Guiding potential buyers on legitimate process to purchase property in Dubai from under construction project at launch stage in primary sales from property developer

Defination of Off-plan (Primary sale)

Any property purchased while under construction, directly from the developer is termed as off-plan (Primary sales) purchase.

RERA guidelines for developers to sell off-plan properties

In order to sell property/unit in an off-plan project, the developer must to open an escrow account with RERA.

The primary conditions to open an escrow account are that the land should be 100% paid and certain preapproved % of construction cost has to be deposited in an escrow account in an appropriate acceptable banking instrument

Escrow account can only be opened if the drawings are approved from the relevant authority and unit numbers are fixed with its net unit area plus balcony area. The same area will reflect on the title deed.

The draft of the sale and purchase agreement (SPA) has to be approved by the authority. SPA will also include exact floor plan of the unit along with specifications of construction and time line for delivery of the project.

The buyer will make all installments payment in the escrow account only.

The buyer will receive Oqood (Pre registration certificate) upon paying initial booking amount along with 4% land department registration fees.

The developer is only allowed to make payments related to construction cost and architect / engineering office fees from the escrow account.

Land department conducts periodic inspection on the project and provides project completion % on time to time basis. Such information is publicly available on Dubai REST App.

Benefits to purchase property in an off-plan project

Attractive payment plan so funds can be planned well in advance

Sufficiently long duration for project delivery to arrange for the funds

As the project delivery time is few years and payments are in installments, so fair chances of making profits by reselling the property given the good market conditions

Modern design, facilities and amenities in community / building leading to better price appreciation and good future potential for rental income

Off-plan project is very much suitable for the purchasers with flexible timelines to occupy the property or for the purchasers who looking to make profit through value growth

Important points the purchaser has to consider before selection of Off-plan project for buying

Selection of developer

It very critical point if the buyer is going with the off-plan project. The buyer should check the credibility of the developer, completion timeline and delivery of past projects, construction quality delivered in the completed projects and after sales services

Selection of the location

The buyer should select the location considering his basic family objectives if he is an end user. If he is an investor who wants to make profit by reselling the property or if he is investing to earn rental ROI, then he should consider the locations which can have high potential for appreciation based on its geographical location.

Check the RERA escrow account compliance

The buyer should always check the full compliance of RERA escrow account. The project escrow account must be opened. Buyer should make payment only in escrow account.

Selecting the RERA licensed real estate agent

The buyer should be very much careful in this step. It is necessary that buyer chooses an agent who has significantly long experience in the Dubai freehold market, who knows the history of all the developers and who genuinely recommends the projects based on its merits (Not based on which developer pays him high commission). Signaturehabitat can definitely fulfill all these required check boxes of long experience and dealing with genuine developers since 2004.

Steps to purchase off-plan property in Dubai

Decide the budget

It is very much necessary for buyer to decide his total budget of an investment. The total cost can be divided in three parts which are down payment, future installments and Dubai land department charges. Generally down payment is 20% of the property value with most of the tier A trusted developers. Dubai land department charges are 4% of property value. Buyer does not pay any brokerage charges to real estate broker as he receives his commission from developer.

Consult/appoint real estate agent

This is very crucial step. Consult an agent based on his very long experience and depth of knowledge about the laws, developers, communities and future growth plans of the Government. His insights are extremely valuable.

Get the complete details about the project and developer

As the purchase to be made in off-plan project, the physical verification of the property is not possible. So the buyer should make his due diligence on reputation of developer, his past projects delivery timelines along with quality and court cases. Buyer should also check the floor plan of the unit, amenities within community and the building etc. Your agent can be a great source to complete this due diligence. The detailed verification will save you from any future troubles.

Check the launch price and payment plan

Please check the price per sq ft of the unit based on location, quality, the brand reputation of the developer, specifications and amenities of the project. Also check the payment plan and suitability of it with your funds arrangement.

Complete the legal formalities

Once all above steps are completed, then complete the legal formalities of EOI (Expression of interest) if applicable, fixing the unit/units, signing the reservation/booking form, transferring the down payment amount in an escrow account and later on signing the SPA (Sale and purchase agreement). After signing the SPA, in sometime, the buyer receives the pre registration certificate (Oqood) from Dubai land department.

Handover of the property

The developer will notify the buyer once the unit is ready for the handover. The buyer can visit the property and can conduct snagging before taking the possession of the property. Once the unit is ready to the satisfaction of the buyer, the developer will hand over the keys to the buyer. The buyer will receive title deed and handover of the property after paying all financial commitment with the developer. The buyer can also avail mortgage for the last installment of the property as UAE banks are only financing on the ready properties.