Buying an Off-plan Property in Dubai: A Walkthrough Guide

Off-Plan property sales in Dubai had increased recently; by Oct 2017, the market shares were similar; 50% for off-plan and 50% for ready property transactions.

In this guide, you will be introduced to the best steps and points to consider prior to buying an off-plan property in Dubai. After you digest it, you will understand the supply, demand, rental income, and main other factors that allow you to make a better decision.

Hoping to keep things simple, I split the tips into few sections below several sections.

The Prices:

First and foremost, do not narrowly look only at the property ticket-price. Make sure to know the price per square feet or meters. Buying a low-ticket price property does not mean that you are getting a good value. In fact, usually, it means you are buying an expensive property when you calculate the price per square feet.

You might end up paying for an off-plan unit at the same price as a ready property, so it's essential to check the prices of the ready properties in the same area and have a look at the historical property transactions in the area of your interest.

It's not advised to buy through the project launch because developers have been giving great offers on the projects awhile after launch. Not to mention that sometimes developers do not launch the good units at the start. Hence, buying after the launch might means competing with owners who are ready to sell for an amount similar to your purchasing price value.

The Property Developer:

Try to find a developer with proven delivery time and don't go directly to a property developer, and unless you are certain, avoid developers that have never delivered any property.

Find a property agent, buying an off-plan property via a real estate broker does not involve paying commission. Bypassing agents might mean missing opportunities because a good real estate agent is aware of all available projects and property offers that you might miss if you go directly to a developer office.

The primary role of the property agent is to understand your needs and preferences and advise you accordingly based on his knowledge of many developers, projects, and the market landscape.

It is the agent who will sell or rent your property after the handover; the agent will advise about the best property. Consequently, it is better to build relations with agents in advance.

Search Google for reviews on the property developer that you are planning to buy from.

Area/Location:

Explore on your own and ask the developer about the upcoming projects in the immediate vicinity which may block your property’s view.

If you buy in a non-established area, then do not foresee good return till the area is built. In other words, the return should increase once the community is established. And understand the current infrastructure and the future of the area of interest as buying properties next to landmarks have greater potential for capital appreciation.

The Project:

Visit the project construction site to get an idea of the construction progress on your own.

Do not take it for granted, not all projects in Dubai are equipped with amenities such as gym and swimming pools, and identify the uniqueness of each project you shortlist.

The Property:

Examine the layouts that define the livability, rentability, and saleability of the property. Make sure that the balcony size is reasonable and avoid units with an extra number of bathrooms which do exist.

Try to buy on a project where a show property is ready. This enables you to get a better idea about the finishing. Keep in mind that you are not going to have the same show property, your unit may have a different design, floor, plan, and plot in case of villas.

Request the approved site plan of the property by DLD. This shows the dimension, position, exact building, exact view, the direction of the unit, and the total size breakdown.

Legality:

Carefully read the SPA to understand what amounts you must make to be able to sell the property, and pay attention to service charges, parking slots location, and to any constraints or unusual conditions.

The new property advertising law allows you to hear only about registered projects; however, you can check RERA website search for advanced tools to check the number, escrow account, status, and the construction progress of the project.

Make sure that the property developer and the master developer are on the same page, and there are no conflicts between them.

Payment Plan:

The higher the hand-over or post-hand-over payment is, the safer your investment is, and the lower your opportunity cost.

Try to avoid date based payment plans and go for construction progress based payment plans.

Investment Return:

Get familiar with the investment ratios such as ROI, NPV, IRR, and others. It is unusual how some agents present to you the ROI without introducing the service charges and the closing cost in the equation.

Study the supply and demand. It is clear that the supply exceeds the demand currently. That means there is a tough competition between property developers which might give you an opportunity for negotiation.

Calculate the capital appreciation and the expected ROI of the property, and consider the service charges.

The Agency and Broker:

Avoid dealing with pushy agents who try to express the sense of urgency and try to deal with a large agency dealing with a large company grants you seamless process and greater opportunity where you profit from the synergy of their big sales team.

Do not stick to only one agent, and always try to meet and listen to others, and most importantly do NOT betray your agent as you are going to lose more than what you think you saved.

Always remember to have Plan B. If possible buy a property that you can use later on in case it does not get leased or sold.

In the end, I hope that has been informative to you. Please feel free to leave any question in the comment section below.