The real-estate market of the UAE has taken a new turn in recent years as the off-plan property market has become increasingly attractive. However, there are some important factors you should consider if you are about to enter this trending lucrative market. Keeping in mind the following 7 points will help you avoid unpleasant surprises and invest wisely in your future.
1. Estimated Market Value of the Property
Researching the market is a must-do if you are buying an off-plan property. Check recent sales in the area and contact real estate agents or independent evaluators to know what is the actual value of properties to see if the proposed are overvalued or undervalued. Never rely on advices from developers or their agents; as the information may be misleading.
2. Details of the Contract
You are in the best bargaining position before signing the contract as renegotiation may become almost impossible once you have already signed. So, go over every detail in the contract, no matter how long it takes, to ensure that the terms are to your liking. You may appoint a solicitor to peruse the document and if necessary also negotiate with the developer on your behalf any amendment on the clauses of the contract.
3. Reputation of the Developer
At the initial stage, buying an off-the-plan property is comparable to buying an open promise. As a result, it is imperative to secure your investment that you buy your property from a developer that has a good reputation and financial security. There are cases where developers may take your money and due to one reason or the other fail to deliver on their contractual promise. Finally, don’t allow yourself be fooled by glitzy brochures and marketing campaigns. Research other projects that your chosen developer has completed in the past, and find out if there is a record of complaints lodged against this particular developer.
4. Neighbourhood Demographics
Consider the neighbourhood demographic. You definitely do not want to, for example, invest in a huge four-bedroom apartment in an area where single adults and couples are the main buyers; and the units in demand are compact studios and one-bedroom apartments. So, if you are an investor, make sure you identify who your future tenants or prospect buyers are likely to be.
5. Payment Schedules
A majority of off-plan property buyers negotiate independently, which mostly leaves them in the dark about timelines, completion dates, and the hidden costs involved. Seek legal advice before sealing off any deal so that you know the details of all these aspects. Moreover, it should be clearly stated in your contract that you would pay the negotiated initial deposit amount and then later the instalments within specific dates, that continue until the completion date of the project.
6. Hidden Charges
The contract should clearly mention all the charges you are bound to pay as a buyer. For example, it should clearly specify upgrading costs, including minor details like the brands of fittings, if you do not like the standard ones. You should be fully aware if there are any hidden charges or any clause that may bring up the purchase price.
Under Law No 13, 2008, the developer cannot ask buyers to pay extra money for any increase in the size of the unit after the completion of the project.
7. Delay in Completion
The contract should require the developer to indicate the starting date and completion date of the project. It should also include options for compensation or penalties in the case of a delay of works.
Find out the status of your developer’s financial position and its capability of delivering the project, by checking out its balance sheet. Find out if the contract gives you any option to remedy or dispute a procedure, if the developer misrepresents the property or the completed project fails to meet the standards promised to you.
According to Dubai’s Real Estate Regulatory Agency (RERA), the root of most of the real estate problems is that buyers are either not reading their contracts thoroughly or not seeking legal advice. Buyers registered in the Real Estate Registry will have their rights protected including a compensation settlement under Law No. 8 or the Escrow Law, 2007; if the developer fails to register the land with the Land Department (above picture) or contradicts any other legality that makes the purchase contract invalid.
RERA advises all off-plan property buyers to seek legal advice if their developers break any agreement or feel that they may have been treated unfairly. You can register your complaint with RERA if your property is in Dubai. If your property is located in any of the other six Emirates then you should independent legal advice.