Dubai Off-Plan vs Resale: Expert Insights

Hi, I'm GG Benitez, a licensed realtor in California and a certified international property specialist. Here today with my partner Ahmed Ashwak. Hi Ahmed. Hi GG. And we have a very special guest with us, the legend Taj Maia. Hi Taj. Hi GG. How are you? I am so well, very, very good right now knowing that you are here to lend our viewers and listeners your expertise in Dubai. Good. So Taj, you want to give us a little bit of background about you? I'm Taj Maia. I've been doing real estate for, I don't even remember how long, over 20 years. I'm originally from India, so I was doing real estate back there and it's been over 10 years of being in Dubai now, doing real estate. And he's a big influencer by the way. You can look him up on his YouTube. I've been watching him even before I started doing my own real estate here. I really respect and value your insight, your mannerism, your sincerity, and your honesty. Thank you. So I think we have done a really good job. We've done a series of interviews, being able to share with Americans and Canadian investors the off-plan, which is about 50% right now of the market. As of now you could say about 50% of the market is off-plan. We've explained that off-plan is under construction, because it's not necessarily really well known throughout the United States. Miami has off-plan, Canada does, but not necessarily California or New York. Yes, New York yes. So we've done a good job talking about the process, talking about why, talking about the benefits. And now we would like to tap into your expertise to share why somebody would choose resale or readymade, what the differences are, and the process. Before you do, please do bear in mind our viewers are first-time comers in Dubai's market, meaning they have no idea what has taken place in the last 18, 20 years in Dubai. So please go through step by step so they would understand what has taken place. True. So my first thing is, anybody watching this and has not been to Dubai, come to Dubai for 3, 4 days and see what an amazing city this is. Because no matter what you hear about Dubai and what you listen about, it's very different from what actually is happening over here. It's probably one of the best cities in the world, and I'm saying this after traveling to a lot of cities around the world. Now, coming to your question, you know, secondary market or resale market versus an off-plan, there are a lot of differences. First of all, buying into a ready property is absolutely zero risk. Because it's a property you see, if you like it you buy it, you get what you see. So you're not waiting to see how it's going to be built, how big it's going to be. Because some people cannot imagine how it's going to be once it's ready. So it's absolutely zero risk, especially when it comes to finishing and the details. Exactly. So you've seen the property, so there's no doubt in your mind. You don't want to know how the kitchen is going to look or how the bathroom is going to be, how much wardrobe space do I have, or what's my view like, how big is the balcony. So you see the property and you buy it. Second big advantage which a lot of people look at ready properties is they want instant cash flow. You put down your money today, yes, and you start getting the rent absolutely very next day, okay. So that is one major thing, yes. The third thing is with ready property, you get time to pay. With off-plan, if you have 40% of the property value with you, you can get 60% mortgage even if you do not live over here, even if you do not have anything here. Still, for your property purchase, you can get a mortgage for 60% of the value and the rest 40% is paid down. So that's another advantage where a lot of people want to look at an already property. So you don't have to be a Dubai resident in order to be qualified for that 60% mortgage. Correct. You don't need to. In fact, we actually did two interviews with mortgage lenders sharing how easy it is for foreigners, and it's becoming simpler and simpler. Yes, it is. Look, people think the process is very difficult. But no. People look at Dubai as a place, and it's one of the most advanced cities in the world. The Dubai Land Department is completely on blockchain, which means there's complete transparency in data. You can go and check every transaction. Obviously details like whose apartment it is or who bought it, that's confidential and privacy. But you can see exactly that apartment number 102 in this building in Downtown sold for how much, or it rented for how much. That data is available in the public domain. So it's quite advanced. Again, the REM department is paperless, so you don't have physical title deeds. It's all digital. You have a property wallet, you have an app. So when it comes to these kind of things, we are way more organized than probably any other property market in the world. Agreed. You know, so processes are very simple. Things are quite simple. It's only that if a person has the will and wants to do something, if they come here and see, it's quite different. Agreed, on so many levels, on a lot of things, lifestyle, all of it. Exactly. So secondary and off-plan, usually these are the main differences. You get the property instantly, you can take a mortgage, and your cash flow starts instantly. Taj, would you think it's wise to buy in a resale market when it's a seller's market? Because everyone