The Dubai Land Department has urged developers launching new projects to “discourage” investors from re-selling “off plan” properties unless the project has reached an advanced stage of construction.
“We don’t have any regulation to prevent people from reselling their property.
“The developer should discourage people from selling off-plan until the project has reached an advanced stage,” the department said in response to a query by Emirates 24|7.
Lately, a number of investors have already put their apartments in Emaar’s Panorama project on sale for a premium that ranges between seven and 10 per cent.
Investors, however, have only paid a 10 per cent down payment at the time of booking.
The remaining payment on the project is linked to a construction plan.
Panorama, located in the Views, comprises four buildings with 15 floors, offering customers a total of 224 apartments.
During the property boom, developers were selling projects “off plan” in a matter of hours with the buyers then flipping the property at a high premium.
Lured by the massive returns, small investors, without considering the financial implications, bought off-plan by paying a token amount from the buyer, hoping to resell again to make profit. Though some were successful, a number of them were caught off-guard when the global financial crisis hit and prices slumped by over 50 per cent. Of late, the market has recovered with prices and rents increasing, but only in certain locations and quality buildings.
Recently, the Dubai Land Department issued a draft law regarding protection of real estate investors.
Article 40 in the draft states in case of a sale of a real estate unit off plan, the developer must provide to the intending investor before the contract for sale is entered into: a payment schedule linked to the stages of progress in the construction of the jointly owned property; the number of the developer’s escrow account; and the developer shall first obtain the approval of [the department] to such payments schedule.