Real estate investors like to buy real estate in the hope of producing substantial capital gains. In addition, there may also be many opportunities for capital growth in an emerging real estate market such as Dubai, with a development cycle of usually 12 - 24 months.
The largest developer of Emaar Properties in Dubai now requires owners to have 40 percent of the off-plan Properties amount paid for before they can sell to a new owner.
With uninformed investors who do not understand their limits on cash flow and believe that they can resell the property after a few payments, with some private developers paying very high commission fees, it is quite possible that agents may misrepresent market trends to enter into an agreement.
While investing in off - plan real estate may not necessarily be the deal it once was, for end - users and some people buying second homes, it is still a viable path because it offers the potential for their dream home, delivered new and to their exact specifications and in the right place.
Companies such as Emaar and Meraas chooses areas for new investments that may be less risky than others (including future financing in the region, already available infrastructure, etc)