Dubai is a magnet for real estate investments, including off-plan property investments, due to the Emirate’s highly stable property market and ever-growing economy. Consequently, properties appreciate at a high rate and promise significant returns on investment (ROI), attracting investors from around the world.
Off-plan property investment is a favourable investment option because this property type is lower in price compared to ready properties, it offers sought-after, flexible payment plans, and its value appreciates during construction, enabling investors to re-sell the property at a higher price than the purchase price or rent it out to gain high and regular rental yields.
Continue reading this article to discover how to sell off-plan property in Dubai, the conditions attached, and other details related to the re-selling process.
Eligibility to Re-sell the Off-Plan Property
Investors in off-plan units must check whether or not they are eligible to re-sell the property. Their eligibility is dependent on the percentage of the property’s price that they have paid to the developer.
According to the Dubai Land Department (DLD), investors must pay the developer a minimum of 30% of the property’s value to be eligible to re-sell their off-plan property. If the investor has not met this required threshold, they can pay the shortfall in advance to facilitate the re-selling.
Now that eligibility is determined, below is a step-by-step guide on how to sell off-plan property in Dubai.
Re-selling Off-Plan Properties in Dubai
The process of re-selling off-plan properties in Dubai comprises the following steps:
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Finding Suitable Buyers
Finding potential buyers can be done in a variety of ways, the most common being through a real estate agent. The agent would screen potential buyers based on many factors, including financial qualifications, motivation and intent, their relationship with financial lenders and banks, and background checks. This helps focus the search on serious and qualified buyers for a faster and more efficient re-selling process.
If investors choose not to work with a real estate agent, they would have to take up their role in announcing the property, promoting it, and screening potential buyers. One efficient way of doing so is by announcing the property sale on related online platforms and property listing websites.
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Specifying the Terms of the Sale
After finding a serious potential buyer, the property owner negotiates the sale terms, which go beyond the property’s price and handover date, including the following:
- Earnest Money Deposit: This payment is meant to showcase the buyer’s seriousness about purchasing the property.
- Closing Costs: These costs generally consist of property taxes and transfer fees, among others. The terms of the sale will specify how they will be collected and the paying party.
- Repairs and Renovations: This only applies to off-plan properties that were occupied previously rather than those still in construction or recently delivered. The buyer and owner should agree upon who will be responsible for these repairs and how their costs will be handled.
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Getting an NOC from the Developer
After agreeing with the buyer on the above-mentioned terms, the off-plan property owner must get an NOC from the developer. The NOC refers to the “No Objection Certificate,” which states that the developer has no issues with the current owner of the property re-selling it to the new owner.
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Signing the Contract
After clarifying the terms and facilitating the selling process through the NOC, the owner and soon-to-be owner can sign the contract. It will detail all the agreed-upon terms, the obligations and responsibilities of each party, and the consequences of failing to meet any of them.
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Ownership Transfer
With the ownership transfer, the initial off-plan property owner receives payment for the property, which includes the same amount that they paid the developer at the initial purchase in addition to any added costs resulting from property appreciation.
It is worth mentioning that if the real estate market witnesses a downward trend during the property’s construction, then its value will decrease, resulting in a lower price compared to the initial purchase price. In other words, the initial buyer will not be able to gain the same high ROI as intended.
With this in mind, it is recommended for investors to buy off-plan properties when market trends are positive. Also, investors should aim for properties located in well-connected areas, characterised by strategic locations, various residential communities, commercial properties, and excellent facilities. This way, they can avoid negative trends impacting their off-plan investment.
After the ownership transfer, the new buyer becomes the officially registered owner of the property, responsible for meeting the requirements listed in the signed contract.
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