Know the Pros and Cons of Investing in Dubai’s Secondary & Off-Plan Market


A real estate investor usually finds it difficult to choose between secondary (ready) properties and primary (under construction) properties. The struggle to choose one from these two categories is common in expanding markets. This is because in these markets, primary sales form a crucial component of the volumes when compared to economies in which the abundance of the volumes are set in the secondary category because of latest development. For instance, the market of Dubai has greatly focused on primary sales for the past few years.

A big amount of primary transactions is basically an indication of dynamic economic activity because it showcases that boosting developments are needed for the needs of an expanding city. This can be led by rising modernization in a country like India or by improved job opportunities, for instance Dubai.

The real estate market of Dubai is known as one of the most successful and rising markets in the world. This means that real estate investors can discover tons of latest real estate projects which provide different off-plan units available for buyers to purchase. These off-plan projects range from 1-bedroom apartments to small sized apartments like a studio flat. These are the most important property projects, especially for investment purposes because it is simple to rent and sell them. Huge luxurious apartments or penthouses with stunning views are also available in different parts of the city. Moreover, townhouses and villas are also in high demand by families as they offer privacy and comfort.

Likewise, an active secondary market is also needed because it is an indication of a regulated supply and demand market. Besides the bigger share of primary transactions, the present Dubai market can also be divided into the below groups:

1. Important new launches

2. Secondary market costs trading at a discount towards the primary market

3. Balanced rental return

4. Latest catchment spots being made for potential growth

5. DLD waivers and free of cost property management services

6. Assertive offers in cost by developers

7. Post-possession payment plan

In any active property market, there should be a least cost difference among the secondary and primary categories. However, assertive offers observed in the primary market points to a low demand as opposed to supply, this makes the present Dubai situation a buyers’ market. Below are the main details of both secondary and primary properties:

1. Various developer offers can form primary transactions affordable as compared to the secondary category. For instance, DLD waivers.

2. Equity outflow is disturbed in the primary market which makes it comparatively simple on costs and affordability.

3. Because equity outflow is disturbed in the primary market, capital appreciation might offer a way larger Return on Equity aka ROE as opposed to the secondary market.

4. However, the secondary market adds the part of rental returns in the general returns, and rental returns in Dubai are equivalent to or go higher than mortgage rates.

The purchases of primary markets are simpler to research because of important information ready on likewise transactions in the same catchment position (because it is a homogeneous product), whereas the research of secondary market purchases requires way more information in a specific hyperlocal market. A buyer does not have to pay brokerage fees to primary market purchases but in secondary market transactions, the buyer has to.

One of the factors that can influence the investor’s choice to purchase a property from the leading real estate companies in Dubai or from off-plan project developers, is the variety of different options that the investor can select. The area and type of property really holds a big impact on the buyer. The investor can choose a particular location in which there is availability of universities, any place he wants to live which is preferably near to his workplace or an isolated area which offers him a sense of comfort.

Even though the variety of numerous choices given by off-plan projects is a single powerful factor influencing the investor’s to force into purchasing this category of property, other crucial factors are the payment plan and competitive price. The real estate companies in Dubai provide easy installments. The real estate developers usually offer the chance to investors to avail the property after the construction work is completed and after paying a specific amount of unit cost.

Although off-plan properties can provide benefits which investors think about before buying a new property, lots of buyers prefer the secondary market as they think it satisfies their demands more. If an investor is more inclined towards owning a ready-to-move-in apartment or villa, then the ideal choice is the secondary market. But the important reason which guarantees the decision of a buyer to purchase property from the secondary market is the price. The investor is bound to pay the full price of the secondary property after signing the purchase contract, either by mortgage or cash payment. The real estate companies in Dubai provide payment plans consisting of various installments which many buyers can easily follow. This means that without paying the complete price at once, they can own the property. But in the secondary market, it is essential to pay the complete cost of the property after signing off the purchase contract. Moreover, the investors in the secondary market are forced to pay the commission of the real estate consultant besides the property cost after signing the purchase contract. This commission is not demanded in off-plan property purchases.

Wrapping it up

Both secondary and primary properties come with their advantages and downsides, and the choice should be a purpose of various variables. For instance, available liquidity, the condition of the market, pricing differential, investment versus end use, developer and mortgage rates, and more. The buyer should be comfortable with the payment plan as well. The options of fixed monthly savings, cash or mortgage are available.

It is clear that in the present circumstances, investing in the primary market of Dubai is way more beneficial owing to variables like discounts and disturbed payment plans, which can lead to a higher return for the investor.

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