UAE Property: ‘Should I buy an off-plan or ready unit in Dubai?’

Question: I want to buy a property to live in Dubai. However, I am confused whether I should buy an off-plan or secondary market unit.

I hear that it’s cheaper to buy a unit off-plan and I can benefit from capital appreciation. However, I will have to pay both the rent and the construction-linked payment milestones if I buy an off-plan property.

But if I buy a unit from the secondary market, it seems to be at a premium. I also need to make arrangements to immediately pay the 20 per cent down payment plus other associated fees.

What factors should I keep in mind to ensure that a property has good resale value in Dubai? Should I also inquire about the service charges before buying a property? Should this be paid as a lump sum or every month?

Please advise what other factors I should consider before making a decision. MS, Dubai

Answer: Choosing to buy a property from the secondary market or off-plan is obviously a personal choice. There are several pros and cons to both, so I will outline some of them here below in order to help you to decide what is the best investment for you.

For secondary market, the pros are:

You will have possession of your unit at the point of transfer whereby you can move in yourself or indeed rent it out straight away.
If you rent it out, you will benefit from earning the rental income immediately based on the rental contract and payment terms.
There will be no delays in handover, the property is ready, so you buy what you see at the point of viewing.

The cons are:

Capital appreciation can be slower than for units that are under construction.
The cost is 100 per cent upfront either by one’s own funds or through a mortgage.

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For off-plan, the pros are:

Lower entry level costs. You only need the initial 10 per cent to 20 per cent down payment, then embark on the assigned payment plan.
Appreciation can be fairly rapid within a rising market, reaching its peak just before handover.
The property will be new and have the latest services and equipment attached to it.

The cons for off-plan are:

There will be delays in construction. This is a certainty. A project can be delayed by up to 12 months without a developer having to compensate a buyer.
There is always a level of uncertainty attached to buying an off-plan property, surrounding not just the delivery time, but the actual size of the unit, the view, the aspect, the facilities, etc.
If looking to rent out at the time of handover, there will be many units hitting the market at the same time, which could impact the value of rent achieved.

Having a good resale value always depends on the supply and demand as most people will want to live near water, be that a marina or beach, or close to major attractions as well as transport links such as a Metro station or good road links. The location will determine the saleability and rentability of a property.

Service charges are often an afterthought with investors or end users. These can vary from Dh2 to Dh5 per square foot for villas and town houses, and between Dh15 and Dh20 per square foot on average for apartments.

These need to be considered because they are a constant cost attached to a property and one that is also likely to go up even if we just take inflation into consideration.

Service charges are an annual charge, but I would request you to check with the owners’ association of the particular tower if it’s an apartment, or the developer if it’s a villa or town house, to see if they require this annual charge to be paid in one go, every six months or indeed quarterly or monthly.

The last thing to consider is that buying real estate should be for the long term because it’s difficult for anyone to time the market.

We are presently in a bullish market and one that is currently based on good fundamentals, such as population growth. All markets can be affected by other factors such as government policy, geopolitical issues or sentiment, so remember that even in real estate, the value goes up as well as down.

Mario Volpi is head of brokerage at Novvi Properties and has worked in the property sector for 40 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@novviproperties.com

Tamkeen's offering

Option 1: 70% in year 1, 50% in year 2, 30% in year 3
Option 2: 50% across three years
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Ruwais timeline

1971 Abu Dhabi National Oil Company established

1980 Ruwais Housing Complex built, located 10 kilometres away from industrial plants

1982 120,000 bpd capacity Ruwais refinery complex officially inaugurated by the founder of the UAE Sheikh Zayed

1984 Second phase of Ruwais Housing Complex built. Today the 7,000-unit complex houses some 24,000 people.

1985 The refinery is expanded with the commissioning of a 27,000 b/d hydro cracker complex

2009 Plans announced to build $1.2 billion fertilizer plant in Ruwais, producing urea

2010 Adnoc awards $10bn contracts for expansion of Ruwais refinery, to double capacity from 415,000 bpd

2014 Ruwais 261-outlet shopping mall opens

2014 Production starts at newly expanded Ruwais refinery, providing jet fuel and diesel and allowing the UAE to be self-sufficient for petrol supplies

2014 Etihad Rail begins transportation of sulphur from Shah and Habshan to Ruwais for export

2017 Aldar Academies to operate Adnoc’s schools including in Ruwais from September. Eight schools operate in total within the housing complex.

2018 Adnoc announces plans to invest $3.1 billion on upgrading its Ruwais refinery

2018 NMC Healthcare selected to manage operations of Ruwais Hospital

2018 Adnoc announces new downstream strategy at event in Abu Dhabi on May 13

Source: The National

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Stuck in a job without a pay rise? Here's what to do

Chris Greaves, the managing director of Hays Gulf Region, says those without a pay rise for an extended period must start asking questions – both of themselves and their employer.

“First, are they happy with that or do they want more?” he says. “Job-seeking is a time-consuming, frustrating and long-winded affair so are they prepared to put themselves through that rigmarole? Before they consider that, they must ask their employer what is happening.”

Most employees bring up pay rise queries at their annual performance appraisal and find out what the company has in store for them from a career perspective.

Those with no formal appraisal system, Mr Greaves says, should ask HR or their line manager for an assessment.

“You want to find out how they value your contribution and where your job could go,” he says. “You’ve got to be brave enough to ask some questions and if you don’t like the answers then you have to develop a strategy or change jobs if you are prepared to go through the job-seeking process.”

For those that do reach the salary negotiation with their current employer, Mr Greaves says there is no point in asking for less than 5 per cent.

“However, this can only really have any chance of success if you can identify where you add value to the business (preferably you can put a monetary value on it), or you can point to a sustained contribution above the call of duty or to other achievements you think your employer will value.”

MATCH INFO

Uefa Champions League semi-finals, second leg:

Liverpool (0) v Barcelona (3), Tuesday, 11pm UAE

Game is on BeIN Sports