The Property Buying Process
Many of our clients are familiar with purchasing property in their own home market. However, the process of finding and securing a Dubai property can be quite different. The following is paragraphs will give you an insight into the local market but you should seek guidance from one of our property experts who will guide you through every step.
Finding a Suitable Property
With so many real estate developments available on the market the biggest challenge to face most of our clients is finding the most suitable to their needs. To do this our staff will take time to understand your requirements and advise you accordingly. Property deals tend to get closed quite quickly, with this in mind it is highly advisable to arrange your finances prior to commencing your search, this often helps to avoid disappointment.
Construction Period and Developers
Most Dubai property developments are due for completion at least 18 months after launch. It should be noted that the system of Escrow accounts in Dubai is limited to a few developers, whereas the majority are using investor's instalment payments to fund the construction of their specific buildings. There is obviously little risk with the Government backed developers, but it is important to use reliable private developers. To ensure investor protection, the Government now require that new developers lodge a bond for 50% of the sale price of the building before units can be marketed for sale.
Payment Schedules
Units are paid for by a series of payments spread over the construction period. Payment schedules tend to be quite evenly spread requiring the majority of the purchase price to be paid before completion. All developments vary but typically the purchaser would be required to put down 10/15% booking deposit followed by 10/15% every 3 months or even up to 20% installments in some cases.
Premium
A property is sold by the developer at the 'Original Price' to the purchaser. The capital appreciation on the property is referred to as the 'Premium.' When a purchaser buys from another individual it is referred to as a 'Secondary Sale.'
Valuations
If you are raising finances for your Dubai property from one of the locally based Banks you will often be required to obtain a valuation if you are buying a 'secondary sale. This is normally quite a straightforward homebuyers valuation and is aimed at confirming the market price and any premium on the property.
Re-Sale Terms
The terms and conditions applied for re-sale differ from developer to developer but it is worth noting them for the 2 largest developers;
Emaar - any Emaar property can only be re-sold once during the construction period, i.e. Purchaser 1 buys off-plan from Emaar but decides to sell before completion. Purchaser 2 can only re-sell that property after it is complete which means settling the balance outstanding to the developer on the due date. Once the property is complete it can be sold on again at any time. Emaar charges a Transfer Fee of 1.5% for a property that is yet to be completed and registered with the Land Department. In the case of a registered property, sellers will require a No Objection Certificate from Emaar, currently costing AED 5,000. The land department will charge 0.5% to the seller and 1.5% to he buyer.
Nakheel - any Nakheel property can be re-sold at any time. At whatever stage the payment plan is at, a 10% accelerated instalment is applied, i.e. if Purchaser 1 has paid 30% so far to Nakheel then Purchaser 2 has to pay 10% of the next payment due on transfer. Nakheel charges a Transfer Fee of 2% (of Original Price). Land Department fees are as above for completed and registered properties.
These terms are subject to change.
Most private developers allow re-sale to take place at any point during construction and typically charge a 2% (of Original Price) Transfer Fee.