Pre-sales in Dubai
There are hundreds of new real estate projects a year in Dubai. It is not only important which project to choose, but also what are the steps when it comes to an investment decision. Let's discuss today the so popular greenfield property investments and that too at the PRE-sale stage.
What is the right or ideal moment and what is the right process?
It is important for the investor to know exactly which project is the best and when to invest in it. "Pre-launch" or "pre-sale" offers are those where the builders shows you just a few details about where the project will be, what the whole idea of it is and the starting prices and this is exactly the time to position yourself as an investor to make the biggest margin in the purchase.
What are the right steps to take then?
The first step is to express interest in an investment. It's kind of like a handshake between the developer and the investor-buyer saying, "hey, I'm interested in your property and I'm putting my seriousness into it." So the EOI (expression of interest) is your copy of passport, email address, phone number and address, along with a reservation deposit, which is usually between 12 to 80 thousand euros, depending on the full price of the apartment. It can be done by cheque, or by bank transfer. And cheques are not cashed, and any bank transfer is fully refundable on cancellation.
By sending this bank transfer you are showing your seriousness. There are many potential buyer investors in Dubai. So on the part of the project developers, they also want some assurance that the investor is genuine and serious about the investment they intend to make.
Another point we observe is the pre-launch price. And of course, if you're already an investor in Dubai, you certainly know about that. The reason why so many successful investors love pre-sales is that you can achieve 5 to 10% less than the official launch price, which from the investor's point of view, especially if they're buying a whole condominium for example, gives them a huge discount. And if you are already informed about the project and you are confident in the builder, this is only to your advantage.
You know the reason for that - developers or builders also seek some stability when it comes to their financial planning. Hence, they are incentivized with their first batch of units to resell them pretty quickly. Once that is done they are less under financial pressure to sell the units that are left. What do they do? They raise prices because the rush is gone. But in the pre-launch phase, you can obviously position yourself at the lowest price point of the project and later on obviously take advantage of that when you want to resell your property. Even if you rent- you still have a higher rental yield because you have a much lower starting price point.
To get your hands on such projects, however, you need an experienced real estate consultant because these projects are usually pre-sold before developers advertise. So that's the important part of having an astute person who really knows the market and has good connections with the developers. Then he can call you two weeks in advance and say, "you know, there's going to be a project by "X " developer and I think you should invest your money in it."
All developers, once they are in the planning phase of a project, they are already approaching agents before it goes to market. And that's the best time for investors to make a move on that particular investment. We've all seen these videos of pre-sales when people are fighting over units. It's nice to be first in line when it comes to a new project. So don't get mad if your agent talks you into a project you haven't even seen on your Instagram or email. That's the point. Then you realize that the agent actually knows what they're doing. Because they have inside information.
And again - there is no financial risk when you choose to participate in pre-sales. You just wait and when you see which unit is allocated to you- you decide. Sometimes you won't even get a unit. Not everyone expressing interest will get a unit. Some people sometimes make multiple requests for different properties because they know how it works. At any point they just withdraw it. That's how they hedge because they know how dynamic the market is here.
In summary- what are the steps and what is the pre-sales process?
You must complete the EUI expression of interest form. You send a copy of your passport and identification details. You then transfer the deposit.
This bank transfer or credit card payment is fully refundable at this time. You then wait for the pre-sales to start. On launch day, ideally, you get the unit you requested. You also get the full details of the project. And on that day you decide if you want to proceed or if you just want to cancel everything and walk away. If you decide to make the investment, you get the best price.
After a while when you start making so much money you want to do it again and again and again. But new investors in the Dubai market are worried at first. They can't even see a proper brochure for the project- how to invest in 2 pictures! But that's exactly how the Dubai pre-sales market works.
Of course, trust is very important when it comes to these things and the amount of investment you're going to make. And the most important thing here is to make sure that the agent you're working with is a licensed real estate broker. You can easily check this through his broker number and the Dubai Rest app.
