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Question of the Week
I have a very good offer to invest in an off-plan project which was initially on hold after the recession hit Dubai in 2008. The project management claims it has been restarted and will continue on schedule. Is this safe?
After the recession in 2008, many projects were shelved by developers. The Dubai Land Department, through RERA, has taken the initiative, along with new development teams, to revive these projects and give clients an opportunity to realize their investment.
Most of the projects are being underwritten by new companies, and escrow accounts are being formed under each project name. Payments from clients would be credited into the escrow account of the building, thus safeguarding the interests of the purchaser, contractor and the new management from any kind of fraudulent process or transaction.
The payment is released to the contractor once he completes his commitment, and the buyers are asked for the payments only once RERA certifies that the construction milestone has been achieved so the management can claim payment into the account from the clients.
This method is a foolproof process initiated to make every property transaction safe and secure for all investors.
The property market has already begun slowing down as per market analysts, so is this amendment a pre-indicator for another market crash?
I am rather pleased that you raised this question. Since the announcement of Expo 2020, the market has seen a speculative hype in the prices which definitely needed a modification.
But the Dubai market has never really slowed down in the fullest sense of the word. The market trend has been changing and will keep changing, and it is up to companies, property consultants and market investment leaders to realize changes and guide client companies, and their investors in the right manner.
In the first quarter of 2014, we had seen a surge in transactions for off-plan projects as compared to ready units. The growth trend mainly involves those projects with a low original asking price, good payment plans along with the assurance of early completion, and good quality.
It is the job of realtors to always provide unbiased advice on trends and analyses to assist investors in making the right investment.
What is the advantage of an off-plan property over a ready property?
The advantage of buying off-plan is that it allows an investor with access liquidity to buy into a project that can end up being a valuable asset once complete, while paying for the sale value over a period of 2-3 years. Since 2012, many developers were offering ready property on payment plans which would allow the investor to pay a downpayment, collect the keys and make payments over a duration of 2-3 years via postdated cheques. These kinds of options have mainly been absorbed into the market. Sports City, Jumeirah Village Circle and Al Furjan are some examples.
Investors can also look into more long-term projects such as Mira and Casa as well as Akoya or the Mudon townhouses which are all located along Umm Suqueim Road headed towards the Dubai Bypass Road which is the next major artery of a growing Dubai.
Off-plan properties do carry certain risks as evidenced in the last economic recession, but developments in property regulation, investors’ foresight, research, and getting the right advice all work to prevent a repetition of the past.
My property agent has asked me to fill out the new unified real estate forms, and said it is mandatory for me to do so. Please advise me on this.
The Dubai Land Department initiated a drive to maintain a standard format for all property-related transactions so as to safeguard the rights of the buyers, sellers and real estate agents.
The new forms can be found on the E-mart site under ‘Broker Forms.’ Form ‘A’ has to be signed between the Seller and the Agent; Form ‘B’ is to be signed between the Buyer and Broker; and Form ‘F’ is the online MOU which needs to be signed by both the parties, and the transfer would only be accepted after Form F is accomplished.
Since the terms and criteria on each deal are different, brokerage firms continue to use the company standard format of MOU along with the new form.
I have been making investments with the help of a manager who is not a registered agent but works in property. Recently, however, I have begun to feel I am being duped on the property prices. I am aware that it is not safe to work with non-registered agents, but how do we deal with such people?
Prospective buyers, owners, sellers and landlords should know not to transact with unauthorized agents, managers and representatives at any point of time. There is no way to hold them liable for any monies involved when they are smart and skip the country altogether. What you should do is to get all pertinent documents together and verify your suspicions; then you should consult a legal advisor for the next step.
Source: Irfan Zafar, CEO-REALCO, Special to Freehold