GG Benitez International

Investing Guide

What Are the Total Upfront Costs of Buying Off-Plan Property in Dubai?

Upfront costs for buying off-plan property in Dubai typically include the reservation or booking amount, the first payment under the developer’s payment plan, applicable Dubai Land Department registration fees and administrative charges. I want clients to see the entire cash-flow schedule before reserving, because the purchase price is not the same thing as the cash required to buy.

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Why are the total upfront costs of buying off-plan property in Dubai lower than most Americans expect? >> the biggest surprises for Americans buying property in Dubai is that the upfront costs are often lower than they expect. And here's what you should budget for. First, you'll pay the purchase price according to the developer's payment plan. Second, you will have to pay a 4% Dubai Land Department Fee. Although some developers sometimes may offer a promotion that covers part or all of that. Third, there is a small admin fee, sometimes a thousand dirhams or less. But here's what surprises my American buyers the most. Unlike many transactions in the US, the developer typically pays the real estate broker's commission on new off-plan properties. That means buyers are not paying their agent separately. Remember, to secure the most desirable unit, you will have to submit what's called an expression of interest before signing the sales purchase agreement and purchasing the project. And that EOI, expression of interest, is fully refundable if your unit is not allocated to you or you change your mind. The key is understanding all of these costs before you reserve a property so that there are no surprises. And if you're considering buying property in Dubai, make sure you understand every one of these costs before making a decision because it could save you thousands of dollars and help you choose the right investment from the start.

The exact amount of fees varies by project and contract. Many investors do not realize how their broker is paid: on many Dubai off-plan transactions, the developer compensates the broker under its sales and marketing arrangement, meaning the buyer may not pay a separate brokerage commission. This is transaction-specific and should be confirmed before reserving.

Your first payment is the reservation amount, which secures the unit while the paperwork is prepared. It is followed by the down payment set out in the developer’s payment plan, commonly around 20% at booking on a launch, though it varies by project.

On top of the purchase price sit the Dubai Land Department registration fees. DLD currently lists initial off-plan sale registration at 2% of the sale value from the seller and 2% from the purchaser, plus knowledge and innovation fees and the Oqood registration charge; confirm what your SPA requires you to pay, because the contractual allocation varies by developer. On an off-plan purchase the DLD fee is often collected at booking and the unit is registered on Oqood, the interim register that records your interest until the title deed is issued at handover.

One difference that surprises many American buyers: in Dubai the developer typically pays the buyer’s agent commission on a new launch, so representation usually costs you nothing on that side of the transaction.

Everything after the down payment follows the construction-linked payment plan, which is generally interest-free during the build. That is why comparing two projects on headline price alone is misleading, a longer, gentler payment plan can matter more to your cash position than a lower sticker.

Why this matters

An off-plan property may be advertised at an attractive purchase price or with a low initial booking amount, but neither tells an investor how much cash will actually be required during the purchase.

The payment plan, DLD registration fees, administrative charges and subsequent construction-linked or scheduled instalments determine the real cash commitment.

Investors should understand not only what the property costs, but when every dirham becomes due.

That matters when comparing two projects with different payment plans and when calculating the investor’s true capital commitment.

What investors should verify

  • Reservation/booking amount: Confirm the amount required to reserve the unit, whether and under what circumstances it is refundable, and how it will be applied toward the purchase price.
  • Payment plan: Obtain the complete payment schedule in writing, including the initial payment, every subsequent instalment, whether payments are date-based or construction-linked, and the amount due at handover.
  • DLD registration fees: Confirm the current Dubai Land Department registration fees applicable to the transaction and, importantly, what the SPA or developer agreement requires the buyer to pay.
  • Registration/administrative charges: Confirm any applicable Oqood/provisional-registration, developer administration or other transaction charges rather than assuming they are included in the purchase price.
  • Broker compensation: Confirm in writing whether the developer is compensating the buyer’s real estate broker/advisor for the particular transaction and whether the buyer owes any separate brokerage fee. Do not assume this is identical for every transaction.
  • Financing costs: If financing is part of the strategy, separately account for lender, valuation, mortgage-registration and other applicable financing costs.
  • Handover costs: Understand what additional cash may be required around completion, including the final developer payment, applicable service charges, utilities, furnishing, snagging/property inspection, management and other costs relevant to the investor’s strategy.
  • Total cash-flow schedule: Before reserving, the investor should be able to see approximately how much cash is required at reservation, during construction and at handover.

GG’s perspective

I do not want a client choosing a property because the first payment looks affordable. I want them to understand the entire cash commitment from reservation through handover. A payment plan can be useful, but a good payment plan does not make a bad investment good. The property still has to make sense on developer, price, demand, supply and exit strategy.

Primary sources

  1. 1Request to register the initial (off-plan) sale: current DLD fees · Dubai Land Department
  2. 2DLD e-services (title deeds, escrow, project registration) · Dubai Land Department
  3. 3Dubai Land Department (official portal) · Dubai Land Department

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