“How do I acquire an off plan property in Dubai?” this is among the burning questions real estate enthusiasts ask our real estate brokers in Dubai. Some investors want to learn about the advantages and disadvantages of buying an off plan property, while others have already spent money on properties but is taking centuries to complete.
Why Do Dubai Property Developers Prefer to Sell Off plan Properties?
One of the reasons why property developers in Dubai do this is to reduce financial risk as well as to partially fund the development of the property, as such, this becomes a very good option for developers. A credible property developer knows the importance of effective marketing.
Many, design real images, and dummy structures that give an almost real idea of the property: its appearance, location, and amenities it will include. The best thing about this is that properties come cheap, partly because you can’t see them yet.
The reason this real estate investment type is seen as a lucrative opportunity. At Aras Real Estate, we help real estate investors hop on these opportunities. So, what is the procedure for acquiring an off plan property in Dubai you ask? Find out next.
Look for a Skilled and Experienced Real Estate Dubai Agent
Even though buyers acquire properties directly from the developer, you must hire an off plan property for sale consultant. When looking for an agent to work with, do not just hire anyone you meet claiming to be an expert, you need someone who knows the market and can immediately identify a good or bad investment.
Remember, it is not always about scoring a great deal for property in Dubai, you will be working with the same developer for as long as your property linked to their project. The real estate Dubai broker you choose must be capable enough to help you with any matter that arises.
Have you seen advertisings along the highways saying, “Pay 10% Down Payment and Become a Home Owner?” Or “Pay as Little as AED 2999 per Month. “Well, before you approach a developer with your booking amount.
Down Payment/ Booking Amount
What's the amount for booking? This is the first question you should ask. If advertising says you pay only AED 3000, it is not the only amount to be paid for the process to start.
You will always need to pay a booking fee and this amount ranges between 5% and 25% of the value of the building. Therefore, we would advise you to inquire about this from either your developer or property agent.
Partnering with an experienced real estate Dubai broker can pay off in circumstances such as this, and you will be free from all the hassles and stress of rejection if a developer doesn't qualify you.
As a buyer, you’re supposed to be a DLD fee of 4% during the purchase. This amount doesn’t change despite the amount paid as a down payment. In most instances, it is the developer that takes the fee and renders it to the DLD. You should check that funds are made as manager’s cheque and under DLD’s name.
Based on the market, a Dubai off plan property consultant will charge you 2% as commission. However, the actual amount depends on your discussion with your agent.
Real Estate Services VAT
The UAE government enacted a VAT of 5% in 2018. So, other than the 2%, you will pay this VAT unless your real estate Dubai broker waives and pays it on your behalf from their pocket.
Extra charges are bound to be there. That is to say other than the agent fee, DLD fee, and booking amount, you will pay for service fee, handover fee, and admin fee, among others, most of which are one-time payments.
Deductions and Penalties
Before signing a contract for an off plan Dubai property, adhere to the payment contract between you and the owner. If you miss or default in your payments, the developer, is legally allowed to take action under the directive of the DLD. He may either demand payment from you or cancel the property and find another buyer.
But before this, you have received at most three reminders to pay. If you fail to honor your commitment entirely or communicate with the developer, the former may seek acknowledgment from the DLD to terminate your contract.
Type of Property
When it comes to off-plan properties, two options are available: residential and commercial projects
Commercial off Plan Property in Dubai
If you want to buy commercial property, expect the same criteria as the one discussed earlier. The main difference would be the VAT. In other words, you should pay a VAT of 5% on the home value, plus registration and agency fees.
Residential Property in Dubai
You will not pay VAT for a residential property. However, you must pay VAT for real estate services that your Dubai property for sale agent and charges during handover.
As a real estate Dubai investor, consider the following factors when looking to buy a Dubai off plan property:
Acquiring Dubai off Plan Property in an Established Community
If you want to buy your Dubai off plan property in an already established community such as Jumeirah Lake Towers, JVC, Dubai Marina, and such, consider the price that the developer is offering you. The truth is that the payment plan is going to be attractive, and of course, you will not pay the entire amount at once. But keep in mind, this is not ready to move in property.
Another thing, it is not easy to predict how the market will perform in the next, ten years. You should therefore ensure you are getting a property that is worth below the market cap. We understand how tough it is to stumble such deals, but it will make a significant difference in your investment and the ROI in the end.
Acquiring a Dubai off Plan Property in a New Neighborhood
Dubai is growing pretty fast, and it’s not going to stop anytime soon, not with the numerous upcoming projects in the city. Assuming you want to a property in a location that is not developed yet, you stumble upon very attractive rates.
Here is how to assess if an upcoming neighborhood is good for investment:
Review the Master Plan
Go through the blue print of neighborhood you are interested in. If you like it, then get it. As we are approaching the EXPO 2020, the establishment of the community and neighboring areas are developing fast.
The goal of the Dubai government is to transform the city into an industrial center. Sooner or later, you will see bigger firms setting up plants and offices in Dubai.
The Transaction Process
Your real estate Dubai broker will accompany you to the developer to choose your ideal property and book it by signing an agreement that you will buy the property. Firstly, you must make a down payment of between 10 – 20%. You will pay DLD fees as discussed above.
Just as we have discussed above, you must stay ahead of your payments as per the agreement. You can re-sell your property during the duration of the contract, although this has to be agreed upon. You must review the terms once again before signing. Consult with your Dubai off plan property agent if you want more clarification.
Once completed, you will examine the property for hindrance that can be addressed quickly. When everything is in order, you will get your keys and access cards. The Dubai off plan agent can ensure all goes well and you move to your new property soon.
Earning Profit from Your Investment
You get to decide what you want with your property. You can sell the property once it is complete or you can safeguard it for several years. It is better to acquire a property in its early stages of development because Dubai house prices tend to hike when demand for off properties increase. Thus, this is the perfect time to get at a reasonable range as well as units of the development.
Review our new off plan projects in Dubai by navigating our Dubai property listings page. If you can’t find what you are looking for and need help? Aras Real Estate is a reputable real estate broker in Dubai and can help accomplish your real estate investment goals.