Primary real estate market of the UAE: what is it?

What is the difference between investments in primary and secondary housing?

The main difference between investments in the primary and secondary market is the cost of real estate. Off-plan objects (under construction) are mostly 20% cheaper than ready-made housing, which was commissioned 1-2 years ago. But it all depends on the specific object, as there are expensive offers on the primary market that exceed the price of the secondary.

Another difference between investments in different markets is the ability to earn income immediately or with some delay. When investing in the primary market, you will have to wait until the new building is put into operation. It makes sense to wait if the investments turned out to be less than they would have been in the case of secondary housing. With the latter, income can be received immediately: you bought ready-made apartments and can rent them out literally the next day.

Investments in the primary and secondary markets also differ in the payment plan. In the first case, you need to make a minimum initial payment of 20% of the cost of housing. The remaining amount can be paid after the house is put into operation. In the case of secondary real estate, the buyer will have to pay 100% of the cost at once.

The current state of Dubai’s primary real estate market

The demand for primary real estate in Dubai has remained consistently high for several years, as evidenced by the growing volume of housing sales. The growth in the number of transactions and their total value is also confirmed by the Dubai Land Department. Given the sufficient stability of the emirate’s economy, it is possible to predict an increase in the value of the real estate by an average of 10% per year.

The Dubai real estate market is developing in all directions. Not only prices and demand are growing, but the number of offers from developers is also increasing. Experts predict the continuation of this trend and do not yet see changes for the worse.

The high demand for facilities in Dubai is explained by several factors:

adequate pricing and good profitability;
a convenient payment plan when the first installment does not exceed 20%, and the rest can be paid when the house is ready;
flexible taxation system — the absence of income tax from individuals allows you to receive rental income in full;
resident visa — when buying a home, you can get a resident visa;
a high standard of living with a first-class healthcare system.

Even with high inflation, real estate remains a good asset and cannot completely depreciate. Due to the tourist potential and favorable business environment, apartments, and villas in Dubai will not lose their relevance and will bring the owner a stable income.

You can invest in the real estate market not only in the UAE but also in many other countries. Housing investments are popular in the Philippines, Costa Rica, Panama, Indonesia, Barbados, Thailand, France, Canada and beyond. At the same time, the UAE and, in particular, Dubai occupy one of the first places in the ratings of countries for investing in the housing stock. This is due to the low tax rate, high rents, excellent purchasing power and a good yield figure.

Advantages of buying housing in new buildings from a developer

Each type of real estate has its advantages, and primary housing is no exception. Among the obvious advantages of the objects from the developer are:

prices below market;
a small initial payment — does not exceed 20% of the cost;
most of the payment needs to be made only after the construction is completed;
flexible payment plan — from 2 to 5 years, which can be an alternative to a mortgage;
the developer can independently pay a fee in DLD in the amount of 4% of the cost of the object;
high return on investment;
the real estate purchased at the construction stage can be sold after commissioning and receive 20% of the profit.

Another important factor in favor of buying a home on the primary market is that new buildings are most often located in prestigious areas and offer more comfortable living conditions.

Disadvantages and risks of primary real estate

Off-plan real estate does not have many disadvantages and risks, but they also need to be considered before buying. It is important to note that for the UAE, most of the points listed below are of no particular importance.

Disadvantages and risks when buying real estate in the primary market of Dubai:

delay or freeze of construction. The risks of such a plan in the UAE are minimized since the state strictly controls developers. The authorities make sure to check whether the company has enough funds to complete the project;
viewing housing only in pictures. Real estate under construction cannot be viewed in reality and assess its quality and comfort level. But you can always see the developer’s previous projects or see ready-made houses in the selected large-scale community.

The purchase of the primary real estate in Dubai has only one drawback. You will not be able to use the purchased object immediately. To move into apartments or rent them out, you will have to wait for the new building to be put into operation.

How to buy a house in the primary market of Dubai?

The process of buying real estate in the primary market of Dubai follows a standard scheme. First, you choose a suitable object, then conclude an initial sale agreement with the developer and make an advance payment. It is necessary to renew the contract for obtaining a certificate of ownership after the completion of construction.

For the purchase and sale transaction to be successful, it is best to contact an experienced real estate agent. Mayak Real Estate experts know local laws, have a database of objects that are not publicly available, can check the purity of the transaction and accompany the investor at all stages of the purchase.

Mayak Real Estate is a full—cycle real estate agency. What else can our employees help with:

choose a residential property at the request of the buyer;
open a bank account;
register a house as a property;
provide full legal and accounting support;
find tenants;
organize turnkey repairs with the involvement of leading designers and builders;
resell the object on favorable terms.

Contact us in the best way for you to receive detailed consultation on the issue of interest and profitably buy real estate in the primary market of Dubai.