Transcription
This is an exact step-by-step process for buying a new property in Dubai. I'll walk you through each stage, how long it takes, how much you'll need to pay, and any hidden pitfalls or traps. By the end, you'll have a fully transparent picture with no surprises.
Starting with Expression of Interest or EOI. Many people are scared of this, but you shouldn't be. EOI is the ultimate investor's weapon. Let me explain. Let's say there is a new, very high-demanded project on Dubai Islands. I know it looks like a glass, but in this example, it's a project, and these M&Ms are investors. This project has only 100 units, but the number of investors who want to get one is much higher, at least 300, maybe even 500. On launch day, all these investors rush for getting, and many walk away with nothing. Such a mess. But a couple of days before the launch, a savvy investor, this yellow M&M, expresses their interest and gets in before everyone else. So on launch day, no matter how many investors try to buy, the yellow M&M still gets their unit.
To express interest, you need to make a prepayment of an amount you choose. There is always a minimum acceptable value, like $10,000 or 2% of the unit value, but there is no maximum. And you can leverage that. If your EOI sum is larger than others, you can sometimes get a better place in the queue, even if it came later than others. EOI is fully refundable if you didn't get the unit or didn't like what you were offered for any reason. The developer will send your money back. Usually, it takes developers around a month. So you normally put down an EOI in three cases: the project is not launched yet, the project was recently launched, and you didn't get the unit you want (in this case, EOI will help you be among the first to get a unit when someone cancels their booking), and if the project has not even been announced. It especially makes sense with developers who release all the units together to a wide audience, and the investors who deposited the money upfront can book quicker.
And this brings us to step two, selecting the unit. Let's say it's an allocation date, meaning the developer was collecting EOIs for several weeks, and now investors get a chance to secure a unit. What happens on allocation date differs among developers. Normally, the developer releases a long list of units you can choose from, but Myra's, for example, has a lottery, and some developers just give you one or few units to consider. And here is some harsh reality: bigger investors always go first and get the best units. It's not uncommon for bulk buyers to take 20, 30, or 40 units at once. This significantly reduces what's left for regular buyers. That's why in hyped projects, coming early is critical, otherwise, you'll end up with leftovers. After the allocation day, units become publicly available, and you can buy what you like without an EOI. The fact that the property wasn't taken on the launch day doesn't mean it's bad. Someone could have been going for it and then canceled. Also, many great opportunities are not that hyped. For example, there is one awesome project on the Bluewaters Islands not many people heard about.
I know that it's difficult to find such opportunities, and the whole investment process isn't always easy, but you don't have to do it alone. We help clients with property search, financial analysis, payment strategy, and basically handle everything end-to-end. And we do it for free. So if you want to learn about that project on Dubai Islands I mentioned or need any kind of help with investing in Dubai real estate, reach out to my team. Call us, WhatsApp us, scan the QR code, or click the link in the description, and we'll find you the property that truly stands out.
And we'll also help you with step three, negotiating the terms. With some developers and projects, you can significantly improve the initial terms, and mainly there are three incentives you can negotiate. So let me walk you through them. First, you might negotiate the price. It would be much easier if you paid a larger share of the price upfront or purchased several units, but even if not, in some cases, you can reduce the price just by asking. Here are some real examples of what you might get: If you buy an inexpensive unit from a small developer that's not in high demand, you can get 2 or 3% off just by asking. Now, let's say you're buying an expensive unit, like a million-dollar three-bed from a medium-sized developer who launched the project some time ago. In this case, you could get 3 to 5%. Another medium-sized developer might give you a 10% discount if you pay 100% in cash upfront. And if, let's say, you're purchasing a couple of full floors in a building, you could get a 10 to 20% discount.
In some cases, developers are not willing to reduce the price but are open to providing a DLD waiver. We'll talk about the DLD fee later, but it's the fee paid to the government, and it's 4% of the property price. Sometimes the developer can fully or partially cover it. Finally, even if the developer doesn't want to change the price, you can still negotiate an improved payment plan. For example, the developer might offer a 70/30 payment structure, 70% during construction and 30% on handover. This could be changed to 60/40 or 55/45. And even if the final split isn't exactly what you want, you might push some payments to later, for example, reduce how much you pay during the first year. That said, not every developer is willing to give incentives. So if you're going for a super-demanded project, don't waste your time trying to get something small because the cost of that is likely losing the unit you wanted.
And when you finally reach an agreement on the terms that are important to you, it's time to book the unit. A booking form is a document containing the key terms of your purchase. Here's the one our client recently signed. It's quite small, just six or seven pages. Inside, you have information on the buyer or buyers (if you're buying jointly with anyone else, it's mentioned here), property details like project name, unit number, number of beds, square footage, completion date, etc., purchase price, and the payment schedule, and basic terms and conditions. Putting your signature on the booking form has two major consequences. First, you secure the unit and the terms from that moment, it's official. Second, it usually makes your EOI non-refundable. If you decide to back out and cancel the purchase, the developer will keep the Expression of Interest amount.
Signing the booking form can also be followed by paying the booking amount. Its size differs and is usually equal to the minimum EOI amount, but sometimes can be as high as 10% of the property price. And as soon as the unit is booked, you can get to step five, down payment and DLD fee. There is always a time frame to make the down payment, usually around a couple of weeks, but you can sometimes negotiate a delay and pay a month after signing a booking form. The down payment amount is almost always 20% of the property price, though there are exceptions when it's just 10%. Ideally, you want to make this payment to the escrow account of the project, but in practice, it very seldom happens that way. It takes time to register the new project in DLD and open an escrow account. So if you are buying right after the project launch, you'll have to pay to the developer's general account. It's a completely normal practice here, and if you go with a reliable developer, your money is safe.
