The UAE real estate sector has undergone noticeable shifts in recent years, influenced by evolving buyer behavior and dynamic price trends. Since 2020, a surge in activity in the secondary market has highlighted changing investor priorities—especially toward completed properties that offer immediate usability. This article evaluates the profitability and strategic considerations of investing in off-plan (under-construction) versus ready-to-move-in properties, with insights into current market conditions and potential returns.
Secondary Market Gains Momentum
The third quarter of 2020 marked a pivotal period for Dubai’s real estate market. Data from the Dubai Land Department revealed that 63% of the 8,675 property transactions during that period occurred within the secondary market—an impressive 21.7% growth compared to the previous quarter. This trend points to rising investor interest in completed properties, largely driven by quicker returns and reduced uncertainty.
Benefits of Investing in Ready Properties
Instant Rental Yield and Personal Use
Purchasing a ready-made property eliminates the wait associated with construction timelines and offers immediate access—whether for rental income or personal occupancy. Chris Hobden, Head of Strategic Consulting at MENA for Chestertons, emphasizes that completed properties offer a clear view of build quality and interior design, reducing speculative risk.
Richard Wynd, Managing Director at Better Homes Real Estate Group, supports this view, highlighting the appeal of generating returns from day one—an advantage not afforded by under-construction units, which can require up to two years before becoming income-generating.
Declining Prices and Favorable Mortgage Terms
Recent market corrections have made ready properties more attractive. Cavendish Maxwell reported an 11.7% drop in residential property prices in Dubai year-on-year. Coupled with relaxed mortgage regulations by the UAE Central Bank—raising the loan-to-value ratio to 80% for non-residents and 85% for UAE nationals—these conditions make purchasing completed units more financially accessible for a broader range of investors.
Advantages of Off-Plan Real Estate
Flexible Financial Structuring
Off-plan or under-construction properties are often accompanied by flexible installment schemes, appealing to buyers who may not immediately qualify for full mortgage approval. Developers frequently offer attractive payment plans, allowing investors to pay over the course of the construction timeline with low initial commitments.
Richard Wynd notes that this model offers a unique advantage: buyers can gradually build equity without incurring immediate high costs, which is particularly beneficial for first-time investors or those diversifying their portfolios.
Potential Savings and Long-Term ROI
Off-plan investments frequently come with incentives, including discounts and post-handover payment plans. According to Varghese, Partner and Head of Real Estate Strategy at Knight Frank, developers may aim for higher overall yields—often ranging between 18% and 20%—albeit over extended timeframes. While these properties may ultimately be more expensive than bank-financed ready units, the flexible terms often balance out the premium.
Market Outlook and Upcoming Developments
The landscape of Dubai real estate in 2020 saw a reduction in the number of new project launches, as developers concentrated on selling existing inventory. However, 2021 and beyond signal a shift: new developments like the Elan community in Majid Al Futtaim’s Tilal Al Ghaf are set to reignite the off-plan market.
Additionally, major economic events such as Expo 2020 have catalyzed demand and created renewed optimism across the sector, benefiting both developers and investors in the off-plan and secondary markets.
Choosing the Right Investment Strategy
Ultimately, the decision between investing in a ready property or an off-plan development depends on your financial goals, risk tolerance, and investment horizon:
- Ready properties offer immediate usability, assured quality, and a quicker return on investment. They’re ideal for investors seeking stability, cash flow, or end-use housing.
- Off-plan properties provide greater financial flexibility and the potential for long-term capital appreciation, particularly when bought at pre-launch prices with attractive payment plans.
At Ocean Gate Luxury Properties, we help investors navigate both segments of the UAE property market with expert insight and tailored guidance. Whether you’re interested in a move-in-ready asset or an off-plan opportunity with high growth potential, our team is equipped to assist you in making well-informed, profitable decisions.
Contact Ocean Gate Luxury Properties today to explore available listings and maximize your real estate investment in the UAE.
