Did you know that approximately 48,000 new apartments and villas are expected to enter the Dubai residential property market by the end of 2018? These statistics, revealed in the Q2-2016 Dubai MarketView Report, go to show the extent of off-plan property sales in the emirate.
If you’re considering buying an off-plan property in Dubai, here are some useful details and tips to keep in mind, before you sign on that dotted line.
Where should you buy off-plan property?
So you’ve decided to invest in an off-plan property. Here are 10 points you must consider when deciding which property to purchase. Make sure you include these in your checklist.
- Reputation of developer, and track record of past and present projects
- Location of the development and surrounding infrastructure
- Position of particular chosen unit within the project or community
- Facilities and amenities within the project
- Payment plan structure, linked to construction
- Handover and completion date
- Current market conditions, and implications on price per square feet
- Overall development master plan
- Be sure that developer and project are registered with RERA
- When buying through the secondary market, evaluate the premium being charged
What does the process entail?
For primary market purchases
If buying directly from the developer, ensure that the developer, project and the project’s Escrow account are registered with RERA. The developer will ask you to sign a Sale Purchase Agreement and pay the deposit. The rest of the payments will follow as per the payment plan outlined in the contract. Some developers will request post-dated cheques for these payments. Make sure that the developer registers your property with Dubai Land Department via the Oqood registration. Depending on the developer’s offer at the time, the developer may pay for the registration of the unit, pay half of the cost, or most of the time the buyer needs to pay the full cost of the registration amounting to 4% of the purchase price.
For secondary market purchases
When buying an off-plan unit on the secondary market, be sure to use a credible, knowledgeable, experienced and transparent broker. The seller should have his unit registered with Dubai Land Department and provide a copy of the registration. After signing an agreement of sale between the buyer and the seller, both parties will go to the developer to apply for a No Objection Certificate (NOC). Once the NOC is issued by the developer, the transfer of ownership takes place in Dubai Land Department trustee office and this is when the buyer pays the seller. Outstanding payments to the developer will be the responsibility of the buyer after the transfer. The buyer will have to pay 4% property transfer fee to Dubai Land Department, 2% commission fee to the broker, NOC fee paid to the Developer capped at a maximum of AED 5,000, and transfer appointment fee of AED 4,000.
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Rules and regulations that you should know about
Make sure you purchase a property only in a Dubai Land Department (RERA) approved and registered project, all payments are paid into the project Escrow account in the name of the project. Project registration and progress can be checked on the government website www.dubailand.gov.ae. Ensure that the Sale Purchase Agreement is signed and stamped by the developer as well as Oqood registration in Dubai Land Department is in place as soon as possible. Payments are made against construction completion milestones, unless otherwise agreed in the Sale Purchase Agreement between developer and purchaser.
If using a broker for your purchase, ensure that he or she is registered with RERA by asking for their broker card or checking the earlier mentioned website.
What to watch out for
Just like any other investment, off-plan property purchase comes with its share of risks. To best protect your interests and investment, look out for the below:
- Be wary of unregistered developers and projects.
- Don’t accept any payment requests, directing payments straight to the developer instead of into the project’s Escrow account.
- Each payment requested by a developer should be supported by an independent consultant’s project progress report.
- Make sure the payment plan suits your budget and time frames.
- Review the Sale Purchase Agreement thoroughly, and if possible, with a professional
Jade Morris has been a senior sales consultant at Dacha Real Estate for the past 4 years since making the move from London Estate Agency. If you have any further queries or inquiries for purchasing an off-plan property in Dubai, you can contact Jade at [email protected]