The United Arab Emirates offers numerous property opportunities. There are two types of property investment: New-build projects and completed properties. The former is a project that is still under construction or in the pre-construction phase and is also known as off-plan property. Completed properties or on-plan properties, on the other hand, are ready-to-occupy properties that can be occupied immediately.
Nevertheless, both types of property have their advantages and disadvantages. Let's take a closer look at new-build projects and prefabricated properties to find out which is the best option for an investment.
New construction projects
New-build projects are those that are still under construction or have yet to be developed. Customers who are interested in new-build projects usually buy on the basis of the construction plans or floor plan and the reputation of the property developer.
When you compare new-build projects with completed properties, buyers tend to invest in the former because they have flexible payment plans and the chance of maximum profitability when the project is finished. Here you will find a selection of new construction projectsthat are worthwhile for German investors.
Advantages of new construction projects
Below you will find some general advantages of new-build projects:
Flexible payment plans
The payment plans for new construction projects are flexible. In addition, these projects are less expensive compared to finished properties. Property developers offer incentives and discounts to encourage potential buyers to invest early.
Customisability
Buyers have the option of customising the floor plans of some projects and choosing the fittings to suit their requirements.
Maximum return on investment
With a minimal investment, the chances of a higher return are greater. Buyers usually invest in new-build projects as soon as they are announced. The more the project increases in value and the further construction progresses, the greater the chances of maximising returns.
Secure investments
The RERA and the DLD have taken special measures to make investments secure. The developers of new construction projects can access the buyers' funds once the project has reached a certain stage of completion. In addition, buyers are required to make new construction instalments or down payments only with DLD-approved banks.
Lucrative property market
Dubai's property market is lucrative and offers a whole range of new-build projects. Buyers can purchase both Villas as well as Apartments outside the building plan and choose the one that suits your budget.
Disadvantages of new construction projects
If you are comparing new-build projects with completed properties, you should also be informed about the disadvantages and possible risks of these.
Possible delays
Construction delays may occur, which could postpone the handover date of the project. This is a disadvantage for investors and occupiers alike. End users may want to move into the project on the handover and viewing date, while investors may be looking for a quicker return by letting or selling the property. We only work with property developers who have a good history of new build projects. Find out how to deal with delays in the handover of off-plan properties here.
Uncertainty
Buyers have no certainty that the final project will actually meet their expectations. Although there are adjustment options and contracts that bind property developers, there is uncertainty. Also, there are no profits for investors until the project is completed. Unless you sell it on during the construction process.
Prefabricated properties
As the name suggests, prefabricated properties are those that are ready to move into immediately. These ready-to-move-in properties are fully built and comply with the rules and regulations set by the government. In addition, owners of ready-to-move-in units can resell or rent out their property at any time.
Advantages of prefabricated properties
In the following sections, we will now look at the advantages of a finished property compared to new-build projects,
Immediate use
Completed projects can be taken into possession and occupied immediately, i.e. private individuals can move into the units as soon as they have purchased the property. Investors can also resell or rent out the units to maximise returns and rental income.
Reduced risk
As the project is already developed, the risk of delays or unexpected problems, such as changes to building specifications that may occur during the construction phase of the project, is minimised.
Established location
Finished properties are usually located in established neighbourhoods that have amenities and facilities such as retail shops, schools, hospitals and public transport.
Disadvantages of finished properties
Below you will find some of the disadvantages of finished properties.
Higher prices
Prices for completed projects tend to be higher than for new-build projects.
Limited customisation options
If you compare the difference between new-build projects and prefabricated properties, there are only limited options for customising prefabricated properties as they are already built and finished.
Potential loss of value
The value of finished property can decrease or increase more slowly depending on market conditions. In Dubai, however, there is a strong upward trend.
Sales volume of new construction projects vs. completed properties.
In the following chart, we have compared the sales volume of new construction projects with that of completed properties in Dubai.
Conclusion
These were the pros and cons of off-plan and ready properties. Deciding which type of property is best for an investment depends on several important factors, including individual preferences, market conditions, financial goals and risk appetite.
However, new construction projects offer an attractive investment opportunity for German investors. The flexible payment plans, lower initial investment and the prospect of high returns on completion of the project are some of the advantages. The possibility of customisation and the security of investments through clear regulations are further plus points. In contrast, finished properties are more expensive, offer fewer customisation options and may experience less capital appreciation depending on market conditions. Therefore, new-build projects could be a better investment option for German investors looking for flexible and high-yield investment opportunities.
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