There is abundant good news for those buying and selling property in Dubai, despite the media headlines of late. The Dubai property market has ridden out the Covid-19 pandemic remarkably well – property prices in Dubai’s popular neighborhoods have remained stable in the first six months of 2020. Demand has increased for properties to buy in family-friendly areas, for example, Dubai Marina, Downtown Dubai, Arabian Ranches, and Palm Jumeirah.
Data from the Dubai Land Department shows that there were 15,897 sales transactions recorded in Dubai in the first six months of 2020, amounting to a total value of Dhs32.5bn.
Buying Property in Dubai
The two main ways to purchase property in Dubai is by buying an existing home (referred to as ‘resold’ property) or purchasing off-plan.
The process of buying a resold property is a relatively simple one. Once you find the property you wish to purchase, you can make an offer (generally through an agent). If it is accepted, you must pay a deposit and sign a Memorandum of Understanding (MOU). This sets out the terms of the sale and purchase. It is recommended to instruct a property lawyer who will conduct the necessary due diligence and review the documentation for you.
Buying off-plan is where you purchase a home that has not yet been constructed, usually from the developer. There are several advantages to buying off-plan, including:
- Lower up-front costs – Deposits for an off-plan property vary between different developers; however, they are normally lower than the deposit required for a resale property.
- Buy the property at its lowest price – Buying off-plan means you potentially purchase the property at its lowest price and therefore have an opportunity to make money when you sell it.
There are risks to buying off-plan, which is why you need an experienced property lawyer to advise you throughout the process. The most significant risk facing purchasers is:
- Late completion – Building projects do not always complete on time and delays can occur, sometimes up to 12 months or more. This can result in you having to pay rent for far longer than you expected. Your lawyer will have advised you on the solutions provided by the developer for late completion. If these are not acceptable, they will advise and represent you in making a claim at Dubai Court.
Selling a Property in Dubai
Selling a property is a relatively simple process. You will need to sign a Form A agreement with a broker to market the property. Form A will stipulate how much commission the broker will receive if they successfully sell your property.
Once an offer has been accepted and terms and conditions are agreed, a MOU will be completed. Furthermore, you will need to sign a No Objection Certificate (NOC). The developer will typically issue the NOC against a payment of a fee once they are satisfied that any amount due to them in the form of service charges have been settled in full.
Once you have the NOC, The Dubai Land Department will issue a transfer of ownership after payment of the purchase price has been made in the form of a manager’s cheque made payable to the seller on the date of transfer.
If you are selling an off-plan property before it is completed, you must meet certain conditions which are in place to ensure stability in the market. Normally, the developer will insist that you have paid off 30-40% of the costs before you can sell; however, this will vary between developers. There may be other terms in the developer’s agreement which you need to adhere to before selling your off-plan prior to completion.
Getting legal advice
For expatriates, non resident investors and locals, buying and selling property in Dubai has become very popular. The best way to mitigate risk in the process is to invest in expert legal advice and representation from the beginning of the sale and purchase process.
It would also be in your interest to prepare a Will to protect your asset as in the UAE, inheritance for Muslim nationals is guided by Sharia laws, while the law of the deceased’s home country could be applied for non-Muslim expatriates. However, there are many uncertainties regarding real estate inheritance issues, and expatriate property owners are recommended to make wills to overcome these. Unlike other jurisdictions, the UAE does not practice ‘right of survivor-ship’ (property passing on to surviving joint owner upon death of the other), and the local courts will make final decisions.
To find out more about buying and selling property in Dubai, please contact our office at email@example.com or call +971 4 448 4284.