Important Tips to Reduce the Risks of Buying Property in Dubai

Ah, Dubai! The country of tall shining towers, artificial islands, and boundless possibilities. If you are considering investing in the property market in Dubai, there are others besides you. But hold on! Before you can consider living in a luxury apartment overlooking the Burj Khalifa, there are several Risks of Buying Property in Dubai that we have to discuss to ensure that all that glitter is not gold.

Risks of Buying Property in Dubai: Why Dubai?

The real estate market in Dubai can be described as a roller coaster ride; exciting, adventurous at times, and most importantly fun. Affordable taxes, well-built roads and infrastructure, and a lifestyle that many yearn for make this place ideal to invest in property. However, it is a well-known fact that where there is great opportunity there is also great risk. Therefore, let me share some of the best practices that will assist you in exploring the property market of Dubai like a true expert.

1. Know Your 'Why'

Before we go any further, what is the reason behind the purchase? Is it For:

• Living in luxury?
• Quite simply, renting out and making some tasty passive income, right?
• Flipping for profit?

Your ‘why’ will dictate your ‘where’ and ‘how much’. Thus, you must ensure that this point is engraved in your brain before you even consider opening property listings.

2. Location, Location, Lo. .. You Get the Idea

Well, let me tell you this: everything in Dubai revolves around location. Here’s a quick rundown:

1. Downtown Dubai: For the gamblers who wish to be in the very middle of the action.
2. Dubai Marina: Ideal for people who enjoy proximity to the water and parties at night. Here are some of the best options to live in Dubai Marina.
3. Palm Jumeirah: How about living on a man-made island? Say no more!
4. Jumeirah Village Circle: Ideal for families who require slightly more space.

Pro tip: Go there in the morning, in the middle of the day, in the evening, at night. That usually peaceful civilian residential area could become the party zone come nighttime!

3. School Yourself (And Then School Yourself Some More)

The more you know the better when it comes to real estate. Here's your homework checklist to reduce the Risks of Buying Property in Dubai:

• One of the best ways to find out more about the developer is to look into their previous projects. Have they been able to deliver projects on time?
• Visit the RERA website for updates on the status of the project. It is essential to join Dubai real estate forums and groups. Words from real people are pure truth.

However, as another popular saying goes: not everything that sparkles in Dubai is gold (sometimes, it is just a shiny glass).

4. Money, Money, Money (But Not All At Once)

When it comes to financing in Dubai, it is well known that it can be challenging.  The majority of the banks provide up to 75% financing for ex-pats.

• Local interest rates are quite steep compared to the ones in your home country.
• They like to include hidden charges in the fine print. Read everything!

Pro tip: Make sure you are approved for a mortgage before shopping for a home. It will make you more financially conscious and remind you of how much you can realistically pay.

5. Off-Plan vs. Ready Properties: The ageless contest

Off-plan properties (those still under construction) can be cheaper, but they come with risks:

• A project taking longer than expected to be delivered (it is a common occurrence).
• This means that what is portrayed or advertised in the brochure may not be real.

Ready properties, on the other hand, are, well, ready! But they're usually pricier.

Our take? If you are just beginning your investment journey in the Dubai property market, it is better to limit yourself to ready properties. Let the off-plan bet be for the experts alone.

6. Is there any need for a lawyer?

But lawyers are expensive!” you say. Know what's more expensive? Entering a wrong investment decision which is likely to be expensive in a specific foreign real estate market. A good lawyer will:

1. Read all the contracts (and yes, there will be a lot of them).
2. Make sure every transaction is lawful and proper.
3. Look out for yourself if things turn for the worse.

So just consider it as an insurance policy for your mental health. Not only a lawyer, you also need a good real estate agent who can help you through thick and thin. For that, don’t miss meeting these agents:

7. Do Not Fall for Too Good to Be True Offers

They should caution that if a deal looks too good to be true, it most likely is. Be wary of:

• Products and services that are offered at very cheap prices.
• Empty slogans of easy money and quick profits (nothing in real estate is guaranteed).
• Fears of losing the contract if they fail to sign today.

As we have seen, if it looks like a scam and smells like a scam, then it most assuredly is a. well, you know.

8. Understand The Fees (All Of Them)

Well, when it comes to Dubai, that initial sum is just the tip of the iceberg. Be prepared for:

• 4% transfer fee to Dubai Land Department.
• 2% real estate agent fee.
• Loan origination fees (if you are applying for a loan).
• Maintenance fees (these may vary depending on the luxury of the building).

Pro tip: In every case, do not agree to any terms and conditions without requesting a detailed breakdown of the fees. This will also help you reduce the Risks of Buying Property in Dubai.

9. Make Sure That Everything Is Documented and We Mean Everything

Oral contracts, as they say, are not worth the paper they are written on – now, get it? Ensure that every promise, every agreement, and every potential angle is in writing. This includes:

• Payment plans.
• Completion dates.
• Any additional items or services offered as part of the promotion.

If it is not written down, then it has not been done.

10. Visit the Property (Multiple Times)

This may sound like a no-brainer, but it is remarkable how many people are swayed by eye-catching 3D images or virtual tours. Always:

• Go to the real property (or development site for off-plan).
• Use at different times (that deserted street can be a traffic nightmare in the evening rush hour).
• Take someone you feel comfortable with to get a second opinion.
• Your eyes are your greatest assets in the process of searching for property to buy.

11. Understand the Escrow System

Buyers are protected through an escrow system in Dubai particularly when buying off-plan properties. Make sure:

• Your payments are being deposited into an escrow account.
• You know when and how the funds are disbursed to the developer.
• This system is your friend. Learn it like the back of your hand.

12. Plan for the Long-Term

It is also important to note that the market for real estate in Dubai can be quite unpredictable. Do not have high return expectations on your investment. Instead:

• Consider long-term (minimum of 5-10 years).
• Activities that might have an impact on the value of the property, such as new infrastructure projects.
• Get ready for an exit strategy just in case.

Indeed, patience is golden, especially in real estate.

13. Believe in Your Intuition (But Cross Check All the Time)

Lastly, if there is something that does not look right, then it is most likely not right. Go with your gut, but never without doing your homework and consulting with experts where appropriate.

The Bottom Line

Investing in property in Dubai can be a fantastic and potentially very profitable experience. But like any adventure in a foreign land, it comes with its own set of challenges and ris Risks of Buying Property in Dubai ks as well. So by adopting these tips, you will be well prepared to face the glamorous world of real estate in Dubai. So, do not forget that the main goal when it comes to buying a property in Dubai is not only to find the right house, it is about choosing the right house that will be beneficial to own.

Therefore, let the great property seeker begin! May your investment choices be good, your views grand and your dreams of Dubai come alive.