Zaki Ameer discusses the key to sound off-plan investment and how to avoid some common property pitfalls.
BUYING OFF-PLAN HAS been bit of a dirty word since the dark days of the property crash in 2008, when scores of buyto-flip investors were left out of pocket. However, as speculated, off-plan buying is making a comeback in 2018.
Most major developers now offer generous payment plans for their off-plan projects, yet in a bid to avoid a repeat of the crash, there are restrictions in place to prevent an influx of buy-to-flip investors hiking the prices up for the end-user – the people that actually want to live in the property.
For instance, the UAE Central Bank’s rule allows only 50 per cent loan-to-value ratio, meaning you need to stump up 50 per cent of the property value in a deposit. This avoids investors putting down low 10 per cent deposits, only to resell the property at a sky-high price at the expense of the person who actually wants to live in the building.
Here are some initial tips to help your decision making process when considering off-plan purchases.
You don’t need as much cash as you think
While you will need a hefty lump sum in savings as a deposit, the good news is that this doesn’t always equate to 50 per cent of the property value. In some instances, the cash deposit required can be as low as a 20 per cent initial payment. How? Well, the property developers recognise that not many people have as much as a 50 per cent deposit saved and are coming up with their own payment plans to get would-be buyers a foot on the ladder. These plans include 30:70 plans where you pay 30 per cent first and the remainder on completion, and many payment plans now allow you to pay in 10 per cent instalments as each phase of construction is completed.
Off-plan is cheaper than ready property
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