is pretty much in demand and in sync with the sellers, and negotiation gets very difficult. It also depends on the location. For example, today if you want to buy a property on, say, Palm Jumeirah, there are very few off-plan properties. There's barely anything, right? And good ones are probably there at a very high price point. Yes, you're right. That's a great example of where you see the same way with Downtown. If, for example, in Downtown you want to be on the boulevard, there is nothing off-plan today. Take, for an example, you want an apartment in the Burj Khalifa. That's the only building, right? Yes, so there is no off-plan. You will have to come and you have to see the property and buy a ready property. So it also depends on where a person wants to be. Point taken. Good point. Now, okay, if you're buying in a new, upcoming area where nothing is built yet, yes, you will buy off-plan. There is no choice. Maritime, for example, like Maritime City. You know, or even say, for an example, in Russo Kay. And you, Russo, I love it. That's a different thing. But if you're buying today in Downtown, you're buying in Dubai Marina, you're buying in JBR, or in Palm Jumeirah, a lot of the developments, I mean there's barely any off-plan over there. So Taj, why would off-plan be so popular the last 18 years, you know, since the market actually started? It always started with the off-plan. Since pre-ICO, we saw the surge of mortgage. Because we started seeing more Dubai residents buying homes versus renting. And that's when the mortgage started kicking in. Now, my question here is, what segregates the resale buyers and who are the preferred off-plan buyers? How do you separate these two? There are two or three things. One is everybody's cash flow, personal cash flow, right? Say today, for example, you offer me a property which is 3 million. I don't have 3 million down. I don't want to take a mortgage for whatever reasons, yes. Or maybe they want to flip it. They want to just put some money down and sell later, or whatever there could be. And the high interest rate of course, which is the biggest issue right now. Look, I've always seen this: every buyer has a different mindset, has a different purpose, and a different need. Exact. Okay. Now, someone who's sitting with money ready will not want to wait. Someone who's sitting with a million dollars in his bank account and says, look, my money is there, I want to deploy it, and I want to get something out. He wants to start making it work right away, okay? So he probably wants to put down the money instantly and start making 8, 9, 10% return on it, you know, tax-free, directly on his property. Okay. There's someone who knows he might get, for example, a million dollars in the next 3 years, has $200, $300,000 right now, and wants to put down as a down payment and start, you know, slowly, slowly wants to send money. That's a different purpose, right? So everybody's need is different and purpose is different. So depending on that, there are people who would want. Then again, some people want a specific location, of course. Right now, if someone comes and falls in love with Downtown, like I want an apartment overlooking the fountain and the Burj Khalifa, you cannot buy anything off-plan. Exactly. You have to give them a ready property. But you touched on a subject in one of your previous videos, and this subject has taken place in the US many, many years ago. And I was just waiting to see when would that trend start in Dubai. And now we're starting to see it. What do you have to say about people who are buying resale properties of older houses, such as 14, 15 years old, buying it at a much cheaper price because it's pretty much run down, and they are refurbishing, renovating the entire place, and selling at a higher price? Is that what you're seeing more often now in the market? Look, as you see the market's maturing. If you see areas such as Palm Jumeirah, Downtown, Dubai Marina, JBR Lakes, yeah, JBR Lakes, these are prime areas, right? As a location, as a destination, it's a super prime property today. Now obviously everything is almost built over there, so there's no space to build new. So these houses were built 15 years back, 20 years back, so they obviously have older design and older fit finish. Which people today do not like. And people who are buying these properties, renovating and selling them, obviously are making a good margin out of it. Because people want new houses. When I say new, I mean more modern houses, new designed houses. And if it's there in a prime location, people are willing to pay the price for it. Are you a big fan of, obviously, one of the first master communities by Emaar, the Springs and Meadows? Is that why we're seeing a huge influx of resale in that area? A lot of places. I'll tell you what: Springs, Meadows, Palm Jumeirah, you know, older apartments in Downtown, Dubai Hills, Emirates Living, Islands, right? I see what they're doing with the Islands. So what is happening is, because look, when these places were built, right, if you see, for example, Meadows, Meadows I don't think they have any plot size smaller than 5,900 square feet. Okay, that's the smallest size for a three-bed. Today, even if a new project is launching even 20 minutes away in the suburbs, okay, that's still a three-bedroom villa will not have that plot size of course, because with time the prices have gone up, so