by Kingdom By MAG 
The UAE’s real estate market is one of the largest in the world and has become a hub for lucrative investment opportunities. Buyers can invest in various properties ranging from ready-to-move-in homes to off-plan properties. In recent years, off-plan properties have gained rapid popularity among both buyers and investors. This surge in interest is largely due to flexible payment plans and the high profitability post-completion.
Let’s take a deeper look at the processes, steps, and key considerations when purchasing off-plan property in the UAE.
What is an Off-plan Property?
An off-plan property refers to any property purchased directly from the developer while it’s still under construction. The property may be in the early stages of development or yet to be built. As a buyer, you’ll rely on blueprints or floor plans provided by the developer to visualize the final product.
At Kingdom by Mag, we offer a wide range of both off-plan and ready-to-move-in projects. Some of our notable projects include MBL Residence, MBL Royal (which is fully sold out), the newly launched MBL Signature, and Cluster R.
Typically, you’ll pay a percentage of the property’s value as a down payment, and the rest is paid in instalments as agreed between you and the developer.
How to Buy Off-plan Property
Here’s a step-by-step guide to buying off-plan property in the UAE.
1. Draft Your Budget
The first step is to draft your budget. Consider the costs associated with purchasing an off-plan property: down payment, instalments, and legal charges.
- Down Payment: Typically, this is 10% to 20% of the property’s total value. Remember, banks usually won’t provide mortgages for the down payment, so you’ll need to save this amount yourself.
- Instalments and Legal Fees: Once the down payment is covered, you’ll be paying off the remaining cost through instalments, with additional legal costs for processing your paperwork.
If your income covers these expenses, then an off-plan property could be the right investment for you.
2. Consult with a Real Estate Agent
A real estate agent brings expertise, experience, and valuable market insights. They can guide you through the entire process and help you negotiate the best deal. With their industry knowledge, agents can also predict the future market value of the property and ensure you make a wise investment.
At Kingdom by Mag, we have more than 28 highly professional agents who are experts in different languages, including English, Arabic, Urdu, Hindi, Nigerian, Italian, Russian, French, and many more. Their diverse skills and local expertise ensure that you’ll receive personalized and seamless support throughout the property-buying process.
3. Extract Complete Details of the Project
Before committing to an off-plan property, do thorough research on the project. Investigate the developer’s reputation, previous projects, handover dates, and any legal issues. This will ensure you’re investing in a reliable, legitimate development.
4. Choose a Payment Plan
Developers offer a variety of payment plans for off-plan properties. Choose a plan that fits your budget and check for hidden costs or additional fees. Ensure the completion date and payment schedule align with your financial situation.
5. Complete the Legalities
After finalizing the deal, you’ll need to complete several legal steps:
- Acquire Reservation Form: This document includes your personal information, property type, payment plan, and down payment. Both parties must sign it.
- Sign the Sales and Purchase Agreement (SPA): The SPA will outline the property value, layout, handover date, and payment schedule. Make sure to read it thoroughly for any hidden terms or fees.
- Deposit Money in Escrow Account: After signing the agreement, you’ll transfer the down payment to an escrow account. Ensure the account is verified by relevant authorities to protect your investment.
- Pay Brokerage Commission: If you’re working with an agent, the brokerage commission will need to be paid, typically based on the property’s value.
- Property Handover: Inspect the finished property a week before handover to ensure it meets the promises made by the developer. If there are discrepancies, request that they be corrected.
Documents Required for Purchasing Off-Plan Property
Make sure you have the following documents on hand:
- Emirates ID (Copy)
- Passport (Copy)
- Sales and Purchase Agreement (SPA)
- Reservation Form
- Mortgage Contract (if applicable)
Things to Consider Before Investing in an Off-Plan Property
Off-plan properties offer lucrative returns, but they require careful consideration. Here are key factors to keep in mind:
1. Opt for a Reputable Developer
Invest only in licensed and registered developers. Verify the developer’s reputation through official channels to ensure the project is legitimate.
