Off-plan vs Secondary Properties In UAE: Which Should You Buy?

Are you looking to buy a property in the UAE, but are not sure where to start? Don’t worry, we have got you covered. You can choose from two types of property: off-plan property and secondary property. Both have pros and cons, and it is important to understand which type of property suits you before making a decision. 

In this blog, we will provide a brief comparison between off-plan vs secondary properties and the pros and cons of each. So, keep reading to know which option is better for you.

Off-Plan Properties

Off-plan properties are properties that have not yet been fully constructed. They may be under construction, or construction is planned to start soon. These properties have proved to be an attractive investment option for investors because they can offer lower prices compared to completed homes. Investors can also benefit from capital growth on off-plan projects if the market value increases during the construction.  

Secondary Properties

Secondary properties are properties that have already been fully constructed and you are buying the property from an end user or investor, not from the developer. Secondary properties are typically more expensive than their off-plan counterparts because they can be immediately occupied or rented out to generate an income, and there is no risk of construction delays etc. 

Pros and Cons of Off-Plan Property

Off-plan properties have grown in popularity dramatically, but it is important to understand the advantages and disadvantages of these properties before making a decision on whether to invest in one. 

Pros

Affordability: One of the main advantages of buying an off-plan property is that you can often buy it at a lower price than a secondary market property.

Capital Appreciation: As an area develops over time, investors can often benefit from the capital appreciation of the property. 

Payment Plans: Developers often offer payment plans which can provide an attractive way to finance the purchase of the property

Flexibility & Control: When it comes to off-plan property, you have greater flexibility to customise it according to your taste. You can often have some say in the fixtures and fittings and make changes in the design of the property. 

Brand New Property: With an off-plan property, you are getting a brand new property that has never been lived in before, so it should be in great condition. 

Cons

Delayed Rental Income: Unlike a secondary market property, an off-plan property cannot be immediately rented out. You may have to wait several years for the construction to complete, delaying when you can start earning a rental income from the property. 

Construction Delay: It might be possible that the developer delays the project's completion due to other commitments, financial issues or other reasons that they cannot control. This means you should always be prepared for the possibility that the handover date is later than expected. 

Financing Limitations: It is not possible to get a mortgage on a property that is still being constructed so this can be a big limitation if you are not a cash buyer, or if the developer's payment plan is not suitable for you. 

Pros and Cons of Secondary Property

Just like the off-plan properties, secondary market properties also have advantages and disadvantages. You should be aware of these before making a decision. 

Pros

Ready To Move: These properties are complete and ready to be occupied. It means there is no need for construction or renovation work, and it can be lived in immediately. 

Easy Financing: It is not possible to get a mortgage on an off-plan property, but you should be able to get a long-term mortgage on a secondary market. This allows you to spread the cost of purchasing the property over a long time, up to 25 years. 

Immediate Rental Income: Secondary properties can be rented out immediately so you can start generating a return right away

Cons

Higher Prices: Secondary market properties typically cost more than off-plan properties because they are already constructed and ready to be rented out or occupied. 

Property Condition: Secondary market properties have already been lived in previously, so they may require maintenance work or modernisation. This should be factored in when considering a secondary property. 

Financing Options

In Dubai, investors and end-users have distinct financing options when considering secondary market properties versus off-plan developments. Secondary market properties offer more traditional financing options such as mortgages from banks and financial institutions. Buyers can use a mortgage to spread the cost of their property purchase over an extended period, making it more accessible to a broader range of investors. Off-plan properties typically offer flexible payment plans directly from developers. These plans often involve staggered payments linked to construction milestones, providing investors with the convenience of paying in instalments. 

Conclusion

When purchasing a property in the UAE, it can be difficult for a buyer to make the right choice. When considering off-plan vs secondary properties, it is crucial to carefully consider all of the potential pros and cons. Off-plan properties can offer lower prices, potential capital growth, and flexibility in payment plans, but you have to wait for the construction to complete and there could be delays. On the other hand, secondary properties can be more expensive, but they can be rented out immediately to generate a return. Financing options for both primary and secondary properties are different. So, buyers need to do proper research about the costs and benefits before choosing which type of property to buy in the UAE.