the plots are shrinking, the sizes are shrinking. So if someone wants a good plot size, they can go to The Meadows, buy an old house, renovate it. He's in a super prime location, way better than any other place, okay? Yes, the house is old and he had to take the pain of redoing it, which takes probably 2 or 3 months. But then he's got a brand new house and he can decorate it the way he wants it. And he's in a good location. To summarize what I'm hearing: everybody that comes has a different goal, has a different mindset, and we have an offering to achieve, whether it's the short-term rental returns with the Airbnbs, a long-term rental return, a long-term, let's say Maritime City or Russo Kay, where they have the vision for the future and they're okay waiting a few years. And like you said, the cash payment plan. Or you have the people that want certain areas. So that's why you have kind of a 50/50 almost split between the resale and the off-plan. And there are pros and cons for each. Now walk us through. I'm an American investor, right? I'm in America and I want a resale property. What's the process A to Z? Okay. So look, anybody anywhere in the world first of all can buy a property in Dubai. Okay, whether they're in America, Canada, no matter where, doesn't matter. The process remains the same. Now I'll walk through a simple process, which is say without a mortgage, or I'll go through both. So if you're buying a property, the first thing is you identify the property, obviously. You get in touch with your agent, see the properties, finalize that process. Remains the same whether you're buying an off-plan or a ready property is to identify the property. Once you've identified the property, you place an offer. Say if the offer gets accepted and you come to an understanding that okay, we are buying this property at this price, it's negotiated, and you're going ahead. First step is you sign an Oqood. Now when I say sign an Oqood, it all happens digitally. You don't sign physically. So they don't have to be here, they don't have to be here. It is done over the phone. The Dubai Land Department processes and the contracts are again standard. Means it's a standardized contract for everyone. What changes is the apartment number, obviously the buyer details, seller's details, the property details. Standard format, it's a standard format. Got it. Okay. And in terms of terms and conditions, the timeline is specified. Okay, all the details of what you've agreed between, and if there's any special terms condition, that okay, the property will be sold furnished, unfurnished, whatever. Based on the property, you just mention those. So you don't need a lawyer to go through the contract and stuff like that. That is significant, what you're saying right now. And I'll tell you one more thing. Even though you're in America or Canada or wherever you are, when you get the document which is the title deed of the property you're buying, you can take your smartphone, through the Dubai Rest app, scan the QR code, and validate whether that property is genuine or no. If it's invalid, then you need to go back to the guy and take a justification on why it's invalid and make sure that there's a valid title. If it's valid, that means the property is genuine. That's incredible. So the Rest step is actually a new offering. And this goes back to the whole point of Dubai continues to innovate and make it simpler, easier, safer for foreigners to invest. So you don't have to be from the Middle East. In fact, you don't have any of these things, right? Then what you do is once you sign an Oqood, you put in a timeline. Now then, how you want to transact in terms of the funds is up to you. Now say if you're living in the US and you have some say cousin, relative, who can transact on your behalf, then you can obviously give them a power of attorney. This power of attorney also can be done online, okay? And you can remit the funds into their account and they can make a payment. Or if you do not know anybody in Dubai, let's assume they don't, okay? You don't know anyone. There's a proper conveyance firm which will take a small fee. You transfer, you show them, you tell them this is the property I'm buying. They go through the documents you send, the transfer the money into their account. They prepare a manager's check, which is like a banker's check, which is given to the seller on the day of transfer, okay? Okay. And you can also give them the power of attorney online where they will act as your attorney on behalf of you at the Trustee office. There's only one small process which is taking the No Objection Certificate okay, from the master developer. This is to ensure that the person who's selling the apartment to you does not have any dues pending towards the apartment in terms of service charges or any payment penalties. So that means if the developer gives an NOC, means it's all clear, clean. Yep. Go ahead, transfer the property. It's a matter of one or two hours on the day of the transfer. You get a new title deed in your name. Sitting in the US, the SMS and the email comes to you directly. Congratulations, this is your property transferred. Click on the link, download your certificate. You're the new owner. Easy. Easy. And then, now, second scenario. They want to mortgage it, okay? Now, if they want to mortgage it, before they finalize the property, they can speak to a mortgage adviser, get a