1. Select the Type of Property
Openshore consultants will advise you on the best property to purchase depending on your requirements such as:
- For Investment or for 'Own Use'
You may wish to purchase for Investment and benefit from capital gains or rental income. Alternatively, the purchase may be for your own needs for living or holiday accommodation. Majority of UK customers are currently purchasing primarily for investment. Others do it for both.
- Residential or Commercial
Most UK private buyers are purchasing residential property. Commercial property is usually purchased by company investors and is normally in the form of whole floors within a commercial or mixed tower development. 'Investment Funds' are a means whereby many customers can get together and purchase a floor within a commercial property with superb returns on investment.
- Off-Plan or Ready-Built
Ready-built property has to be purchased with the full price payable on purchase. You will need to raise the funds yourself or obtain an appropriate mortgage.
Off-Plan purchases provide the best capital growth and means purchasing before the property is built which normally happens within 2 to 3 years of purchase. The payments are made as a 10%-15% deposit and further regular payments at 3 or 6 month intervals.
Most UK users are currently buying off-plan, as this results in the best investment growth and also makes payments easier.
- Apartments or Villas
Most residential property being purchased is in the form of apartments in residential tower developments. Villa type properties are normally more expensive and the rental returns are not as high as purchasing multiple small apartments for the same total cost. However, our latest property reports project similar capital growth rates for both types of property. If you are purchasing primarily for rental or easy re-sale then it is best to buy an apartment.
- Size of Property
Villas tend to be 3/4/5 or more bedroom properties with most being detached. Apartments tend to be single Studio type, 1 bedroom (most apartments), 2 bedroom or luxury penthouse type. The most popular are studio or 1 bedroom apartments. Sizes are measured in m2 or sq feet. and include the balcony area. Typical 1 bed flat may be about 600 to 1200 sq feet.
- Location in Dubai
Freehold property can only be purchased in the Dubai property free zones. There are many locations within Dubai which have various strengths and weaknesses. Download the map for further details.
- Specific Development
Within each Dubai development zone there are many separate developments which may be of different types (residential, business, retail or mixed). Normally a development consists of a single building with various units (e.g. apartments) inside. Most of our customers rely on Openshore to recommend the best development and location to ensure maximal investment growth and security.
Openshore property will ensure that the property you purchase will meet your requirements and where you are unsure about any aspects, we will make appropriate recommendations.
2. Make a Reservation
Once you have agreed a property, the purchase is initiated by signing the Reservation Form and paying a reservation fee of around £1000 or more. This comes off the final price and is not an extra payment. Openshore will reserve the property for you and ensure the price is fixed. (Our Dubai experience is that property price always goes up around 5% every 3 months. Since we have been dealing with Dubai property, the price has never gone down. Thus a 3 month delay in reservation could be quite significant.
3. Complete the Purchase & Pay Via 'Clients Account'
The purchase is completed by signing the contract with the developer and making the first payment which is usually 10% to 15% in an off-plan purchase. Your purchase will be from the developer in such a case and all funds will be paid to the developer. A 'Clients Account' facility, where funds belong to the customer, provides a secure method of payment. The purchase price is normally in UAE. It may be worth opening a foreign currency account to make payments easier and these payments can be made by bank transfer from your bank to the developers account which will be provided with your purchase agreement. Forward purchase of currency will fix your price in sterling, but is not essential.
4. Make Payments as Per Plan
If you are purchasing 'off-plan', then you will make the rest of the payments according to a payment plan which may be 15% every 6 months, for example. Whilst mortgages are available for property purchase in Dubai, most of our customers have found it better and easier to raise funding in the UK or re-mortgage their existing UK property. Many have sold their existing UK property to invest in Dubai as the investment returns are much higher.
You can normally re-sell your property after you have made 30% of the payment or sooner, even though the property is not complete. There is normally a 2% fee payable to the developer if property is sold before payments are complete.
5. Take Possession and Register
After the building is complete a handover is made to the purchaser (or their agent). The property can then be registered at the Land Registry after payment of a land registry fee (2%). The Service Fee is a fee payable to the 'Manager' of the building for the common areas. This varies depending on the facilities provided and may be around £2 per square ft. (£1000 to £2000 for an average flat) Normally you have to pay the first year fees prior to taking possession.
6. Further Steps
As stated above, you can normally sell your property after you have made 30% of the payment. After completion you can:
- Re-Sell and capitalize on the capital gain
- Let out either as a professional Let or as a holiday Let using various agents and continue to get both capital gain and rental income.
- Use it yourself and still capitalize on continuing capital gains
