As profitable as off-plan buying is, there are major and minor errors to avoid lest your investment could virtually run to waste or worse off turn into an ugly fund-zapping court case.
Thankfully, the market has been patiently studied over the years, and certain smart fixes had been developed to counter such situations and keep you and your investment safe.
Here are the demerits, and their fixes;
There are situations when the value of a property drops before construction is done.
The simply means an investor would pay a property’s original price as it is legally binding on the contract with his off-plan developer, regardless of the lack of value that might have befallen the property.
Consequently, your funding institution (bank or alternative lender) could reduce the amount your credit account is funded with, or cease it altogether.
Fix; take a loan with a fixed value; a fixed value loan would cover your entire budget, thereby making sure the time for completing construction activities on your property is as short as possible. The longer your job waits, the more likely it is to fall into a period of value decline.
It is important for both parties to have a full grasp of contract terms. A single misstep could put you at a disadvantage within the law. A client-friendly law runs the UAE of course, but it’s important to know what such legal pages say right before you fall into a contract. An example of such mishaps was seen in Spain, during a recession, where the contractor went out of business and investors were unable to retrieve the amount they had initially advanced.
Another of such legally excruciating situations, was seen in Australia;
The sunset clawback, that allows develops to withdraw their contract at the tail end of a construction deal, thereby selling off your off-plan property as a completed construct to a higher bidder.
Fix: make yourself a big player with the knowledge of contract law in the city. Better still have a well-grounded attorney cover that aspect for you.
If at the end of the construction process, what you get isn’t exactly what you had bargained for, fixing becomes another major headache. This type of cases may be due to inadequacy or material defects.
Fix: make yourself available for a routine inspection of the property as construction proceeds, or If you are an international investor with other commitments, have an intelligent representative carry out such inspections for you. This way it’s very unlikely you end up with something you will not be happy with.
Off-Plan property is practically the best to purchase in a city like Dubai, the reason being that;
- There are hectares of land available for any kind of project at suitable locations.
- Ready built houses are relatively expensive
- You get to choose your taste.
However, you should always play safe as anything is possible anywhere, even here in Dubai.
Thanks for reading.
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