Tips for buying a home in Dubai

Garbutt, whose company provides multiple real estate consultancy and valuation services including the monitoring and inspection of construction projects for Dubai's Real Estate Regulatory Agency (RERA), warns that prospective buyers must do their due diligence and avoid making certain assumptions about the market in order to get the most out of their investment.

He urges prospective buyers to take the following steps when purchasing a property in the emirate:

Make sure you're dealing with the right people. Although this may sound obvious, prospective buyers should always ensure that the person they are buying from actually owns the property and is entitled to sell it. Garbutt says he has seen many instances where prospective buyers have found themselves dealing with individuals who are not the official owners or even the main brokers, but rather sub-brokers who are trying to earn fees out of the deal. "It is not legal, but they do exist," he warns.

Get a detailed condition survey. Under Dubai law, every mortgage must be based on a valuation and a survey of the asset, but most valuations lack an in-depth building survey, Garbutt warns. He said banks have interpreted this requirement as simply being a valuation survey that summarizes the building's condition in a single paragraph.

"A lot of people expect a detailed condition survey to be part of normal practice just like in their home country, but it's not really established here, although there are few companies doing it now," he said. "So, if you are a buyer and are relying just on the bank's survey, you may find that there are a whole round of problems with the property that won't get spotted and you can be exposed to significant issues later on."

Verify the accuracy of title plan. Prospective buyers should not assume that the actual area of the apartment or villa they are buying matches what is on the title plan. "Quite often we see errors because the term 'area' can be defined in different ways," he noted. "You can have what they call a net internal area, net external area, gross external area, gross internal area, and also something called built-up area. These are all ways of measuring things, and different nationalities measure area in different ways. And often what you agree on doesn't stack up to what your actual understanding is of what you are being provided.

"This is very important because the valuation hinges on a rate per square foot, but is that a rate of gross or net? It makes a big financial difference when you start making calculations, so buyers should be aware of what they are actually buying by way of the area they are looking at, otherwise they might end up paying for common areas that they do not own. After all, you are paying a service charge for the common area, so if you have now also bought that common area, you are effectively paying twice."

Check out the owner's association. If you are looking at buying an apartment, make sure that it has, or will have, an owner's association and a reserve fund. This is critical for ensuring that the quality of the building will not slip. And without an adequate reserve fund, essential repairs and upkeep will not be made.

"On paper the market value of your apartment may be the same as a similar flat in the tower next door, but if that tower has a large reserve fund built up and yours doesn't, that will significantly reduce the value of your property," he said.

"So while initially you may not mind that you don't have a reserve fund because you'll be paying a smaller service charge, it's only a short-term gain, as ultimately you will pay for it later when you sell your property."

Look at each property on a case-by-case basis. Build quality can vary widely even within the same tower or development. "Buyers should not always assume that a property will be better quality because it is from a particular developer or located in a particular building," Garbutt noted. "There are many examples during the downturn where a developer had to find ways to reduce construction costs, and one thing they often did was renegotiate their contracts with the contractors. And if the two sides were not able to come to an agreement, the developer would bring in another contractor, and the impact of that invariably was a reduction in quality. In many cases there are completely different finishes, materials, and products from one apartment to another in the same tower."

"We also have developers that have been here for a long time who may have delivered some poor projects early on but have learned and gotten better over time. So in some cases you have developers who are doing projects today that are far better quality than what they did five or ten years ago. So you can't always judge a developer by what they've done before."