For anyone stuck in the rental trap, it can be disheartening not being able to get a hold on the property ladder. Fortunately, developers are now realising that not everyone can afford a multimillion-dollar home, and a new wave of affordable off-plan properties are being launched.
Danube Properties, a company that attracts buyers with Bollywood endorsements and reasonably priced accommodation, launched Miraclz in 2016, which allows a one per cent payment plan, meaning investors can now pay as little as Dh4,500 a month for their own pad. Located in up-and-coming Arjan, near Miracle Garden, the project is off-plan.
Pay over time
“The cost of acquisition of off-plan property is always lower than buying completed property in the same area, plus you have the convenience of paying over a period of time until completion of the project, thereby offering you a clear advantage in terms of investment,” says Rizwan Sajan, Founder and Chairman of Danube Group.
With lucrative payment plans and reasonably priced properties, it’s getting easier to buy your own home.
“The new developments in affordable areas such as Miraclz and Dubai South aim to cater to the housing needs of the middle-income group,” says Damodhar Mata, financial blogger at Financialplanningindubai.com.
“Houses in the affordable areas also help investors achieve higher degree of diversification, while earning a higher yield on their investment.
“Prices for affordable housing now start at Dh275,000 for a studio in Dubai South. Investors can comfortably achieve a yield of 8-10 per cent on affordable housing.”
However, when buying off-plan, there can be pitfalls. “A completed property, if available in a good location and at the right price, is always the best choice,” says Mata. “As such, properties can be immediately occupied or rented out, however the choice is limited. Off-plan properties offer a definite price advantage, providing capital appreciation and higher rental yields. However, they also come with an inherent risk that the project may get delayed, suspended or, worse, cancelled.”
Who’s building it?
While the market has matured and these pitfalls are less likely, it always pays to invest with established developers. Take for instance a development such as Jumeirah Golf Estates, with its proven track record. Its AlAndalus properties offer an opportunity to buy an affordable property while having the luxury of being located in an exclusive community. One-bedroom apartments at AlAndalus started at Dh597,000 but were quickly sold out.
“At this moment in time, demand for affordable housing in Dubai far exceeds supply,” says Omar Al Mukhayet — Head of Projects, Jumeirah Golf Estates. “Both residential sales and rental rates have significantly increased over the past three years, outstripping the growth in salaries and consequently making affordability a key aspect in the purchase decision-making process among Dubai residents. Therefore, it is no surprise that there has been an overwhelmingly positive response to AlAndalus, the affordable luxury community in Jumeirah Golf Estates.”
While golf communities will always be in demand, there are a host of up-and-coming areas to look out for.
“The newest communities can all be found in and around the Umm Suqeim and Hessa Roads and along the new Emirates Road,” says Thomas Bunker, Manager of Off-plan Sales at Better Homes. “Here the larger players such as Emaar, Dubai Properties, Nshama and Damac are all developing large residential projects. A bit further down the road you will find Dubai South where MAG and Dubai World Central are developing their own low-cost products including MAG 5 Boulevard and The Pulse respectively.”
Although there is a barrage of exciting investment opportunities out there, these deals do require some patience, depending on the project, as Bunker points out, “Most of the projects are set to be completed by 2020, although some of the projects are being handed over now.”
What to remember when buying off-plan
“Location, location, location. It is the most important aspect to look out for when investing in an off-plan property,” says financial blogger Damodhar Mata. “Proximity to commercial, educational and medical facilities is always an added advantage. Proper due diligence on the reputation and the financial standing of the developer is also a must. It is advisable to avail of a mortgage, if available, Involving an institution in the due diligence process and mitigating capital risk to a certain extent.”