Property in Dubai
DLD warns investors against re-sale of off-plan properties
The Dubai Land Department (DLD) has warned developers launching new projects, to prevent investors from indulging in re-selling off-plan properties, provided, the project has already reached advanced stage of construction.
The department said that although there is no law in place to prevent people from re-sale of an off-plan property, it is the responsibility of the developer to discourage such practices, until the project has attained an advanced stage of construction.
Off-late, several investors have placed their apartments in Emaar’s Panorama project for sale, at a premium within the range 7 to 10 percent. However, the investors have paid only a 10 percent down payment at the time of booking. The rest of the payment on the project is dependent on the construction plan.
Located in ‘The Views’, the Panorama project comprises four buildings with 15 storey each, offering a total of 224 apartments.
During the peak real estate boom in Dubai, developers were seen selling off-plan properties within hours with the buyers, flipping the property at a high premium.
The small investors, lured by the huge returns, purchased off-plan properties, without considering any financial implications, by paying token amount from the buyer, with intention of re-selling again to make profit. Although, few were successful in the deal, several of them were caught off-guard during the onset of global financial crisis, and fall in prices.
The market has finally recovered with prices and rentals growing, but, only in certain locations and for quality buildings.
Further, the Land Department in Dubai, recently issued a draft law protecting real estate investors, stipulating that in case of a sale of off-plan property, developer will have to provide the intending investor a payment schedule about stages of progress in construction of the jointly owned property, the developer’s escrow account number, and approval by the developer from the department for such a payment schedule.
Posted on 9/7/2012
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