How buying off-plan property is now an alternative to mortgage financing

Flexible payment plans minimise buyers’ financial strain and they also benefit from capital appreciation

All developers operating in the off-plan market typically offer flexible payment plans. Chris Whiteoak / The National

Dubai’s real estate landscape is constantly evolving, and investors are looking for smarter ways to grow their wealth while maintaining financial flexibility.

One strategy gaining popularity is off-plan property investment. Buyers are actively opting for this approach because not only does it have a lower upfront commitment compared to secondary market property purchases, it also presents the potential for higher long-term returns.

Off-plan properties are a compelling option for those considering financial alternatives to mortgage financing or seeking to diversify their portfolios.

Recent property launches, such as The Wilds by Aldar, Ghaf Woods by Majid Al Futtaim, Amaal 8 by Amaal, Biltmore Sufouh and Damac Islands, are examples of developers rethinking investment plans for buyers, with attractive pricing and flexible payment plans.

Data from Property Monitor reveals that Emaar has emerged as the clear market leader for off-plan transactions in Dubai so far this year, recording 3,789 – more than double that of its closest competitor. Sobha Realty follows with 1,428 transactions, trailed by Binghatti Properties and Danube Properties.

All developers operating in the off-plan market typically offer flexible payment plans. The most common payment structures in the current market are 60:40, 70:30, 80:20 and 50:50. In the first three plans, a majority of the payment is paid during construction, and the remainder settled after handover. Buyers are also required to pay a 10 per cent to 20 per cent initial deposit on booking under these plans. The 50:50 payment plan is something quite new that developers are rolling out where the first half is paid before construction and the second half is paid upon handover.

What attracts investors to off-plan?

The biggest benefit of investing in off-plan properties is the flexible payment structure, which minimises the immediate financial strain compared to buying a ready property – where a down payment of 20 per cent is required upfront for properties under Dh5 million ($1.36 million), and 30 per cent for properties over Dh5 million.

Off-plan investments allow buyers to spread payments across several years, freeing up capital for other investments. We've seen customers who don’t yet have the means for a full down payment choose to continue renting while investing in off-plan properties, due to the flexible payment structures.

This phased approach allows buyers to manage their liquidity more efficiently, reinvesting in other opportunities while still securing a prime real estate asset. Additionally, the final handover payment can be financed through a mortgage, offering even greater flexibility, especially for investors with variable income streams or international portfolios.

Capital appreciation

Beyond financial flexibility, capital appreciation is a key advantage of off-plan investments. By securing a property at today’s price with a future delivery date, investors lock in a lower purchase cost while benefitting from market appreciation over the construction period.

Given Dubai’s upward property trend and strong demand from international buyers, off-plan properties often see a significant value increase before handover, making them a strategic long-term play.

Additionally, post-handover payment plans are becoming increasingly common, allowing buyers to continue paying in instalments even after receiving the keys, further reducing financial pressure.

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Risks

Like any investment, off-plan properties come with their own set of considerations:

• Project delays: Construction timelines can sometimes extend beyond initial estimates
• Lower liquidity: Unlike ready properties, off-plan homes are harder to resell quickly, requiring a longer-term commitment
• Market fluctuations: Prices may shift before handover, though Dubai’s market has historically demonstrated resilience and upward growth

Alternatives

For investors who want to invest into real estate but prefer lower capital requirements, fractional ownership is an emerging trend. This model allows multiple stakeholders to co-own high-value properties, sharing both the costs and potential returns. It’s an attractive option for those looking to diversify across multiple properties or markets without overextending their financial commitments.

However, fractional ownership comes with its own limitations, decision-making is shared and resale options can be more complex.

The decision between off-plan investment and fractional ownership depends on individual financial goals, risk tolerance and time horizon. For those with a medium to long-term outlook, off-plan remains one of the most strategic options in Dubai’s real estate market, offering buyers a way to leverage flexible payments, secure prime assets and benefit from market-driven appreciation.

Jake Matthews-Hubbard is sales director for off-plan at Espace