan properties annually. The report indicates that there were a total of 22,159 apartment transactions in 2023, reflecting a substantial growth rate of 91.57%. Additionally, villa transactions reached 3,507, demonstrating a growth rate of 32.94%. The cumulative transactions amounted to 25,821, with a year-on-year growth rate of 80.33%.

The report noted a 42.1 percent increase in off-plan property sales, driven by demand, compared to last year's period.

According to an influential analyst in the business, this demand is a “positive indication” that the Dubai property market is gaining momentum and confidence in the future prospects of the city’s economy. More and more high-net individuals are choosing Dubai for their business, and people who want to purchase a new second home also have their eyes set on the UAE.

We’ve already revealed in a previous post the fact that despite the hardships that the nation witnessed during the pandemic, the real estate market, along with the travel industry, has been highly positive, and it seems that the trend continues to remain the same.

According to the latest reports, the residential real estate market saw a 43.8% growth in demand during February.


Dubai sees exquisite rise in off-plan properties

Since the end of last year, Dubai was already showing signs of booming in the real estate market. Just ahead of New Year’s Eve, the off-plan real estate prices in the Emirate of Dubai surged by 50%. The off-plan real estate demand has been growing, especially in really popular areas across Dubai, and it’s still increasing as we speak. We’re referring to the most popular districts comprising the central district of the emirate, Downtown Dubai, Business Bay, and the Dubai Water Canal.


Off-plan properties

An off-plan property is a property before the structure has been constructed on it. Pre-constructions are marked to real estate developers and also to the early adopters as developments. This way, the purchaser can secure more favorable financing terms.

It’s also important to note the fact that property investors are buying these with the main aim of making massive capital gains. The high financial returns may come because developers selling the off-plan property offer financial incentives or discounts to the early adopters. More than that, there is also a massive opportunity for capital growth in a rising market with a development cycle that usually lasts for 12 to 24 months.


Advantages and risks of buying an off-plan property

In a really rising real estate economics housing market, buying off-plan is enabling investors and homebuyers to buy a property at lower prices compared to the case in which they would have to wait for the construction of the chosen property to commence. More than that, another benefit of buying off-plan is getting a pretty that has a more specific location or a set of features – these choices are limited once the construction starts.

Regarding the risks of buying an off-plan property, regardless of whether investing as a business or in a second home, this will have a higher risk compared to buying a property that's already been built.

We're talking about the potentially falling value of the property once it is under construction. More than that, it's also possible that the constructor goes out of business before the construction of the property, and the buyer cannot get back their cash. Another issue that could arise is that the finished property may not meet the original expectations.

These risks are the best reasons to work with a professional real estate agency that knows what it's doing in the market.


Effective and smart investments

Once you choose a great team player and get an MVP regarding off-plan properties, these can become really effective and smart investments. The transaction will definitely turn out beneficial for both parties involved. The developers secure capital for the construction of their residential projects, and the buyers normally see the added value during the handover phase.

We also must address the potential for long-term ROI that should remain high. Popular locations such as Downtown Dubai, Business Bay, and Dubai Water Canal have seen off-plan developments skyrocket recently. Other new off-plan residential projects have been announced outside of Downtown, also in highly desirable locations, such as Nad Al Sheba, Dubai Hills, Meydan, and Dubai Creek Harbour.


Massive surge in the property market

The property market in Dubai is still surging, and the transaction volumes reached a record high of 11,597 in March 2023. Just in case you don't know, this is a global property consultancy firm. The report highlighted the fact that this figure is the highest monthly total that the Emirate has ever recorded. It's also important to mention that this is marking a growth rate of 47.3 percent compared to the previous year. More than that, the total transaction volume recorded in the first quarter of 2023 is also the highest total ever registered, totaling 29,323.

"The growth is supported by a 96.1 percent increase in off-plan market transactions and a 12.4 percent increase in secondary market transactions," according to the report.

It's also important to note that despite the rising prices, "average residential prices in Dubai have increased by 12.8 percent in the year through March 2023, with the average apartment and villa prices increasing by 12.4 percent and 14.8 percent, respectively, over the same period."

Other important data reveals that as of March 2023, "the average apartment prices in Dubai stood at 1,234 dirhams (USD336) per square foot, while the average villa prices were 1,455 dirhams per square foot."

On the other hand, the same report notes the fact that average apartment sales rates are still 17.1 percent below the highs of 2014, while there are a number of premium locations where the rates are now above their 2014 levels. The average villa sales rates have now surpassed their 2014 high and sit 0.7 percent above that figure.

