The Know How of Buying Off-Plan Property
Over the years, the UAE real estate market has been growing at a constant rate. According to latest reports, the market has also recently seen a fall in rental and sales prices making it even more attractive to investors. It is now considered by many to be a ‘buyers’ market’ and tenants are also enjoying the rewards. This period of rapid development in the UAE, means developers are consistently looking for buyers to invest in their off-plan properties. Buying an off-plan property has its advantages, but those looking to invest should also be mindful of some key considerations before signing any deal.
Think of the future! Shortlist the areas you would like to live in – and what you will need access to, for example a supermarket, schools, fitness centres, do you want to be near the beach, and so on. Make sure you consider the general infrastructure around the development that you are considering. All new developments should have accessible basic amenities, so make sure that you have seen the development plan to ensure these are in place. Also, keep a look out for smart technology embedded into new homes that can simplify your day-to-day living.
Track record of the developer
When you start the process of deciding which off-plan property to buy, conduct thorough research of the developer and check their track record. One authentic method would be see if the developer is registered with the respective real estate authority.
If you are considering an already existing developer in the UAE, it is worth visiting their completed projects to check for quality and deliverables. With all developers, you should also be sure to check their show homes. Make sure all deliverables promised to you are also signed on official papers as proof of your agreement.
The biggest advantage of buying off-plan property is that you can stagger the payments as per the progress of the construction.
One option to help with your purchase is to take out a bank loan. The maximum loan to value during construction period is 50%. So you would need to pay at least 50% of the property value, before a bank can finance the property. Make sure you choose a plan you are comfortable committing to, and be mindful that you might already be paying rent or a mortgage on the current property that you live in.
Some off-plan properties in the UAE also offer a structure of paying a certain amount of the down payment first and paying the majority of the balance payment upon handover of the property. This kind of plan, if available is also worth considering as it will give you the freedom of exploring other investments or even saving up for when the development is ready.
You should also bear in mind and be sure to double check that all payments are directed towards the projects Escrow account and not directly to the developer.
Handover and completion date
The most common issue that a lot of buyers face when buying off-plan property is the delay in the handover. Therefore, real estate authorities in the UAE have introduced strict regulations that must be met by the developer before selling units in a project. These include either complete ownership of the land the property is built on or a 20% payment as bank guarantee with the respective authority or a deposit of 20% in Escrow or to reach 20% construction stage, depending on the emirate in which the property is located in.
Your off-plan sale and purchase agreements should have a specific mention of the expected completion date of the project, along with a solution on how the developer will address the potential issue of not meeting handover deadline. A delay is often expected and therefore it is important to know what clauses will hold true if that happens, and how you will be compensated for any delays.
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