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Considering buying a off-plan property in Dubai? Before you dive into the world of glossy brochures and flexible plans, here’s what you need to check to turn your investment into a success rather than a headache.
Although the Government of Dubai and DLD (Dubai Land Department) have strict regulations in place to protect buyers, your personal inspection is key to the security of the transaction. This guide is your safety checklist.
1. Developer Due Diligence
This is the most important step. The success of your investment depends entirely on the builder.
- Reputation and history: does the developer have a proven track record of completing projects on time and to the quality promised? Check his previous buildings and look for buyer reviews.
- Licence and registration: ensure that the builder is licensed by DLD and that all his projects are registered with RERA (Real Estate Regulatory Agency).
- Financial strength: Check the overall financial strength of the company.
2. Project Due Diligence
Don’t invest in a promise, invest in a legitimate project.
- Project registration (Oqood): make sure the project is registered with DLD and has a unique Oqood number. Never pay a deposit for an unregistered project.
- Escrow Account: this is your greatest protection. All your payments must go into a special escrow account controlled by RERA. Ask for proof of its existence.
- Building Permits: Check that the developer has all necessary permits.
- Construction progress: if possible, choose a project that is already advanced (e.g. 30-40% complete) rather than one that is only on paper.
3. Purchase and Sale Agreement (SPA) Review
This is the most important document. Hire an independent attorney to review it very carefully for the following clauses:
- Payment schedule: is it clear and linked to actual construction milestones?
- Handover date: Is an exact date given and are there provisions for compensation in case of delay by the developer?
- Property details: is an accurate description of the area, layout and materials used included?
- Warranties: what warranties are offered for the structure after the property is delivered?
- Service fees: what are the estimated annual maintenance fees?
- Force majeure clauses: what are the conditions for unforeseen circumstances?
4. Location and future development
- Area Master Plan: Study the development plans for the area. Will there be new roads, schools, malls? This can dramatically increase the value of your property.
- Transport accessibility: what are the current and future transport options (metro, buses, roads)?
5. The full budget: all costs and fees
The price of the property is just the beginning. Budget for:
- Fee to DLD (Dubai Land Department): 4% of the purchase price. This fee is paid for the initial registration of the contract (Oqood).
- Administrative fees for Oqood: Small administrative fees for issuing the certificate, usually around 1,000-3,000 dirhams.
- Mortgage fees (if any): about 0.25% of the loan amount.
- Legal fees and other administrative fees.
The role of professionals: your security team
Don’t compromise. Work only with:
- Licensed Broker: RERA registered and experienced in off-plan property sales.
- Independent Counsel: This investment will save you thousands. It works for you, not the broker or builder.
Conclusion
Investing in a off-plan property in Dubai can be extremely profitable, but only if you approach it with awareness and caution. Diligent due diligence on the developer, the project and the contract is an absolute must. With the right steps and the support of experienced professionals, you can take advantage of the enormous potential that building in Dubai offers.
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