pre-approval. Now, there's only one thing that if they're taking a mortgage, because it's a bank which is lending them money, they will have to come into the country once, even if it is for one day, okay? To sign the mortgage documents personally in front of the bank. So you can't do power of attorney because for a bank, okay, it's creating a liability and the bank needs to verify that's you and only you who's taking the mortgage, right? Because otherwise, you know, probably tomorrow someone can do a fraud or something. So that's just to eliminate that. So for that purpose you need to come here. It's only for signing the mortgage documents. Otherwise, no. And as we discussed, it's up to 60% that they can finance. And the interest rates, the mortgage process, everything will happen remotely. It's only that before the maturity of the mortgage, they need to come here, show their passport, sign in front of the bank. Understood. And we talked about, okay, so 60%. The interest rates we won't quote those because obviously those change all the time. But they're still significantly less than the US and Canada. And we have very well-known banks. So the process we actually have a couple interviews we've done with mortgage lenders. Go through that. So thank you for sharing that. In one scenario you don't have to come. Second scenario, come once just to verify. Now walk us through this scenario. Okay, now I have my property. I want to rent it out. I'm in America or I'm in Canada. How does that work? Look, it's very simple. First thing which I tell anybody is that whichever agent you're dealing with, right, you need to build a relationship with your agent. Because your agent is your representative over here. When it comes to renting the property or taking care of anything, you know, buying, selling, whatever. And that's where also one more thing which is very important which I see that a lot of people, even if they're buying off-plan, they think that listen, if I just go directly to the developer, it'll be better. I'll get a better deal or a better unit. Which is not true for a simple reason. Because look, a developer is not a person, right? It's a big entity. And for the developer, you're just one client buying a unit. He's making the developer is making thousands of units, okay? You're just buying one of them. It doesn't make any difference to the developer. Developer sales people, they keep changing. The sales team can change, turn over right, huge turnover. People with experience today, they're in the market. For example, Ahmed's been in the market for so long. I've been in the market. If we've sold a property to a client, we make sure we take regular progress, even if the developer person changes, we can still service them because we know who's the new guy, exactly, right? Who to take, who to talk to if there's an issue, if there's some delay on the payment, blah, blah, blah, right? So your agent can manage your property. They can rent it out for you, collect the rent on your behalf. When I say collect the rent means not take the money in their account, but they can deposit it in your account, make sure the money reaches you on time, and take care of your property as well, right? So there are so many people. In fact, you'll be surprised, GG, that most of the investors, most of the investors who own apartments in Dubai do not live in Dubai. There are people I've had clients I've had clients for whom we bought a property, they bought it, building is ready, I've taken hand over, rented it out. They've seen after a year of the property being built, just in fact just day before yesterday, I had a client who purchased a villa 2 years back. It was continuously tenanted. The family had not seen the house. Day before yesterday, after two years, they came and they actually went inside the house and saw the house, right? And they were really happy, yeah? But they've been getting their money, everything is fine. You there are there are processes and there are ways to verify. But you need to know about this. Just don't believe anybody. Look, I tell everybody: look in Dubai the market is so transparent. Do not believe me, okay? Look it up. Look it up, easy. And if you want, if the person you're talking to is not willing to give you access to that, that means he's trying to hide something. But look it up, you know? Do your research. It's simple, right? And if you feel that, discuss with your broker. Listen, why is this like this, this like that? And you know, so if you build a relationship, your real estate agent is going to take care of it. And of course there are property managers here, yeah, exactly. Because see, people who've been in this market for a long time, they are used to dealing with clients who are overseas, okay? There are because you know, that's their main business right? For me, most of my clients are overseas. You know, they don't live over here. Because that's how this market is. So it's almost like a concierge service. It's not: this is very different from real estate agents in the United States. Once we sell you the property, of course we want you to be happy, we want your referral, we want your next business. But our position and that transaction, we're out, okay? Here, that's not it. It's a concierge service. We're introducing them a long-term relationship with property management, with you know the tax accountants and for us international tax