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Amid Dubai off-plan boom, buyers must avoid costly mistakes

Not all off-plan investments are created equal, and a polished brochure doesn’t guarantee profits

Dubai’s booming off-plan property market is a magnet for investors seeking high returns. However, while the rewards can be substantial, the risks of making poorly informed decisions are just as significant — and often underestimated, experts say.

To date in 2024, off-plan purchases in Dubai accounted for 105,700 deals, almost double the 54,200 recorded for resales.

Off-plan properties are undeniably appealing, with their state-of-the-art designs, lifestyle-focused features, and flexible payment plans. They offer early investors the chance to secure prime units that align with their preferences and capitalise on the growth potential as projects near completion.

But here’s the reality: not all off-plan investments are created equal, and a polished brochure doesn’t guarantee profits. “The truth is, many buyers dive in without a clear understanding of critical success factors. Failing to evaluate the developer’s track record, misjudging market timing, or overlooking future demand can quickly turn an exciting opportunity into a financial setback,” says Firas Al Msaddi, CEO of fäm Properties.

To begin with, attractive marketing renders for off-plan properties are often not produced to scale, and buyers attracted by the images and the ticket price can be misled about the actual size and layout of the property. “It’s vital to thoroughly examine the dimensions of each room as specified in the floor plans. This ensures that expectations are aligned with reality when the property is handed over, avoiding disappointment about how the space looks and feels,” Msaddi says.

Meanwhile, the types of apartments in a building can greatly affect the living experience. “For example, buildings with mostly studio and one-bedroom apartments usually attract bachelors or single professionals, while those with larger, three and four-bedroom units will appeal to families. A mismatch here could leave buyers disappointed with the facilities and atmosphere,” Msaddi says.

For example, owning a luxurious four-bedroom penthouse in a building dominated by studio and one-bedroom apartments may not deliver the lifestyle experience its owner is looking for. Similarly, the project’s amenities — such as gyms, pools, or play areas — are typically designed to suit the majority of residents. This might not meet the needs of families if the building is predominantly occupied by bachelors.

Investors often assume their property’s completion date is the same as the handover date, but this is not always the case, particularly for large-scale developments. “After completion, it can take up to four months for buyers to inspect their units, report snags, and have those snags resolved. For larger projects, this process can extend to six months or more. It’s important to account for this timeline when planning your investment strategy,” Msaddi says.

When investing in off-plan properties, many investors aim for short-term gains by buying and quickly reselling before handover, and this is often the wrong strategy, Msaddi says. “However, for those pursuing this short-term approach, it’s crucial to consider potential competition from the developer. Frequently, developers continue selling similar units at competitive prices, which can significantly impact an investor’s ability to achieve a profitable resale,” he adds.

The key takeaway here is that off-plan investors must plan their cash flow and strategy carefully. Investors should:

•Clearly identify when they intend to resell and who their target audience will be.

•Analyse the project size and the total number of units to gauge competition - both from the developer and other off-plan investors.

“A well-thought-out strategy aligns an investor’s expectations with market realities, ensuring they don’t underestimate the competitive landscape and the volume of similar units likely to hit the market,” Msaddi says.