Off-Plan versus Direct Development: Two Products, Two Protection Regimes

The off-plan question is almost always framed commercially. How much discount to ready. Which payment plan. Which developer. Whether the brand is confirmed. These are the questions a sales channel is built to answer, and they are the questions a serious investor should treat as secondary. The first question is structural: what protection regime governs the contract, what failure modes does it cover, and what residual risk does the buyer carry that no discount can compensate.

Off-plan, direct development for an end user, and limited-partner co-investment in a development SPV are three distinct products. They sit on three distinct legal substrates, distribute risk across three distinct stakeholder geometries, and exit through three distinct mechanisms. Treating them as interchangeable, on the basis of a headline price per square metre, is the most common underwriting error in private real estate.

This document is classified as marketing material under MiFID II Article 24(3). It is not investment advice.

What 'off-plan' actually means#

Off-plan is the purchase of a residential unit from a developer before, or during, construction. The buyer signs a preliminary sale contract, pays a deposit, and pays additional instalments at defined construction milestones until the unit is completed and a final transfer deed is registered. The legal grammar is jurisdiction-specific; the economic substance is the same: the buyer provides development finance to the operator in exchange for a contractual right to a specific finished unit at a fixed price.

The standard Dubai schedule is the reference case because the market is the most liquid and the most documented. A typical plan runs 10 to 20 per cent deposit at signature, 50 to 60 per cent against construction milestones (foundation, structural shell, facade, MEP, finishing), and 20 to 40 per cent at handover or as a post-handover plan over 24 to 60 months. Dubai Land Department data confirms off-plan accounted for approximately 63 per cent of residential transactions in 2024 and roughly 72 per cent in 2025, the highest share of any major prime market globally.

The Italian and Indonesian grammars are materially different. In Italy the buyer signs a contratto preliminare before a notary, the constructor delivers a garanzia fideiussoria covering sums paid before transfer, and the final atto pubblico is registered at the Conservatoria dei Registri Immobiliari. In Indonesia the buyer signs a Perjanjian Pengikatan Jual Beli (PPJB) before a notary, pays staged instalments, and only on completion executes the Akta Jual Beli (AJB) final notarial deed, registered with the Badan Pertanahan Nasional (BPN). The same product, three legal regimes, three risk profiles.

The off-plan discount and where it actually goes#

The headline argument for off-plan is the discount to ready. Across Dubai, Bali and the Mediterranean prime markets, off-plan units at launch are typically priced 10 to 25 per cent below comparable ready inventory in the same micro-location, with the spread widening during early launch phases and compressing toward handover. This is not a marketing claim. It is a structural feature of the product, observable across multiple cycles and consistent with the cost-of-capital calculation that any developer running an escrow-funded construction makes when pricing first releases.

The question is not whether the discount exists. The question is what the discount is actually paying for, and to whom the spread accrues at exit. In the institutional reading, the off-plan discount has three components. The first is a time-value-of-money adjustment for the buyer's staged contribution of development capital ahead of delivery. The second is a risk premium for the failure modes catalogued below: delay, design change, brand pullout, developer insolvency. The third is an early-access premium that the operator captures by accelerating sell-out velocity. The discount is the sum of these three, not a windfall.

Capture of the spread depends on the development. In a well-run project with credible demand and a disciplined release schedule, the latest release approaches ready-market pricing as units sell down. In a weak project, the operator discounts later releases to clear inventory, and the early buyer underwrites the absorption risk of every unit released after theirs. The off-plan discount, in plain terms, is a contractual conversion of operator risk into buyer risk in exchange for a price concession.

Jurisdictional protections compared: Dubai, Italy, Indonesia#

Three jurisdictions, three regimes. The protection a buyer actually owns at the moment of signing the preliminary contract is, in each case, the statutory and contractual stack that the local regime makes available. The institutional buyer should read the statute, not the brochure.

