The old adage “location, location, location” remains true when purchasing property, but more relevant would be “research, research, research”. The UAE real estate market is much more transparent than it once was and there is a vast amount of information available on the internet, from articles to raw data from which you will be able to prepare yourself to ultimately start property shopping.
Start with the most important item: how much can you afford. While some can purchase property in cash, most will have to consider financing some element of the purchase. And though you are eligible to secure a mortgage, you will need to place a deposit in cash. This currently equates to 30 per cent of the property’s purchase price. There are also costs not covered by the mortgage and have to be paid in cash.
In the off-plan market, many developers offer financing or even a post-completion payment plan. Also prominent is the collection of instalment payments during construction to cover the “deposit”, allowing the purchaser to secure a mortgage for the balance amount due at the handover. Going this route, you should calculate other costs and must make a personal assessment of where the market price will be at the point of handover. If the prices rise during construction then securing a mortgage should be easier, however, if prices fall then you would be funding the difference between the mortgage valuation price and the purchase price to meet the shortfall.
Depending on urgency, you could consider both the off-plan and secondary markets. However, if you have a specific date to move into your new home, e.g. at the expiry of your lease, then focus on the secondary market or properties nearing completion.
Having an understanding how much you can afford and when you will move, it’s time to research what and where to buy. For investors, consider the marketplace, the sort of rents you could achieve, the service charges and what competition you will face in years to come. The desirability and rentability of established communities are clear, however, off-plan purchases require a more XYZ approach.
When buying a home for yourself, consider the neighbourhood and access to school/work (Google maps can be helpful to assess travel times). Also, visit during the day, at night, on weekends and working days to see what the neighbourhood is really like.
If investing in a freehold area, you will become part of an owners’ association (Dubai) or owners’ union (Abu Dhabi). Therefore, meet the association manager and ask for the property’s financials. If this information is not available or collections are low and reserve fund is minimal, you could find yourself with increasing financial liabilities when repairs or upgrades are required. Very few people purchasing property consider this, but it is probably the most important question to understand when purchasing property in the UAE.
Now you know where you want to buy
It’s time to find an agent to assist you. There are many reputable agencies in the UAE and many are specialists in specific communities. What’s lacking here is a rating system for the performance of these agents based on prior customer experiences, so you should be looking for a regulated and reputable agent/agency.
Before you make an offer
In many countries, a detailed due diligence is conducted by specialists such as lawyers and surveyors on behalf of a purchaser before a sale is concluded. However, this is not common in the UAE. A copy of the sale and purchase documentation, which includes any JOPD (Dubai)/constitutional documentation should be secured and reviewed so that you have a clear understanding of your obligations as an owner. Similarly, an inspection should be conducted by a qualified surveyor. Knowing that there are defects or issues with the property is critical, since once it is transferred to you the obligation and cost to reinstate it becomes yours.