attorneys, international accountants, and the international mortgage lenders. And it is that concierge type of service of taking care of them. And I love what you're saying. The majority of them don't even live here. So although this may be new to Americans, this is not new to foreign investors. Seen. I'll tell you what, I've seen a lot of people, especially when they're from Canada and the US. They come to me, reach out. Oh Taj, I bought this. I said okay fine. So why is your agent not taking care of this? No, I don't. I didn't have an agent. I went to the developer directly. Look, you know, the developer is only bothered about selling the stock. The developer is not going to manage your property. They're not going to tell you when to resell it. They're not going to help you resell it. They don't care about it, whether you know you want to resell it or whatever. They're not going to do that. You will need an agent to do that. You will need an agent to rent your property. You're not going to be able to do that on your own. So always make sure you know have someone who's taking care of it. No matter who it is, you be care. I mean, if you're happy with that person, you are, you know, good. But you need to have someone because if you need anything while selling, they might commit the world to you, huh? But their interest ends the moment you paid the deposit and signed. We had from Ellington, we did an entire podcast interview with one of our favorite, you know, sales directors there, Abdul Latif. And he was saying the same thing. He said, I always tell people you want to work with an agent. Because once we sell the property, I'll tell you what, it's that the developer will discount the property if you go directly. And what Americans also don't know, Taj, that they're not paying the broker's commission. It comes from the developer. It's a free service that you're saying no to. Why would you say no to a free service? So money-wise, you're not saving. But what we're talking about today is that service after purchase, service, concierge style service, strategizing when to sell it, property management, all that. Look, having an agent in the deal is like having a relationship manager in your bank. Where you need anything, you just call the relationship manager. Otherwise you have to call the helpline. Thank you. Welcome to this. Press one for this. Press two for this. And you have to keep going on and on with that automated system. Comes back to after-sale service. It's a major point that's missing over here. I'm not going to say all the brokers are out there like in the market. But yes, a majority are. They're just looking for that one quick sale. Also, you know what? People don't realize that. See, the markets here and the markets probably in the US and Canada, totally different. When as an agent, if I rent a property, I take the commission from the tenant, right? Correct. So my interest is that if I've sold a property to someone, if I get that property rented, I can make some money on it, okay? So people don't realize this. That because someone's interest is there in their property, he will work for it, okay? And that's where I see because you know, and then what happens. People also, okay, if you want to resell the property, what are you going to do? If you tell the developer, developers not interested in reselling. You will need an agent. Now so many times I get people coming to me. Listen, can you resell it to me? I said yes. And you know, I'm like, okay. And I know that these people contacted me before. But they went directly to happen. I said please give me a reason that why should I help you now when you were making a purchase? You didn't really think of taking my services. So, unless I'm getting something out of it, why should I be doing this, right? As a service. So this is where people don't realize that relationship building, it's relationship building. Relationship. Especially when you're buying overseas. Look, if you're buying in your own neighborhood, you know everything. That's a different thing. Yes, okay? But when it's someone you know, buying, you're making an investment in a different country, it's always. Thank you for making that point. Also about the rental, that we are able to collect from the tenant, that percentage. So it's a business model. It's a business model. I mean, today if I have an inventory of, you know, over 100 apartments which are being rented and managed by my company, I'm a whole separate income. It's for us a portfolio, right? Because that, okay, a client comes and says listen, let's sell this property, okay? We'll sell this, buy something new. They want to upgrade, you know, etc., etc. This is very important, very, very important. Because this is not the typical business model that's a whole separate entity and a whole separate offering in the United States. Whereas this is part of that relationship building here. So now let's take it another step further into the situation you walked us through, the differences between the off-plan and resale, readymade. You walked us through how you walked us through after-sale service. We talked about that and renting it out. Now one of the concerns that foreigners may have from America and Canada is something goes wrong. There's a minor leak. There's a minor situation. And am I going to get on an airplane 16 hours? Where am I going to be taken advantage of by someone local, saying it costs $5,000? Tell, when you rent a property to a tenant on a long-term basis, so there are two things, right? You either rent it on a long-term basis or you short-term rental, put it on a short-term rental. If you put it on short-term rental, the company managing the part will take care of this, okay? It will be billed to you. If it's a major damage, okay? But they will take care of the hassle, okay? If it's a long-term tenant, small issues, okay, usually, typically in an apartment, anything which is less than 500 dirhams, okay, costing less than 500 dirhams, the tenant has to do it. The land doesn't do it mentioned on the contract, on the contract, okay? If there's a major thing, say for example there's some issue with the air conditioning, okay? Look, if you have an agent who's managing the property, what he will do is he'll send a maintenance team. Tell you look, look, Mister XYZ, this is the cost. I'm getting it fixed. You can transfer the money directly to the tenant. This coming back to why you should have a relationship with your broker. And usually they will look out for these. These things are done and you know, it's nice. You don't really need to come here because look, you're not going to come and fix that, right? You need an agent who will do it for you. So it's a very simple thing. And whether leakage happens or this that, it's not a big hassle. Usually, usually these issues don't come when the building is brand new. When you've taken hand over, okay? There have to be checks and stuff like that. But usually we don't really face any major issues. It's once in a while, if something goes wrong or something. It's not a commonality. And this is not a sue-happy also. That's another thing. No, no, no. This is not a sue-happy city. Since GG has brought this question, previously before, I was actually managing a facility management company. Okay, one of the biggest flaws that I notice with the secondary market here in Dubai is unlike in America. In Dubai, I notice majority of the people, and I'm saying majority by almost 90%, people who come and buy a property in a resale market refuse to pay that little extra money to get the entire property checked through a proper maintenance company in order to do that. Now my problem always with that has been if you're willing to come and spend a couple of million dirhams to buy a villa, for example, what is the harm in paying $1,000 to make sure you're getting a safe deal? Do you find that an issue? And by the way, before I'm sorry, just to explain to our viewers and listeners, snagging is not a word we use in America. It's inspection. So that's the same thing you're referring to. So snagging is inspection, yeah. I mean, look. It's always advisable to do an inspection and check everything is in order. Because when you're buying something, then you can tell the seller that look, this is not proper in the apartment. Either you fix it or give me some discount because I'm going to fix it. Exact. Right? So that's always advisable to check and see and make sure you're buying something which is in correct order. Usually we don't really find some major issues, okay? It's a very rare scenario. I mean, I still haven't come across where some major issues there, and it's you know been troublesome. But it's always good to be safe, okay? Good to know that. What other questions do you find because you have us and Canadian investors and we do as well? What are some of the top three to five concerns you've heard repeatedly from the US? One is how safe is my investment? Is it freehold? You know, can I buy? If I'm a Canadian or an American? You can buy no matter who you are, as long as you have a passport you can buy. And money. But not everywhere in Dubai is freehold, which they are not aware of. By the way, most Americans look, now 90% of the properties which are on the market, or maybe 95%, are all freehold. All the new development, obviously you and I are not promoting anything that's not freehold. But you will not find anybody selling anything that's not freehold. So you know, it's it's a very and it's not leasehold. So it's not for 99 years and you don't have to have a sponsor. That was a misconception that I found as well. Don't we have to have a sponsor? People tell me, what do I need to have if I want to buy a property in Dubai? The answer is very simple. A passport and money. That's if you have these two things, you can buy a property. More money, you're going to make more money. You don't need anything special to buy a property. And the will to buy, you know? So if you have that, you're good to go. So Taj, thank you. I am going back to the US with a plethora of information that is going to answer the questions that are most commonly asked. And I have the best associates here in Dubai to work with. With significant experience and even more important than the experience, the reputation of ethics and morals and great personalities to work with too. So I've enjoyed getting to know both of you and the processes. And I thank you for your expertise and time. Most welcome. And I look forward to bringing more Americans, Canadians to Dubai. Looking forward to that. Always. Thank you for being here. Thank you. Thank you for me. So with that, we'll just say please make sure that you are following, like, subscribe on YouTube. On your way to following like, subscribe on YouTube, and stay tuned for the next episode on the Dubai Connect podcast.