2. Review the Project
Physically visit the site to assess the space and layout. Check the progress of the construction and the quality of materials being used.
3. Estimate the ROI
ROI is a critical factor in any investment. Consider the location, type of property, the developer’s reputation, and the rental potential of the unit. Properties in prime locations tend to yield higher returns.
4. Prioritize Location Over Cost
Location is crucial when purchasing an off-plan property. While off-plan projects in prime locations may be more expensive, they often offer higher ROI in the long term. Ensure that the property is well-connected to transportation and amenities.
5. Negotiate on Payment Plan
Payment plans vary between developers. Negotiate the terms and instalments to suit your budget. Be mindful of penalties for late payments.
6. Read the Contract Carefully
Before signing the SPA, thoroughly review all terms and conditions. Watch for hidden clauses that could work against you, such as hidden costs or restrictive conditions.
Why Should You Work with a Real Estate Agent When Buying Off-Plan Property?
Some buyers may wonder why they should go through a real estate agent when they can buy directly from the developer. Here are the benefits of working with an agent:
1. Expert Market Knowledge
Real estate agents are equipped with in-depth knowledge of the local market. They can provide insights into the latest trends, pricing, and upcoming developments, which can be crucial for making a wise investment.
2. Access to Exclusive Deals
Agents often have access to off-plan projects that are not available to the general public. These exclusive properties may offer special terms or pricing, giving you an edge in the market.
3. Negotiation Skills
Experienced agents can help you negotiate better terms, from securing a lower price to more favorable payment plans. Their professional relationships with developers allow them to get better deals for their clients.
4. Guidance on Legal and Contractual Matters
The legalities involved in buying off-plan properties can be complex. A real estate agent ensures that you’re fully informed and that the terms in the SPA are fair. They help you avoid hidden fees and ensure all contracts are registered with the relevant authorities.
5. Ongoing Support Throughout the Process
From the reservation form to the final handover, agents provide continuous support. They can assist with property inspections and help resolve issues that arise during the process.
6. Saves Time and Effort
Real estate agents save you time by doing the research, finding properties, and guiding you through the steps. Their experience streamlines the entire process, so you can focus on other aspects of your life.
7. Increased Security and Reduced Risk
Working with a licensed agent reduces the risks associated with purchasing off-plan properties. Agents are regulated professionals who ensure all transactions are secure and compliant with the law, giving you peace of mind.
8. Advice on Investment Potential
A good agent will offer advice on the investment potential of the property. They can help you assess factors like appreciation, rental yields, and long-term capital growth, ensuring you make an informed decision.
How to Deal with Delayed Property Handover
Delays in property handover are common in the off-plan market, but they are manageable. Here’s how to address the issue:
1. Negotiate with the Developer
If there’s a delay, start by negotiating with the developer. Review the SPA for clauses regarding delays and try to come to a solution that works for both parties.
2. Check if the Project is Cancelled by the Government
Verify if the government has canceled the project. If so, the authorities will provide details about the refund process.
3. File a Claim
If the developer is responsible for the delay, and the grace period has expired, you can file a claim for a refund. It’s recommended to seek professional help to ensure the process goes smoothly.
FAQS
How can I buy an off-plan property in the UAE?
To buy an off-plan property, draft your budget, select a property, consult with a real estate agent, finalize the payment plan, and complete the legalities.
Are off-plan properties more expensive than ready ones?
No, off-plan properties are generally priced lower, allowing for savings compared to ready-to-move-in properties.
What if I am unable to pay the instalments of my off-plan property?
Late payments may result in penalties or cancellation of the contract, allowing the developer to sell the property to another buyer.
Can I sell my off-plan property before completion?
Yes, you can sell off-plan property before completion, but check your contract for any restrictions on resale.
Conclusion:
Off-plan properties in the UAE offer great opportunities for investment, especially for those who are working with a budget. The flexibility of payment plans, along with the potential for high ROI, makes these properties an attractive option. Whether you choose to buy directly from the developer or work with a real estate agent, the key is to thoroughly research the market, choose a reputable developer, and ensure all legalities are carefully followed.
