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How to Buy Off-Plan Property in UAE

How to Buy Off-Plan Property in UAE

Aug 19, 2024

by

QUBE Development

Off-Plan Properties, Dubai, Real Estate, Legal

Buying off-plan property in the UAE can be an exciting investment opportunity.

You can own a brand-new home, often at a lower price than existing properties. However, it's important to understand the process and risks involved.

To buy off-plan property in the UAE, you'll need to pay 20% to 80% of the purchase price during construction and the rest when it's finished.

 

This means you should have a solid financial plan in place. It's also smart to research different developers and projects to find the right fit for your needs and budget.

Before signing any papers, make sure to read the sales agreement carefully.

You'll also need to fill out a reservation form with your personal info and details about the property.

These steps can help you make a smart off-plan property purchase in the UAE.

Understanding Off-Plan Property in UAE

Off-plan property in the UAE means buying a home before it's built. You purchase based on plans and designs from the developer.

This type of investment is popular in the UAE. It often allows you to buy a property at a lower price than finished homes.

When you buy off-plan, you pay in stages as the building is built, making it easier to afford a property.

The process involves multiple laws and stakeholders, including the following:

  • It starts with choosing a project and a real estate developer
  • The sales and Purchase Agreement (SPA) is a critical document that details the terms of the sale, property layout, and payment schedule. Verify all terms before signing.
  • The Real Estate Regulatory Authority (RERA) oversees off-plan projects. They ensure that developers comply with regulations and secure buyers’ rights.
  • Developers must register the project with RERA. Ensure the project is registered to avoid risks. Funding for off-plan projects is regulated. Developers must place buyers' payments in escrow accounts. This ensures that your money is secure and used only for the specified project.

Evaluating Developer Reputation and Project Viability

To buy an off-plan property in the UAE, you must carefully research developers and their projects.

You should look into developers' reputations and analyze specific off-plan projects to make a well-informed decision.

Developer Research

Start by looking into the developer's background. Check how long they've been in business and what projects they've completed. Look for reviews from past buyers and industry experts.

One quick way to research developers is to review their licenses with the Dubai Land Department. All developers must be licensed by the DLD department.

As a next measure, you might want to check their portfolio of delivered projects.

This can be found on their website or in real estate directories such as Bayut, Property Finder, and others.

And also, make a note of their customer service as well as this can go a long way in understanding the developer’s core values. 

Key Points for Developer Reputation:

  • Track Record: Previous successful projects.
  • Customer Feedback: Reviews from past buyers.
  • Credentials: Verification through official sources.

Analyzing Off-Plan Projects

Once you identify reputable developers, evaluate their off-plan projects. Start with the location and community facilities.

Prime locations often offer better returns on investment. Check the developer's brochure to understand what is included in the price.

Visit the construction site if possible. Most reputable developers offer site tours. Look into the expected completion date and the payment plan offered.

Flexible payment plans can make your investment more manageable.

Key Points for Project Analysis:

  • Location: Proximity to amenities and infrastructure.
  • Facilities: Availability of parks, gyms, etc.
  • Construction Progress: Check current status and expected completion.
  • Payment Plans: Payment flexibility and stages.

Legal Framework for Buying Off-Plan Property

The UAE has rules to protect buyers and sellers of off-plan property. These laws make sure everything is fair and clear for both sides.

Understanding Sales Purchase Agreement

The Sales Purchase Agreement (SPA) is a key document when buying off-plan property in the UAE.

It lists all the details of your purchase. This includes the price, payment plan, and when the property will be ready.

You need to check the SPA carefully before signing. Make sure it has:

  • Full details of the property
  • Clear payment terms
  • Completion date
  • What happens if there are delays

The SPA must be in Arabic and English. Both versions are legally binding. If you're not fluent in Arabic, get a trusted translator to review it.

Here’s what an SPA agreement looks like

Securing Financing Options

Securing financing is essential. Multiple banks offer mortgage options for off-plan properties.

Steps to secure a mortgage:

  1. Eligibility: Ensure you meet the bank's criteria.
  2. Documentation: Prepare required documents such as salary slips, bank statements, and identification.
  3. Approval: Get pre-approval to understand how much you can borrow.
  4. Interest Rates: Compare rates from different banks to find the best deal.

Several developers also offer flexible payment plans. These can range from paying 20% during construction to 80% upon completion.

Make sure the plan aligns with your financial situation.

Legal Steps and SPA Verification

Following legal steps ensures a smooth transaction. Your legal advisor plays a crucial role here.

Legal steps:

  • Sign the Reservation Form: This includes buyer's information and payment details.
  • Register with DLD: The Dubai Land Department (DLD) manages property registrations.
  • Draft the SPA: After signing, the SPA should be submitted for verification.
  • Escrow Account: Payment should go into an escrow account to protect your investment.

Verification of the SPA is crucial. Legal advisors check for compliance with UAE laws and ensure the developer is reputable and the property is registered.

This step is vital to protect your interests and avoid potential legal issues.

 

Financial Considerations and Payment Plans

Buying off-plan property in the UAE involves careful financial planning.

You'll need to understand payment structures and explore financing options to make a smart investment.

Analyzing Off-Plan Payment Plans

Off-plan payment plans in the UAE often follow set structures. Common options include:

  • 80/20: Pay 80% during construction, 20% at handover
  • 60/40: Pay 60% during construction, 40% at handover
  • 50/50: Pay 50% during construction, 50% at handover

These plans let you spread costs over time. Some developers offer more flexible terms.

You might pay 20-80% of the price during building. The rest is due when the property is ready.

Check payment schedules carefully. Make sure they match your budget and cash flow. Also ask about any fees or charges not included in the base price.

Finalizing Your Off Plan Property Purchase

When you are ready to finalize your off-plan property purchase in the UAE, you need to follow clear steps for property handover and conduct a thorough snagging and inspection process.

Here's what to focus on.

Property Handover Procedures

The handover process starts once construction is completed. You need to confirm that the property is ready for occupancy. Usually, the developer will notify you when the unit is complete and set a date for handover.

During this time, ensure all contractual obligations are met and payments are up to date. You will need to sign various documents, such as the handover notice and a snagging list approval.

Having all necessary legal documents in order, including the sales and purchase agreement, will make the handover smoother. Keep thorough records during this stage to avoid any disputes later on.

Snagging and Inspection Best Practices

Snagging involves a detailed inspection of the property to identify any defects or required repairs.

It’s recommended to hire a professional snagging company to carry out this inspection.

Make a checklist of items to inspect, such as walls, ceilings, electrical systems, and plumbing. Document any issues with photos and detailed notes.

Submit the snagging list to the developer and ensure they acknowledge receipt. Most developers will fix these issues before the final handover.

Follow up to make sure all identified issues are resolved to your satisfaction.

Being meticulous at this stage can save you time and money in the long run.

Conclusion

Buying off-plan property in the UAE can be a smart investment move.

It offers the chance to get in early on new developments at lower prices, and you'll have more choices and can often customize your property.

With careful planning and due diligence, off-plan property in the UAE can be a rewarding investment. Just be prepared and know what you're getting into.