Buying off-plan property in Dubai can be a lucrative investment option.
Off-plan properties are those that are still under construction or have not yet been built.
Investors can secure a property at a lower price than what it would cost once the project is completed, which can lead to significant capital gains.
Over the past decade, some of the capital gains achieved by investors on off plan investments in Dubai have been truly staggering.
With the city’s real estate market now very established, yet still to reach its full potential, there is significant opportunity available to investors.
One of the attractions of buying off-plan property in Dubai is the flexible payment plan options that many developers offer.
Typically, buyers are required to deposit between 10-20% of the total property value initially, with the remainder due upon completion. However, some developers offer payment plans that allow buyers to pay in instalments throughout the construction period, making it easier to manage the financial burden.
When considering buying off-plan property in Dubai, it is important to do thorough research and due diligence. Buyers should consider factors such as the developer’s track record, the location of the property, and the potential for capital appreciation.
Whilst there are some risks involved, with thorough due diligence and a strong strategy, off plan property in Dubai can be a very good investment option.
Buying Off-Plan Property in Dubai
When it comes to buying off plan property in Dubai there are several factors to consider before committing to a purchase. And once a property is secured there are certain steps to buying off plan and a handover process for completion.
Considerations when buying off plan in Dubai
There are some considerations to be made when buying off-plan properties, such as delays in construction or changes to the development plans.
Investors need to do their due diligence and research the developer, the community, and the type of property before making a purchase.
Buyers should also carefully review the payment plan, contract terms, and any penalties for cancelling the contract.
It’s worth noting that property developers in Dubai are required to register their projects with the Dubai Land Department (DLD), and they must meet certain construction milestones to ensure that the project is delivered on time.
The Step-by-Step Guide to Buying Off-Plan Property in Dubai
Purchasing off-plan property in Dubai is a systematic process that demands meticulous attention to detail. Below is a guide to navigating this process with precision:
- Research the Market: Begin by acquainting yourself with the dynamics of Dubai’s real estate market. Explore the various communities and the array of new projects on offer to identify the most suitable options.
- Engage a Real Estate Agent: Secure the services of a reputable and seasoned real estate agent. A proficient agent will not only assist in locating the ideal property but will also provide invaluable guidance throughout the purchasing sequence.
- Property Reservation: On choosing the property, reserve it by making a down payment. In Dubai, the payment structure for off-plan properties typically requires an equitable division, often a 50/50 split, with an upfront payment ranging from 20% to 80% of the total price.
- Sign the Sales and Purchase Agreement: Proceed to sign the Sales and Purchase Agreement (SPA), which delineates the terms and conditions of the purchase. It is imperative to meticulously review and comprehend every clause within the SPA before endorsing it.
- Fulfil Payment Obligations: After signing the SPA, adhere to the stipulated payment plan for the remaining balance. The developer is obliged to provide regular updates on the construction’s progress. The buyer should conduct inspections of the property during its development phase.
- Property Handover: There are several stages to the handover process, as detailed below.
By following these steps diligently, buyers can navigate the complexities of acquiring off-plan properties in Dubai, ensuring a secure and successful investment.
Navigating the Property Handover Process in Dubai
Once you have identified an off plan property and moved forward with purchasing, you will receive updates on progress from the developer and eventually, near the time that the build is almost finished you will receive a completion notice and from then on the handover process takes effect.
This is similar to buying an off plan property in many other countries but there are certain nuances to adhere to.
Understanding the handover process is useful to ensure a smooth transition to property ownership in Dubai. Here’s a detailed breakdown of the steps involved:
- Fulfil Handover Requirements: The journey begins with a completion notice from the developer, sent via email and post, marking the initiation of the ownership transfer. As a buyer, it’s imperative to meet the handover requirements within 30 days as specified by the developer, to avoid penalties and guarantee a smooth ownership transition.
- Organise a Property Inspection: Conducting a “property snagging” inspection is vital to identify any defects that the developer must rectify before you take possession. It’s essential to complete this step within 30 days to retain your inspection rights and avoid accepting the property in its current state. Pro Tip: Retain a copy of the inspection checklist for future reference.
- Schedule a Meeting with the Handover Team: Upon receiving the notice, arrange a meeting with the developer’s handover team to finalise the proceedings and officially take possession of the property.
- Understand Financial Obligations: The completion notice will be accompanied by a handover package, including an account statement and property completion details. This document will outline your previous payments and the remaining balance.
- Settle Remaining Instalments: It’s crucial to pay the remaining balance of the total cost, adhering to the terms and conditions. Also, any incurred late payment penalties should be cleared at this stage. Delays in these payments may lead to additional charges.
- Familiarise Yourself with Potential Associated Fees:
- Oqood: This pre-registration with the Dubai Land Department (DLD) is mandatory for all off-plan property sales.
- Registration Fees: Property owners are required to pay a registration fee of 4% of the purchase price, along with a charge for title deed issuance.
- Service Charges: Applicable to residential building owners, these charges cover maintenance and amenities upkeep. Regulated by RERA, they are based on property size and are payable quarterly in advance.
- Administration Fees: Some developers may charge this to cover documentation costs for ownership transfer, typically ranging from AED 500 to AED 1000.
- Utility Registration Fees: Before ownership transfer, registration with utilities like DEWA and the district cooling provider is required. Proof of payment is essential for the handover completion.
- Finalise the Handover: The culmination of the process is the most exhilarating part. It involves signing necessary documents by all property owners or authorised representatives, post-approval of the property’s condition, and clearing all payments.
Buying off plan in Dubai
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