The UAE’s real estate market is one of the largest in the world and is popular for providing lucrative investment opportunities. Buyers can invest in a myriad of properties ranging from ready-to-move to off-plan properties. That said, off-plan properties have gained rapid popularity among buyers and investors alike. The influx of investing in off-plan property is mainly due to the easy payment plans and profitability after project completion.

Let’s take a closer look at the processes, steps and other aspects necessary to consider buying off-plan property in the UAE.

What is an Off-plan Property

Any property that is purchased when under construction directly from the developer is termed as off-plan property. The property may either be yet to be built or is in the early stages of construction. That said, the buyers of off-plan property have to rely on the blueprint or the floorplan of the property provided by the developer.

Generally, the buyers have to pay a certain percentage of the total property value as a down payment. Whereas, the rest of the payment can be done in instalments, or as mutually agreed between the parties.

How to Buy Off-plan Property

Here are all the steps required to be catered by the investors before buying off-plan property in the UAE.

Draft your Budget

The first step in buying an off-plan property in Dubai or other Emirates is to draft your budget. For convenience, divide the expenses of purchasing an off-plan property into three categories: down payment, instalments and legal charges.

The down payment is paid before signing the sales and purchase agreement. The down payment amount can be anywhere between 10% to 20% of the total purchase price. Remember that banks will not provide a mortgage for the down payment; therefore, buyers are required to save the amount by themselves.

You can read our blog on how to save money for house down payment, for some valuable saving tips.

Moving forward, the next monetary cost is in terms of instalments and legal fees. That said, if your monthly income is enough to cover the household expenses and instalments, you can opt for the off-plan project.

Consult with a Real Estate Agent

The next step in purchasing an off-plan property is to consult a real estate agent. There are several benefits of hiring a real estate agent, as they have the experience, knowledge and expertise to guide you through the process.

A real estate agent can provide you with valuable insights regarding the project and can also predict the market value of the property after completion. Moreover, their connections with the developers can aid in negotiating the final price and number of instalments.

Extract Complete Details of the Project

Purchasing an off-plan property is a long-term commitment and before purchasing buyers are dependent only on the floor plan. That said, it is necessary to identify and verify all the necessary details regarding the project. This should include the market reputation of the developer, previous projects and their handing over date, court cases and land lease. A thorough verification will exempt you from future hassle.

Choose a Payment Plan

The last step in this process is to finalise the payment plan. There are different types of payment plans offered by the developer to the investor. The payment plan varies from buyer to buyer depending upon the amount to be paid after the down payment.

Opt for the plan according to the budget you drafted. Make sure to check the interest rate, completion date and hidden costs before signing the contract.

Complete the Legalities

After sealing the deal with the developer, buyers are required to cater to the following legal steps.

1. Acquire Reservation Form

   The first legal step after confirming the purchase of an off-plan unit is to acquire the reservation form. It is a legal document which includes the personal information of buyers, type of property, payment structure and amount of downpayment. Both the pirates are required to sign the form prior to moving towards the next step.

2. Sign a Sales and Purchase Agreement (SPA)

   Signing a SPA is one of the most crucial steps in buying an off-plan property in the UAE. The SPA agreement includes details regarding property value, property unit layout, handing over date and payment plan.

   The signed document serves as a written agreement between both parties; therefore, read the agreement carefully. Ensure there are no hidden charges or conditions that are not in your favour.

   Moreover, verify the developer’s name, personal information and all the details regarding the property. Remember that it is necessary to register the agreement with government entities like TAMM in Abu Dhabi or DLD in Dubai.

3. Deposit Money in Escrow Account

   After signing the agreement, it’s time to transfer the down payment to the developer. For this purpose, developers are required to provide you with an escrow account, in which the amount will be deposited.

   To check the legitimacy of an escrow account, you can visit the official website of the government institute of your Emirate. For instance: the residents of Dubai can visit the DLD to verify the escrow account.

   Once you have verified the account, transfer the amount to the escrow account. You can either use a wire transfer or pay through a credit card.

4. Pay Brokerage Commission

   If you have hired a real estate agent, then after transferring funds brokerage commission needs to be paid. The amount of commission is variable and is generally dependent upon the overall property value.

5. Property Handover

   Buyers are suggested to visit and inspect the finished property 7 days before the handing-over date. During the inspection, buyers can testify whether the finished property matches what was promised by the developer or not. Buyers must also check for the finishing, paint, interiors and materials used in consumption. In case of any discrepancy, buyers can ask the developer to replace the element.