Step-By-Step Guide for Foreigners to Buy New Property in Dubai

This is the ultimate weapon of investors. Try to understand this statement with the help of an example. Imagine there is a new high-demand project on the Dubai islands. Let's represent the project as a glass container with a capacity to hold 100 units, but we want to fill 300 candies in this container. The extra demand to fill the container with extra candies represents the investors' interest in investing in the project. This project (glass container) has only 100 units, but the number of investors who want to invest is much higher, almost three times the capacity of the project. On launch day, all these investors will rush to invest, leading to overflooding and leaving many investors empty-handed, as in the case of candies, which are left without getting any space in the container. If, before the launch, a farseeing investor, say a,  expresses their interest and gets in before the other investors, then on the launch day, no matter how many investors try to buy the property, Investor A will still get their unit.

To express interest, the investors need to make a prepayment of an amount. There is always a minimum acceptable value, like $10,000 or 2% of the unit value, but there is no maximum, and it can be leveraged. If the EOI sum is larger than other investors, then the said investor can sometimes get a better place in the queue even if they came later than others. If the investor didn't get the unit or didn't like what they were offered, the developer would fully refund the money.

EOI is put down in three cases: 

• The project has not been launched yet.
• The project was recently launched, but the investor didn't get the desired unit.
• The project has not even been announced.

Let's say it's allocation day, implying that the developer has been collecting EOIs for several weeks and now investors get a chance to secure a unit. On allocation day, the circumstances and situations differ among developers. Usually, the developer releases a long list of units from which the investor can choose, but developers such as Meraas have a lottery system, and some just give one or a few units to consider.

The bigger investors always get to go first and get the best units. Bulk buyers usually take 20, 30, or 40 units at once, thus significantly reducing what's left for regular buyers. It is because of this reason that in hyped projects, coming early is critical. Otherwise, the investors end up with leftovers. After the allocation day, units become publicly available, and the investors can buy whatever they want without an EOI. The fact that the property wasn't taken on the launch day doesn't mean it's bad; it could imply that someone might have been going for it and then canceled. Also, many great opportunities and projects are not that hyped.

With some developers and projects, you can significantly improve the initial terms. There are three incentives you can negotiate:

1. One might negotiate the price. It would be much easier if they had paid a larger share of the price up front or purchased several units, but in some cases, they can reduce the price just by asking.
For example: 

• If you buy an inexpensive unit from a small developer that is not in high demand, you can get 2 or 3% off just by negotiating a bit. 
• If you are buying an expensive unit like for a million dollar 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 up front.
• If you are purchasing a couple of full floors in a building, you could get a 10% to 20% discount.

2. In some cases, developers are not willing to reduce the price but are open to providing a DLD waiver. It is the fee paid to the government and is 4% of the property price. Sometimes, the developer can fully or partially cover it.

3. 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.

Even if the final split isn't exactly what you want you might push some payments for later. For example, reduce how much you pay during the first year. Not every developer is willing to give incentives. So if you are 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.

A booking form is a document containing the key terms of your purchase.

Components of the Booking Document

• Information on the buyer or buyers 
• Property details like project name, unit number, number of beds, square footage, completion date, etc.
• Purchase price and payment schedule 
• Basic terms and conditions 

Consequences of Putting Signature on the Booking Form

1. One can secure the unit and the terms 
2. Makes EOI non-refundable 

If you decide to back out and cancel the purchase, the developer will keep the Expression of Interest. 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 it can sometimes be as high as 10% of the property price.

There is always a time frame to make the down payment, usually around a couple of weeks. But it can sometimes be negotiated for 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 a person is buying right after the project launch, they have to pay to the developer's general account. It is a completely normal practice, and if the buyer goes with a reliable developer, their money is safe. At this point, they pay the 4% DLD fee, which can’t be delayed because it is required to register the unit. This payment goes to the developer's bank account, and then the developer pays the fee to the Dubai Land Department on the buyer’s behalf. They are also required to pay the developer's fee, roughly $1.5 thousand.

A Sales and Purchase Agreement or SPA is a detailed contract between the buyer and the developer that establishes all the terms of the purchase.