The average residential rent increased by 26.3 percent in a year-on-year comparison ending in March 2023. It's also important to mention the fact that the average apartment and villa rents are rising by 26.3 percent and 26.2 percent, respectively. As of March 2023, the average yearly apartment and villa rents have reached 101,044 dirhams and 300,984 dirhams, respectively.


Buy off-plan property the smart way – key highlights that you need to know

The off-plan property purchases are getting stronger in popularity these days. Still, many people are now hesitant regarding investing their cash in a property they have not seen. If this is the case regarding yourself as well, then you have come to the right place because the experts at Starling Properties are here to help.

If you want to buy a property that is under construction or off-plan, should you buy it, or should you wait? This is an example of a question that might arise, and we’ll make sure to offer you the best answers to all of your questions. You want to ensure that you will choose the right thing to do with your money and invest it properly. There are a lot of off-plan properties on the market, and it can become quite a challenge to find the best one out there waiting for you. This guide will help you make the best decisions and determine the questions you should ask before signing an off-plan property at the best possible price.


What does it mean to buy an off-plan property?

Off-plan properties are buildings that are not complete yet. These are bought on the agreement that they’ll be completed in the future, and this is usually between one and five years.

The off-plan buildings can be bought at prices below the market, which is one of their main advantages.


What if the prices fall?

If you’re considering buying an off-plan property and you are worried that its price might fall, then you must be aware of the fact that this is an important issue to be taken into consideration, and experts know this as well. The price is determined when you buy the property, and there’s no telling that it will not change in the future. This is one of the reasons why you should definitely consult with a trusted real estate consultant before buying the property. Our experts will advise you on what you should do if the property prices fall after the buying-off plan. The investment will be great if you have this extremely informed decision on which steps you should take. You should hold it until completion; you should then sell at current prices or sell at a reduced price – this is what you should remember.


What are the advantages of buying an off-plan property?

Buying off-plan properties is a great way to enter the real estate market at affordable prices. More than that, it is also important to note the fact that the off-plan properties are located in upcoming neighborhoods that come with amazing infrastructure facilities and this means that people can see massive returns on their investment. More advantages include the following:

Great prices – the properties are sold at lower prices compared to the ones that are on the market these days.

Higher ROI – the returns are usually higher than those gained from investing in other types of properties because such projects get a chance to reap the benefits before they are finished being built up and ready for being occupied.

The best choice is to get yourself a great partner such as Starling Properties to find out the details about everything you need to know regarding buying an off-plan property.


How do you ensure the off-plan property is finished at the highest quality?

Off-plan properties ate sold usually before the building is completed and it can turn out to be very difficult to find out whether the developer has a good reputation or not. This is another important aspect that will make the best of your decision if you are working with a great team player. The MVP you choose for this task should be a realtor who knows all the ins and outs of the property market. It’s probably crucial to go through a survey before buying an off-plan property and ensure the developer has a good track record.


What does the buying process involve?

The process of buying an off-plan property is a pretty complex one, and it will vary depending on the country. Starling Properties will be the best choice you have available on the market to complete the task. The first step will be to decide whether you want to buy. This is because this process can turn out to be very time-consuming and costly as well, and this means that it is very important to make sure that you do your best research before making the best decision.

Next, you will have to go through the chosen location and the developer. The developer will be the one who is able to offer data about how much of the project has already been built and what stage it is currently. You will also have to ensure that the research you are doing also involves the info related to the local laws that involve ownership in the country.


How to identify the best developer?

The first step is to understand the developer’s track record. You will have to learn all about the developer’s previous projects, if they were successful or not, and other important factors. Secondly, it will turn out to be worth checking out the location of the property as well. You will definitely want to invest in a good location with an exciting design and architecture.

This will increase the value of the property, and it will also make it more attractive for future buyers or renters, according to the required case. Your investment will also have to rise over time, and you should be able to avoid all issues from the government over land disputes.


Who will manage the off-plan property?

This is another interesting issue that we have to mention in this article. It’s common for the developer to offer a list of people recommended when the property is completed. The developer will list potential parties to manage the property during the off-plan period. Starling Properties can also recommend trusted associates to choose from architects, agencies, management agents, and more.


As a conclusion

To maximize the potential of your off-plan property, entrust the challenges to our expert team at Starling Properties. We'll ensure a seamless experience, allowing you to enjoy your investment fully. Contact us at +971 52 850 7767 to access our wealth of knowledge and expertise in Dubai's real estate market.