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Understanding The Off-Plan Development Process In The UAE

Understanding The Off-Plan Development Process In The UAE

All You Need To Know About Off-Plan Development Proces For a Savvy Investment Decision.

Off-plan real estate purchases are a sound option in the UAE in today’s market.  And if you are considering investing in real estate, it is also wise to understand the off-plan development process. Well-structured payment plans, complemented by market reforms undertaken by the government to protect buyers’ rights make off-plan development an attractive alternative.


For all those working within constrained budgets looking to enter the property market with modest deposits, the off-plan development path may be a tempting option. Understanding the off-plan development process in the UAE will help you avoid some of the potential investment pitfalls.


Off-Plan Development Process Summary

Understanding the governing rules, regulations, and milestones in the off-plan real estate investment process is important when you are considering purchasing an off-plan property.

Here are a few things to keep in mind:

  • Only purchase property in a Dubai Land Department (DLD) approved and registered development project.
  • Factor in payment of DLD registration fees of 4 percent of the purchase price at the time of purchase.
  • Ensure the Sale Purchase Agreement is signed and stamped by the developer.
  • Register the property on the Interim Property Register (Oqood) until the development of your property is completed.
  • Once registered, a title deed will be issued, clearly defining the particulars of the purchased property and the sale transaction.
  • Make regular payments into an Escrow account in the name of the project as per the schedule set out in the purchase agreement..


When buying off-plan property in Dubai, the developer will require documents including passport copy, Emirates ID, and reservation form containing the prospective purchaser’s terms and conditions.


Potential buyers also need to pay a reservation or booking fee ranging from 5 to 15 percent of the total purchase amount, which is required prior to drawing up the Sales and Purchase Agreement (SPA), which needs to be signed by both parties.


Primary Market Purchases

If you are buying directly from a developer, always ensure the developer, the project, and the project’s Escrow account are all registered with the Dubai Land Department (RERA). The developer will ask you to sign a Sale Purchase Agreement and pay the deposit. The rest of the payments will follow as per the payment plan outlined in the contract. Some developers will request post-dated cheques for these payments.


Ensure the developer registers your property with Dubai Land Department via the Oqood registration. Depending on the developer’s offer, the developer may; pay for the registration of the unit or pay half of the cost. Most of the time the buyer needs to pay the full cost of the registration, which is set at four percent of the purchase price.


Secondary Market Purchases

When buying an off-plan apartment on the secondary market, be sure to use a credible, experienced, transparent and knowledgeable broker. The seller’s apartment should be registered with Dubai Land Department and the seller should be able to provide you with a copy of the registration.


After signing an agreement of sale between the buyer and the seller, both parties will go to the developer to apply for a No Objection Certificate (NOC). Once the developer issues the NOC, the transfer of ownership takes place in the Dubai Land Department trustee office. This is also the venue where the buyer pays the seller.


Outstanding payments to the developer will be the responsibility of the buyer after the transfer has taken place. The buyer will have to pay a four percent property transfer fee to the Dubai Land Department and a two percent commission to the broker.


The developer’s NOC fee is capped at AED 5,000, as is the transfer appointment fee at AED 4,000.


Prior To Committing Do Your Homework

Do your homework on your prospective off-plan property. Research the developer’s legacy and confirm they have a successful record of completing properties on schedule.


Flash out your knowledge about the location. Is it close to supermarkets, schools, shopping malls, restaurants and other areas that reflect your lifestyle? Is it close to public transportation? How far away is it from your workplace? Wherever possible, visit the area and scout it out for potential issues.


Understand Your Development

Buying off-plan commits you to a relationship for several years. As with any good relationship, you need to take the time to get to know the project to see if it’s right for you. When looking at off-plan options, think about factors such as:


  • Location
  • Neighbourhood vibe and its dynamics
  • Surrounding infrastructure
  • Facilities and amenities
  • Development master plan
  • Location of the apartment you’re considering
  • Size, number of rooms, floors, units, towers
  • Parking availability
  • Security


Thanks to the advent of mock-up apartment models and detailed development plans, you can get a good feel for your potential off-plan investment.


Be Very Clear About Your Financial Commitment

In addition to the actual price, buying off-plan property in Dubai also attracts other charges. Some of these additional fees include legal fees, developer fees or agent fees. Off-plan properties also require its buyers to pay a two percent Dubai Land Department fee for land registration.


Similarly, you will find maintenance fees vary depending on the property size. Maintenance fees may also be a fixed rate in some developments. It is important to understand the total amount of fees you will incur as part of your purchase, as they can add significantly to the overall purchase price of your chosen off-plan project.


Always Review And Understand The Off-plan Contract

Once you have completed the information gathering phase, you need to carefully review the agreement you will be entering into and ensure you fully understand it.


Buying off-plan projects in Dubai involve legal documentation such as a Memorandum of Understanding (MoU) or a Sale and Purchase Agreement  (SPA) between the buyer and the seller. These legal documents detail the full terms and conditions, including the obligations and responsibilities of both parties.


Be sure to check if your agreement clearly indicates the completion date of your desired off-plan project. The agreement must also contain the compensation to be paid in the event the development is delayed. Never sign an agreement unless you fully understand the complete contract terms.


Understand Your Payment Plan Commitment

When it comes to off-plan properties, it’s all about the payment plan. Dubai’s real estate industry has a reputation for adopting a customer-friendly approach with their payment plans, offering quite favourable options. The attractive plans make it easy to see why Dubai has evolved into an investment hotspot with reasonable payment plan options on the table.


Off-plan properties offer attractive long-term capital appreciation and return potential. Before investing, do a budget and confirm your liquidity position will enable you to make payments as per the plan’s schedule.


Similarly, take resale value predictions into account when determining the value of your property. Dubai’s maturing market is leading investors to expect significantly higher future gains compared to what they are paying today.


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Final Word

Today, developers are offering attractive payment plans on off-plan properties, including post-handover installments, at highly competitive prices. By carefully following the process outlined above, doing your homework on the developer and thoroughly exploring the location of your prospective off-plan investment, you will be well positioned for a hassle-free off-plan development investment in Dubai’s real estate market.



Ahmed Al Neama

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