Process of Purchasing Property In Dubai

Dubai is a city and emirate in the United Arab Emirates known for luxury shopping, ultramodern architecture and a lively nightlife scene. Real estate market is also booming recently which the city offers higher rental yields than many other mature real estate markets. On average, investors can achieve gross rental yields of between 5-9%. Property prices per square foot are lower than many other cities globally, making Dubai an affordable location to own prime real estate.

Dubai’s real estate market data becomes outdated very quickly. That is because, Dubai’s government prides itself in being a government faster and more efficient than private sector hence things keep changing.

Have you been thinking about buying property in Dubai and wondering how the process works? Here are the answers.

1: What Outcome Do You Desire?

what outcome do you desire from your investment in Dubai’s real estate market? Below are some of the common reasons people invest in real estate.

Parking your Money: In brief experience in Dubai’s real estate market, there are many investors who prefer putting their money into real estate rather keeping it in the bank where it only depreciates with the passage of time. Real estate, at the end of the day, is an asset and the beauty of such investment is that, you can liquidate it whenever you want.

Capital Growth: Is it your hard earned savings that you are investing? If that’s the case, most probably you are looking for capital growth. This is a centuries old practice and works very well while buying property in Dubai, where people invest their money into real estate and let it grow in value with time.

If your plan is to buy a property and sell it at an appreciated prices down the line then you and your agent need to look for such properties in Dubai which have the potential to generate good returns in coming years.

One thing to keep in mind is that, capital growth is not guaranteed. Your property could go up in value or lose its value in coming years, depending on various factors.

Rental Income: What’s better than investing your money into a safe real estate market like Dubai, where not only your property’s value will increase with time but you are guaranteed to make highest rental yield as compared to other real estate capitals of the world?

In most views, this is the best type of real estate investment. By buying such property in Dubai, you will kill three birds with one stone; your money is secure, it grows over time, it gives you monthly income.

2: Selecting The Property

Once you have determined what kind of property you want to buy in Dubai. It is time to select the property.

Following are some important points to keep in mind while selecting the property:

Developer: While there are many well-known names in the development sector of Dubai, sometimes the best properties you can find are built by unknown developers. So, do your research about the developer of property and if you are not present in Dubai, ask your agent to have a meeting with developer and do his due diligence.

Age of Property: Dubai’s real estate market is relatively very young and most of developments are hardly 10 to 12 years old. Knowing how old the piece of property can be an important factor while making the final decision.

If it is a brand new property, you never know what kind of issues will arise in coming months. If it is old and not kept well, you know not to invest in it.

Building Management Company: Your agent should be able to find this piece of information for you. Each building in Dubai has its own dedicated staff for security, repairs, cleaning and management. Knowing which company is managing the building and digging some details about their reputation can make your decision easier.

Historic Data: There is not a lot of historic data available in Dubai’s real estate market but you could find it as much as possible. It is also an useful information to not let you invest on wrong place.

3: Property Evaluation

Following things must be considered while evaluating a real estate deal;

Asking Price: We all know that there is usually a difference between an asking price and an actual selling price. Your agent will be able to get the asking price from seller and if he/ she is good, you will also get following data with it.

Market Asking Price: The asking price from the seller is one thing but you need to know how does it compare with the average asking price in the market? If it is at level or lower than average market price, the seller is most probably serious about selling his property.

If the asking price is higher than the average market price, the seller could be just checking the market to see what kind of offers he can get and not very serious about selling the property.

Actual Selling Price: To get a good bargain while investing in Dubai’s real estate, knowing the actual selling price can be a game changer. In many cases, we have seen a difference of 10 to 15% between the average asking price and average selling price.

To know the actual selling prices for similar properties in recent months, you need to find more information. Such information is not publicly available on any portal and not all agents put the effort in investigating as well.

Historic Data: Again, history can teach us a lot and we shall never ignore it. While above steps will give you an evaluation price based on current market and a lot of help in buying property in Dubai, it is important to know how the similar properties traded in last few years? This little piece of information can be very useful in making the right decision.

4: Negotiating the Price

This is the time for which we have been preparing ourselves in all above steps.

Sometimes, these negotiations can be over in a jiffy with both parties coming to terms and sometimes, it goes on for weeks as well. Some negotiations happen in a very sweet and gentle manner and some get very heated. Sometimes negotiations succeed and sometimes they don’t. But you could choose the one which offer you better.

5: Sign Memorandum of Understanding (MOU)

Once the price has been negotiated and both parties have come to an agreed upon figure, it is time to put things into writing. Mostly agent will prepare the MOU for you. This piece of document will contain all the details of transaction including a specified date on which the final transaction will take place.

As per the rules of Dubai Land Department, both buyer and seller will exchange a security cheque amounting to 10% of agreed sale value. If any party decides to cancel the deal after signing the MOU, the other party has the right to keep the 10% security deposit as a compensation for the loss of their time and effort.

6: Concluding the Transaction

The final step is to conclude the transaction. The date of transferring the property in your name is already decided while signing the MOU. Here is what buyer will have to do on the given date;

Visit Trustee Office: Along with your agent, visit the nearest/ agreed upon trustee office. The seller shall also be present in the trustee office. (Physical presence of both buyer and seller is mandatory at the time of property transfer).

Submit Documents: Upon reaching the trustee office, you are required to handover the documents to the trustee officer. There is usually a quality control process in such offices where you will submit documents at the reception first. After reviewing the documents, you will be allowed meet the officer.

Verification: The trustee officer will verify the details provided in the MOU along with the identities of both seller and buyer.

Exchange Cheques: Once information has been verified, the buyer will submit following cheques;

· Manager’s cheque in the name of seller (Total Sale Price)

· Manager’s cheque in the name of Dubai Land Department (4% of sale price)

· Manager’s cheque in the name of Agent (2% of sale price)

· Manager’s cheque in the name of Trustee office (AED 2,000 if property value is less than or equal to AED 500,000; AED 4,000 if property value is higher than AED 500,000)

· 10% cheque submitted by seller

·  The seller will also return the 10% security cheque to buyer.

Collect Title Deed: Once above cheques have been exchanged, the trustee officer will ask you to wait for some time (usually 30 to 60 minutes). Once your title deeds will be issued by Dubai Land Department and sent to trustee office, they will stamp it and give it to you.

Now Compass have cooperated with District One Residences Project. If you need to buy property in Dubai, you can contact to us anytime.