BEWARE Offers & Gimmicks When Buying Off-Plan Property in the UAE!

In the bustling real estate market of the UAE, off-plan properties are often marketed with a flurry of hype, excitement, and enticing offers, designed to capture the attention of potential, unknowing buyers.

These gimmicks, while seemingly tempting, typically mask an ugly underlying issue: inflated property prices!

Understanding the true cost of these so-called deals is crucial to making a sound investment. The last thing any investor needs is to be caught out with a dud property that was sold deceptively!

Common Offers to Watch Out For

Developers in the UAE are known for adding a range of incentives to make their off-plan projects stand out. Here are some of the most common gimmicks:

• Rental Guarantees: One of the most "appealing" offers is a rental guarantee, often promising returns as high as 8-10%p.a. over a period of 3-5 years. While this might sound like a safe bet, these guarantees are typically baked into the price of the property, meaning you're essentially paying for your own return.

• Furniture Packages: Another frequent offer is a “free” furniture package. The promise of a fully furnished home is appealing, but again, the cost of these packages is often added to the property’s price. You could end up paying more for furniture you may not even like or need.

• Luxury Cars and Holidays: Some developers go as far as offering luxury cars or all-inclusive luxury vacations as part of the deal. These flashy incentives can be hard to resist, but it’s essential to recognize that the value of these perks is reflected in the property’s price tag - if you actually need a car or want the holiday, you would almost certainly be better off to find that deal separately, form someone who deals in that sector!

The Real Cost of These Offers

While these gimmicks can make an off-plan property seem like a fantastic deal, they very often lead to overinflated prices. When the time comes to resell the property, the value is determined by its intrinsic qualities, not the perks you received at the time of purchase. If the property was overpriced to begin with, you might struggle to sell it at a price that recoups your investment - but hey, at least you drove that new car to the airport to take that holiday, drinking coctails at the pool bar from the proceeds of your 8% rent income, right!

Consider this: if a property is sold with a rental guarantee or a luxury car, those items are not necessarily transferable to a future buyer. This can make the property less attractive on the resale market, as the new buyer will not receive the same benefits. As a result, the resale value may be lower than anticipated, leading to potential financial loss.

Are there any Real, Good offers available?

Yes of course, it's not all doom & gloom out there.

What's more acceptable and common practise in the market, are things like:

• Discounts from launch prices, typically 2-5% when taking accelerated payment terms, like paying 100% cash upfront, or at least not taking the post-handover payment plan options (PHPP).

• Waiver for all or part of the Oqood & DLD fees, which can easily exceed 4%.

• Waiver for the 1st year Service Charges. The Developer almost always has to manage the Owners Association for the 1st year anyway, and by law they must give the first 1 year as a Defect Liability Period (DLP), so they're going to be very closely involved and liable for almost every cost in that 1st year anyway.

How to Protect Yourself

When buying off-plan, it’s essential to focus on the property’s fundamentals - location, quality of construction, developer reputation, and market trends - rather than the gimmicks. These are the factors that will determine the long-term value of your investment.

A thorough market analysis can help you determine whether the price of a property is fair, gimmicks aside. Comparing similar properties without such offers can provide a clearer picture of the property's true value.

Get Professional Guidance

Navigating the off-plan property market in the UAE can be challenging, especially with the many gimmicks developers use to attract buyers. To ensure you're making a wise investment, consider working with a trusted real estate consultancy who can help you see beyond the flashy offers and focus on what truly matters - the property!

Looking to invest in off-plan property in the UAE? Contact rightclick.realestate today to help you navigate your options and make a smart investment decision.

BONUS: Whether you're just starting your property investment portfolio, or already have a few properties (and related battle scars) behind you, why not take our Property Guru Quiz and see how much you really know about analyzing a properties financial prospects - go ahead, click here, it's free and only takes a few minutes!

This post aims to equip you with the knowledge needed to make informed decisions in a market filled with offers that may not be as beneficial as they seem. Make sure you educate yourself, to ensure you make smart investment decisions.