6 Things Every International Buyer Should Check Before Signing an Off-Plan Contract

Off-plan properties present attractive investment opportunities for an International Buyer who is considering Dubai's evolving real estate market. These properties are purchased during their development phase, and offer attractive entry points and the potential for future value appreciation. As the Dubai market continues to show growth and investor confidence in the off-plan segment, a methodical approach is essential. 

This guide outlines six essential checks every International Buyer must conduct before signing an off-plan contract. Adhering to these points helps ensure a secure and well-informed investment, mitigating potential risks and aligning with personal financial goals.

6 Things To Know Before Signing an Off-Plan Property

Know the Developer

The decision to invest in real estate relies on several factors, including the developer's track record, the development's current status, and the projected delivery date. The UAE government has strong buyer protection laws within the real estate sector. Despite these regulations, it is still crucial for an International Buyer to possess thorough knowledge about the developer before committing to an off-plan property purchase in Dubai.

An International Buyer should speak with friends and family members who may have experience with a particular developer and seek their opinions. For more authentic information, an International Buyer can contact property agents in Dubai. These agents can discuss specific projects and developers and guide the International Buyer on the developer's reliability. Furthermore, checking the developer's track record of previously delivered projects in the market provides insight into their construction quality and adherence to timelines. This due diligence helps ensure the developer's credibility.

Gauge Off-Plan Property Prices

An International Buyer must understand that buying off-plan properties in Dubai does not equate to acquiring a cheap option. Rather, it means securing a good deal because the property is still in its development phase. First-time buyers often overlook additional costs linked to property purchase.

When considering an off-plan property, buyers frequently focus solely on the initial asking price, the down payment, and the instalment plan before finalising a deal. However, an international buyer should extend their analysis beyond the total property cost. Instead, they must compare the per square foot price of various off-plan developments before committing to a specific project. This comparative analysis helps an international buyer accurately assess whether the property they intend to buy is a financially viable option.

For any off-plan property you buy in Dubai, certain basic fees are essential. The Dubai Land Department DLD fee is 4% of the property value. This mandatory cost covers property registration and documentation. A Property Registration Fee also applies. For properties valued below AED 500,000, the fee is AED 2,000 plus 5% VAT. Properties exceeding this threshold incur a fee of AED 4,000 plus 5% VAT. If financing a purchase through a mortgage, expect an additional Mortgage Registration Fee. This amounts to 0.25% of the loan value plus AED 290.

Location Remains the Most Important Factor

Even when an International Buyer considers an off-plan property, they cannot overlook the importance of location. Location remains the most significant factor in property acquisition because it impacts the property's future demand, the buyer's lifestyle if they plan to reside there, and the potential returns on investment.

An International Buyer should not solely rely on advertisement material. They must visit the location themselves before committing to buy a property in Dubai. This direct visit helps them understand the surroundings, the distance from key destinations, and whether the project is situated in an established area. Buying a cheap property in an unestablished area can prove costly in the future, as it may take a long time to realise returns. Even if an International Buyer plans to live there, they may incur significant travel expenses for school, office, shopping, or recreational trips. Therefore, careful consideration of the location is essential before purchasing an off-plan property.

Check Project Legitimacy

Before investing in any off-plan project in Dubai, an International Buyer must confirm the project's legitimacy. Although strict rules exist, and only registered projects can be advertised in the UAE, it is still prudent to verify projects by visiting the Real Estate Regulatory Agency (RERA) website, which is part of the Dubai Land Department (DLD). The DLD website provides a "Project Status (Mashrooi)" service, which enables users to inquire about real estate project statuses. Also, an International Buyer should never make payments to any account other than the designated escrow account for the development.

By taking these smaller steps, an International Buyer's payment remains safe, even if the project faces delays or becomes shelved. Dubai's legal framework, like the Escrow Law (Law No. 8 of 2007) and laws related to off-plan sales registration, mandates that developers deposit buyer funds into RERA-approved escrow accounts, which protects buyers and ensures project delivery.

Always Work with a RERA-Registered Real Estate Agent

An International Buyer must work with a Real Estate Regulatory Agency (RERA) registered agent when investing in the Dubai real estate sector. Engaging directly with a developer provides information only about their specific projects. A RERA-registered agent, however, can help an International Buyer identify all available opportunities. To make the best investment decision, particularly for off-plan properties, an International Buyer should choose top-performing, RERA-registered property brokers in Dubai. A professional real estate agent can help an International Buyer find a suitable investment deal within their budget.

Understand the Payment Plan 

The higher the post-handover payment percentage, the safer an International Buyer's investment in off-plan properties in Dubai. An International Buyer should avoid payment plans based on fixed dates and instead opt for construction-condition-based payment plans. This approach allows them to observe the project's progress and make payments accordingly. However, before committing to such payment plans, an International Buyer must ensure their income and savings are sufficient; otherwise, paying a substantial amount at the end of the project could become problematic.

Conclusion

An International Buyer considering off-plan property in Dubai can make a sound investment. Careful research and adherence to the outlined guidelines are paramount for a successful venture. Taking these steps ensures a well-informed decision in Dubai's dynamic real estate market. This approach ensures a secure and efficient experience for every International Buyer.

Our expertise helps navigate this process and gives seamless support from initial inquiry to post-completion. We offer comprehensive assistance, ensuring a secure and efficient purchase experience for every International Buyer.

Is off-plan your next Dubai investment? Contact us for expert advice.

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