Dubai: Escrow Law 8 of 2007. Under Law No. 8 of 2007, any developer selling off-plan must open a dedicated escrow account with a Dubai Land Department-approved escrow agent. Buyer payments are deposited in the name of the project, not the developer, and released only against certification from an independent project consultant that a specific construction milestone has been completed. Article 14 requires retention of 5 per cent of total payments for one year after completion as a defects-rectification guarantee. The Oqood pre-registration system administered by the DLD prevents double selling. Under RERA practice, a delay of more than twelve months entitles the buyer to a full refund with interest. The Dubai regime is, on the documented criteria, the most articulated off-plan buyer-protection framework in any emerging prime market.

Italy: D.Lgs. 122/2005 and the 2019 notarial reform. Italian Legislative Decree 122 of 2005 requires the constructor to deliver a garanzia fideiussoria, a bank or insurance surety bond covering all sums paid before final transfer of ownership. Non-delivery results in nullità relativa: the contract is voidable at the buyer's election, with restitution. Following the 2019 reform (applicable to building permits requested from 16 March 2019), the preliminary contract and all transfer deeds must be executed as atto pubblico before a notary, with violation triggering nullità assoluta. The notary verifies the garanzia fideiussoria at signature. The protection is procedural and structural, not commercial.

Indonesia: PPJB, AJB and BPN registration. Indonesian off-plan transactions execute through a two-stage notarial process. The Perjanjian Pengikatan Jual Beli (PPJB) is the preliminary commitment, signed before a notary, with the deposit typically held in a notarial escrow account at 10 to 30 per cent. The PPJB does not transfer ownership. The final transfer occurs on completion, by Akta Jual Beli (AJB) before a Pejabat Pembuat Akta Tanah (PPAT), with registration at the Badan Pertanahan Nasional (BPN). Foreign buyers transact through Hak Pakai (30+20+30 years under Government Regulation 18/2021) or Hak Guna Bangunan held by a PT PMA. Hak Milik freehold is reserved to citizens under Article 33(3) of the 1945 Constitution and the UUPA 1960. The Indonesian regime relies more on notarial discipline and developer credit than on statutory escrow. The 2024 to 2025 Bali cycle saw documented developer failures with foreign investors holding only contractual claims against entities in liquidation.

The four off-plan failure modes#

Off-plan can fail in four distinct ways, each requiring a different mitigation. The underwriting question is not whether failure is possible but which mitigations the statutory and contractual stack actually delivers in each scenario.

Mode one: delay. Knight Frank's Dubai data records that only 60 per cent of promised housing was completed on schedule between 2022 and 2024, and only 46 per cent between Q1 and Q3 2025, attributed in part to a contractor capacity crunch on the back of the 2024 to 2025 launch surge. Six- to nine-month delays are common in routine construction across emerging markets. Dubai RERA permits refund with interest after twelve months. The Italian regime permits enforcement of the garanzia fideiussoria on failure to deliver. The Indonesian regime depends on the contractual penalty clause in the PPJB and on developer solvency.

Mode two: design change. The unit delivered may not match the unit sold. Finishing changes, layout modifications, amenity downgrades and density increases above the master plan are routine off-plan outcomes. The mitigation is contractual: a specification annex with material-deviation thresholds and remedies. The protection is only as strong as the contract drafted at signature.

Mode three: brand pullout. Branded residence projects, the fastest-growing segment of the global off-plan market, carry a specific failure mode in which the brand operator terminates the branding agreement during construction, for cause (developer breach, financial default) or for convenience (strategic exit from the geography). The unit is then delivered as a generic product, with documented evidence in multiple jurisdictions of post-handover values trading 15 to 30 per cent below the marketed brand price. The mitigation is contractual: a brand performance clause with a buyer remedy in the preliminary contract. Few buyers ask for one.

Mode four: developer insolvency. Under the 2024 UAE Financial Restructuring and Bankruptcy Law, the Dubai escrow framework continues to protect funds in escrow, with the project asset transferable to a successor developer. Under Indonesian insolvency law, secured creditors rank first, with unsecured buyers paid on a residual basis. Under Italian law, the garanzia fideiussoria is enforceable against the issuing bank or insurance company directly, independent of the constructor's solvency, which is precisely why the 2005 statute exists.