Constituents of SPA 

• 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, etc.

Most developers allow signing the SPA digitally, but some require a physical signature. It doesn't mean visiting Dubai. The whole purchase process can be fully remote and doesn't require coming to the UAE. If the buyer is abroad, they will send a physical copy of the SPA, which can be signed anywhere.

It is a digital certificate issued by the Dubai Land Department for off-plan property transactions. It proves ownership before the construction is finished. This is a kind of title deed for properties under construction.
It has two main practical applications:

• If one decides to sell the property before it is built, this document is required. It proves ownership to the buyer, and after the deal is done, the buyer will receive an updated OQOOD.
• If the person is eligible for a Golden Visa, meaning the property price is AED 2 million or about $546,000, OQOOD is required. The moment you get OQOOD, the moment you can apply.

Payments are made according to the payment schedule. The payment deadlines are usually tied to specific dates, construction milestones, or both. The way of making these payments is the same as when putting down an EOI or making the down payment.

Payment Methods

• You can pay in cash
• If you have a bank account in Dubai, you can write a cheque. The developer will deposit the cheque and get access to the money.
• 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 are not accepted by certain developers. For example, American Express often doesn't work. Your bank might freak out when you try to make 10, 20, or 30,000 dollar transactions and end up blocking your card. 
• A more reliable method is a wire transfer. You can do it from many banks around the world, mostly accept sanctioned countries. Be aware that if you don't include the developers' IBAN in the wire transfer form the money won't reach them. Some banks don't specifically ask for an IBAN.
• The last method is Crypto. It is legal and widely used among Dubai Developers. So you can simply send USDT to their wallet address.

Phases of Consequences for Failing to Make Payment

• Grace Period and Notifications: The developer sends an email about the missed payment deadline and asks to make the outstanding payment.
• Dubai Land Department Involvement: If payment is not made, the developer notifies the DLD, and then they issue a 30-day official notice. This is the last chance to settle.
• 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.

In Dubai, properties that are still under construction can be sold. A person is eligible to do so once they have paid a certain share. Normally, it is around 30 to 35%, but some projects and developers have a higher barrier, like about 50%. When they cross this threshold and want to sell, they need a No Objection Certificate from the developer. It costs around $1,000 and is easy to get. Selling a property under construction can be challenging.

Conditions of Successful Resale

• The property is unique
• The project is sold out
• The buyer is not looking for mortgage

It starts with the snagging inspection. Any defects found at this stage will be fixed by the developer. After that, the property is ready to use. The buyer will also get a Title Deed - the document confirming ownership rights. If they have a post-handover payment plan, they can continue paying according to the schedule. But if there was one payment due at handover, they could either pay it or convert it into a mortgage. If the buyer wasn’t a resident before the purchase, they could become one during the construction via the Golden Visa. This makes the process of getting a mortgage easier.

Renting Out Options

• To rent out the apartment for a year “as is” -  no furniture and no improvements. There will be 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. The tenant pays for everything else, including property maintenance and real estate agency fees. Usually, payments are made in one to four cheques per year, and the more cheques are accepted, the higher the total amount.
• To rent the apartment for the short-term. It is required to furnish the apartment and hire a management company to handle rentals and maintenance. In this case, one can make higher profits because short-term rent is priced at a premium, but the price fluctuates between peak season and off-season.

One can follow all the above mentioned steps to acquire premium and luxurious properties in Dubai such as Albero at Dubai Creek Harbour by Emaar Properties, one of the most prominent and renowned real estate developers. The project is well crafted and announced offering fully-furnished apartments with exceptional amenities encompassed in the shimmering calmness and views of the Dubai Creek.

For all foreigners around the world interested in buying property in Dubai, these steps will serve as an effective and efficient guiding tool to help them make the right decisions at the right time without any discrepancies. For further aid, you can reach out to Dubai Housing, a trustworthy source that will help you in solving all your doubts in an easy and refined way. This guide will support and assist you to easily understand all the complex procedures and requirements needed to acquire property in a diverse and luxurious country like Dubai.