Also, at this point, you pay the 4% DLD fee. You can delay it because the fee is required to register the unit. The payment goes to the developer's own bank account, and then the developer pays the fee to the Dubai Land Department on your behalf. And you also pay a developer's fee, roughly $1,500. And when that's done, you can move to step six, signing the SPA. Sales Purchase Agreement or SPA is a detailed contract between the buyer and the developer that establishes all the terms of the purchase. This is what it looks like. This one is from Shoba, quite a thick document of about 80 pages. It contains all the unit information, including layout and a detailed description of interior materials, detailed payment terms, including consequences of missed deadlines and payment failures, the process for handover and fixing defects, service charges, and many other things.
Most developers allow you to sign the SPA digitally, but some require a physical signature. It doesn't mean you'll have to visit Dubai. In fact, the whole purchase process can be fully remote and doesn't require you to come to the UAE. If you are abroad, they'll send you a physical copy of the SPA, and you'll sign it wherever you are. By the way, if the project is just launched, be ready to wait a couple of months for the SPA. And once you've signed the contract, you can get an ACUD. ACUD is a digital certificate issued by the Dubai Land Department for off-plan property transactions. It proves your ownership before the construction is finished. This is kind of a title deed for properties under construction. It has two main practical applications. First, if you decide to sell the property before it's built, this document is required. It proves your ownership to the buyer, and after the deal is done, the buyer will receive an updated ACUD. Second, if you're eligible for a Golden Visa (meaning property price is 2 million dirhams or about $546,000 US), an ACUD is required. Basically, the moment you get an ACUD is the moment you can apply.
Step eight, payments. You pay according to the payment schedule. The payment deadlines are usually tied to specific dates, construction milestones, or both. The way you make these payments is the same as when you put down an EOI or made the down payment. First, you can pay in cash. Second, if you have a bank account in Dubai, you can write a check. The developer will deposit the check and get access to the money. Third, you can pay by card, either in the developer's office by tapping it on the terminal or remotely via the online checkout. This method is not 100% reliable. Some cards aren't accepted by certain developers, for example, American Express often doesn't work. Also, your bank might freak out when you try to make a $10,000, $20,000, or $30,000 transaction and just block your card. So a more reliable method is wire transfer. You can do it from many banks around the world, mostly accepting sanctioned countries. Be aware that if you don't include the developer's IBAN in your wire transfer form, the money won't reach them. Some banks don't specifically ask for an IBAN, so pay close attention. And the fifth method is crypto. Crypto is legal and widely used among Dubai developers, so you can simply send USDT to their wallet address.
Also, people often ask, what if I fail to pay? There are three phases of consequences. First, grace period and notifications. The developer emails you about the missed payment deadline, asking you to pay the outstanding amount. Second, Dubai Land Department involvement. If you don't pay, the developer notifies the DLD, and then they issue a 30-day official notice. This is your last chance to settle. Third, the consequences of non-payment. It depends on the project's completion rate, but the general rule is that the developer can cancel the agreement and either auction the property or keep a percentage of the property's value. So if you see payment difficulties coming, tell your agent and the developer immediately. That way, you have time to negotiate a solution.
And now, let's discuss one of the main milestones: getting the right to sell. In Dubai, you can sell properties that are still under construction. You're eligible to do so once you've paid a certain share. Normally, it's around 30-35%, but some projects and developers have a higher barrier, like about 50%. When you cross this threshold and want to sell, you need a No Objection Certificate from the developer. It costs around $1,000 and it's easy to get. But be aware that selling a property under construction can be challenging. First, if the unit isn't particularly special, buyers are more likely to go for a ready property. Second, if the developer hasn't sold out their inventory, buyers may choose to purchase directly from the developer instead of paying you a premium. Third, many secondary market buyers prefer a mortgage, but if the property isn't ready, they can't do that. They first have to pay what's left before the handover and then mortgage the remaining amount.
But if you decide not to sell, your next step is handover. It starts with a snagging inspection. Any defects found at this stage will be fixed by the developer. After that, the property is ready to use, and you also get the title deed, the document confirming your ownership rights. If you had a post-handover payment plan, you continue paying according to the schedule. But if there was one payment due at handover, you can either pay it or convert it into a mortgage. Even if you weren't a resident before the purchase, you could become one during the construction via the Golden Visa. This makes the process of getting a mortgage easier. There are still some requirements, but generally, you can get a loan of up to 25 years and cover the payments from rent if the property is good for renting out.
Speaking of renting out, at this point, you have two main options. The first is to rent out the apartment as is, no furniture and no improvements. You'll have no additional expenses besides the service charges, which vary based on the area, building type, and developer, and usually range from $3 to $6 per square foot per year. So if you own a two-bedroom apartment in GVC, your service charges might be around $5,000 per year. The tenant pays for everything else, including property maintenance, and the real estate agency fees are also covered by the tenant. Usually, payments are made in one to four checks per year, and the more checks you accept, the higher the total amount you can expect.
The second option is to rent the apartment short-term, like on Airbnb. You'll need to furnish the apartment and hire a management company to handle rentals and maintenance on your behalf. In this case, you can make higher profits because short-term rent is priced at a premium, but the price fluctuates between peak season and offseason. This only makes economic sense if your property is in a prime tourist area, otherwise, occupancy might be low. And of course, you can resell the property either as is with no improvements or after an upgrade. But not just any random property will bring you huge returns from the resale. The good news is that there are several red flags that aren't that difficult to spot. I talk about them in this video.