The geography of the failure mode matters more than the headline discount. A buyer who underwrites design change in a jurisdiction with weak specification enforcement is taking equity-like risk on a debt-like return. A buyer who underwrites developer insolvency in a jurisdiction with no escrow framework is unsecured. The discount does not cover these risks. The protection regime does.

Direct development: the custom alternative#

Direct development is the alternative product for buyers who want a finished, bespoke asset on a specific site. The buyer (or a buyer-controlled vehicle) acquires the land, commissions the design, contracts the construction, manages the permits and delivers the unit. The result is a single asset, designed to specification, on a site selected for its merits, with no exposure to absorption risk on adjacent units.

The economics are different. The discount-to-ready is not a feature of the product. The buyer pays cost (land plus design plus construction plus permitting plus contingency) and captures the finished value at completion. The spread between cost and finished value, in a well-selected site and a well-executed build, is the value-add return. On Lake Como, Nungwi and Gili Air, this spread is structurally protected by the scarcity of substitutable inventory (see Scarcity as Value Protection).

The trade-off is duration and complexity. Direct development requires 24 to 48 months from land acquisition to certificate of occupancy in most prime jurisdictions, with the permitting horizon longest in landscape-protected jurisdictions such as the Italian lakes. The buyer who wants finished product in 18 months at a 15 per cent discount to ready is not a candidate. The buyer who wants a specific architectural statement on a specific shoreline, with full control of specification, is.

The protection profile is also different. The buyer is the principal. The construction contract, the architect's appointment, the contractor's performance bonds and the local equivalent of decennial liability insurance (in Italy, the decennale postuma mandated by D.Lgs. 122/2005 Article 4) are the protection stack. The Italian decennale covers structural defects for ten years post-completion. The grammar of protection is professional, not regulatory.

The LP route: institutional direct co-investment#

There is a third product, which the institutional segment selects increasingly and the retail off-plan channel rarely surfaces. The investor allocates to a dedicated single-asset SPV that owns a development project, alongside a sponsor that contributes its own equity and runs the project on behalf of the limited partners. The investor's economic interest is in the SPV's equity, not in a specific finished unit. Exit occurs on sale of the underlying asset, sale of the SPV shares, or refinancing distribution.

The economic structure is the institutional standard. INREV-aligned value-add vehicles typically run a 6 to 9 per cent preferred return, a sponsor catch-up clause, and a carry split of 80 per cent LP / 20 per cent GP above the hurdle. Sponsor co-investment of 1 to 5 per cent of committed equity is market-standard. Management fees typically sit at 1.25 to 2.0 per cent of committed capital during the investment period, stepping down in harvest.

Why this differs from off-plan. The LP investor does not own a unit. They own a slice of the equity of a project SPV, ring-fenced from other projects under the sponsor's umbrella. The protection regime is contractual, governed by the shareholder agreement, the construction contracts, the audit framework and the local building code. The sponsor's own capital sits in the same SPV on the same terms, making alignment structural rather than declarative (see How a Dedicated SPV Protects Investors).

The exit profile is also different. The LP investor exits when the asset is sold or refinanced at the SPV level, on a timeline calibrated to the project (typically 36 to 72 months for a value-add cycle). The off-plan buyer exits when they sell their specific unit in the secondary market, on a timeline determined by personal liquidity and the project's absorption profile. The two products carry different liquidity grammars.

Skin in the game disclosure. Greystone B.V., Victaura's Netherlands parent, operates as a direct developer and as an LP co-investor in projects it controls, with Lumina Holding co-investing at SPV level alongside every project. Greystone is not an off-plan retail flipping platform.

Pricing and exit: what each product offers#

The three products price and exit on different mechanics. Off-plan prices on a discount to ready at launch and exits on the secondary market for that specific unit type. Direct development prices on cost (land plus build) and exits on the open market for the unique completed asset, with the spread between cost and finished value capturing the value-add return. LP co-investment prices on the SPV's net asset value at subscription and exits on realisation of the asset, with LP carry mechanics governing the proceeds split.

