How safe is it to buy off-plan in Dubai?

Dubai's property market has long been a destination for investors, but off-plan purchases carry unique risks and protections. Here's how Dubai safeguards off-plan buyers before, during, and after handover. I'll also compare and contrast this with the protections available in the UK to help you form an opinion.

Before construction

In Dubai, property developers must comply with a range of regulatory and financial requirements before launching an off-plan project. Specifically, developers must:

• Be incorporated in the UAE;

• Hold a valid trade license;

• Prepare audited financial statements; and

• Submit a detailed project feasibility report.

Together, these measures ensure that only credible developers with viable projects enter the market. If in doubt, investors can access a list of approved developers on the Dubai Land Department's website.

Similar checks exist in the UK, but investors face a more fragmented regulatory landscape, with the National House Building Council (NHBC), the Financial Conduct Authority (FCA), and the Property Ombudsman acting as touchpoints.

During construction

In the UK, developers can sell off-plan properties before construction begins. But in Dubai, developers must have completed at least 20% of the construction work before selling any units.

To enhance investor protection, developers in Dubai and the UK often provide payment schedules tied to construction milestones. All funds paid by buyers must be deposited into an escrow account, which means that funds are not directly accessible to the developer until agreed construction milestones are met. This protects buyers from financial mismanagement and project abandonment.

Money held in escrow can only be used to finance construction works and will be released progressively, based on the project's progress, as verified by Dubai's Real Estate Regulatory Authority (RERA). Progress reports are available through Dubai's Rest app. No such independent oversight exists in the UK.

Prior to handover

As completion approaches, you'll be invited to conduct a "snagging" inspection, where any defects or unfinished work are identified and logged for rectification.

At this stage, final payments are due, sometimes through a mortgage. The developer will only release the property once full payment is received and any outstanding issues have been addressed.

Post handover

As the owner of an off-plan property in Dubai, you'll enjoy the following guarantees:

• Good-working order guarantee: For fittings (e.g. plumbing, air conditioning) for one year post-completion. In the UK, buyers enjoy a two-year developer warranty that covers fixtures, fittings and general workmanship.

• Ten-year guarantee: Protects against structural defects affecting the building for ten years after delivery. This is also the case in the UK.

The developer is responsible for addressing any defects that may arise during these periods. You have the right to seek mediation services through RERA in the unlikely event that you encounter issues with the developer (e.g. delays, substandard repairs, or a failure to rectify defects).

Conclusion

Strict planning laws, financial safeguards, and warranty schemes provide Dubai off-plan investors with significant protections, superior in some respects to that available in the UK.

Contact me for a free consultation if you need any advice with your property search. I'll recommend projects best aligned with your goals, and put you directly in touch with the developers.