The buyer-protection capture is different. In off-plan, the buyer captures a contractual right to a specific unit. In direct development, the buyer captures legal title to a specific completed asset. In LP co-investment, the LP captures a defined economic interest in a ring-fenced legal entity. The instruments are not interchangeable, and the protection of each is documented at signature, not negotiated at exit.

What the protection actually covers#

Each protection regime covers a specific failure mode and leaves others uncovered. The Dubai escrow framework covers price: it does not cover delay (other than the twelve-month refund right), specification, or brand pullout. It covers the buyer's money against developer misappropriation. That is the design.

*The Italian garanzia fideiussoria covers price. It does not cover delay (other than as a trigger for enforcement) or finished specification (covered separately by the decennale postuma*). It covers the buyer's money against constructor insolvency. The 2019 notarial reform layers procedural certainty on top.

The Indonesian PPJB-to-AJB framework covers process. Notarial discipline reduces fraud and double-selling risk. It does not directly cover developer insolvency at the level of interim payments, which is why developer selection and notarial-escrow structuring of the deposit matter more in Indonesia than in either Dubai or Italy.

No regime, anywhere, fully covers brand pullout for branded residences. This is contractual, not statutory. The buyer who pays a brand premium without a brand performance clause in the preliminary contract is taking the brand-pullout risk uncompensated. In a market where branded residences are the fastest-growing off-plan segment, this is the protection gap to price most explicitly.

What this means for the buyer: choose by protection, not by price#

The framing question is not which product offers the headline discount. It is which product matches the underwriting the buyer is actually doing.

For a buyer who wants finished, branded, ready inventory in a regulated emerging market with a working escrow framework, off-plan in Dubai is a credible product. The discount is real, the protection is articulated, the exit path is liquid. The buyer who buys an off-plan unit in a Dubai sub-market with 9,000-plus branded units in pipeline is taking absorption risk that the Dubai prime headline number does not capture, as documented in Scarcity as Value Protection.

For a buyer who wants a finished asset on a specific scarce site, with full specification control and a hold horizon measured in decades, direct development is the working product. The protection stack is professional rather than statutory. The output is a unique, bespoke, finished asset, with no exposure to absorption risk on neighbouring inventory.

For an institutional investor or family office that wants exposure to development-stage real estate without the operational burden of being principal, LP co-investment in a ring-fenced SPV is the institutional product. The sponsor co-invests on the same terms, the SPV is audited, and the exit is realisation-based. The investor reads the shareholder agreement and the construction contracts.

The Victaura operating model sits in two of these three lanes, by design. Greystone B.V. directly develops where it controls land and permitting (Lake Como, Nungwi, Gili Air). Greystone co-invests as an LP at SPV level alongside Lumina Holding on platform projects. Greystone is not an off-plan retail flipper. The decision to decline the off-plan retail lane is itself a protection decision: it removes the buyer-side failure modes that the off-plan retail product cannot fully insure.

The first question is the product. The price is the second question. The discount is the third. A discount to a ready market without disclosure of which failure modes are statutorily covered, and which are not, is incomplete underwriting. The institutional partner the segment now selects is the operator that names the product, not the discount.

Disclosure#

Skin in the game. Victaura, through its parent Greystone B.V. (Netherlands), operates as a direct developer and as an LP co-investor alongside Lumina Holding at SPV level. Greystone holds active commercial positions in Lake Como (Italy), Zanzibar (Nungwi, Tanzania), Gili Air (Indonesia) and Ras Al Khaimah (UAE, Al Marjan Island). Greystone is not an off-plan retail flipping platform. Readers should assume that commentary on these markets may be influenced by, or may benefit, Greystone's existing positions.

Classification. This document is classified as marketing material under MiFID II Article 24(3). It is not investment advice, it is not a personal recommendation, and it is not an offer to sell or a solicitation to buy any security or interest in any vehicle. Any investment decision should be taken on the basis of formal subscription documentation, independent professional advice, and a documented assessment of suitability for the investor's specific circumstances. Failure-mode examples in this note are described in sanitised form and do not refer to identifiable projects.

Sources. All factual claims in this note are sourced to public primary documents or to industry triangulation where official series are unreleased, with the basis flagged in line. The references section sets out the operative sources.