UAE investors warn about red flags to avoid in a property transaction

Watch out for below-market pricing, inspect developer’s track record and verify title deed legitimacy, experts say

Gunjan Chaurasia, a property investor in the UAE, says if something sounds too good to be true with a unit, it probably is. Antonie Robertson / The National

Gunjan Chaurasia, a Dubai resident since 2006, purchased a four-bedroom villa in Sharjah’s Masaar 2 community for more than Dh4 million ($1.08 million) in March. The project is scheduled to be delivered in 2027.

The Canadian, 41, decided to buy based on the project's amenities and facilities, developer Arada’s credentials and infrastructure around the community. She also owns apartments in Dubai’s Jumeirah Lakes Towers, India and Canada.

Citing the biggest red flag to a property purchase, she says if something sounds too good to be true, it probably is. If a property is big in size, but comes at a very low price point, then there is a hidden issue that you're not aware of, she warns.

“Another issue is that a lot of buyers look at the price of the unit, but don't look at the service charges. Also, always check the price per square foot. A unit may be very reasonably priced, but the area may be small,” she says.

“Always go for a good location and a good building. You need to check for plumbing and do a thorough inspection, but I wouldn’t be too concerned about the cabinet colour, for instance, because these issues can be fixed. Most importantly, check the surrounding infrastructure, facilities and amenities such as schools, hospitals, entry and exit points.”

Last month, a report by New York-based Fitch Ratings predicted that Dubai’s real estate market would enter a “moderate correction” in the second half of 2025 as a record number of projects launch.

The ratings agency also estimated that residential prices could fall by as much as 15 per cent this year.

However, industry experts remain confident in the market’s potential, citing Dubai’s record population growth, continuing housing demand and maturing real estate sector as indicators that any correction will likely be moderate.

Clarity of purpose

Ms Chaurasia urges buyers to always think about the reason behind their property purchase.

Agreeing with her, P.P. Varghese, head of professional services at Cushman & Wakefield Core, says that for investment purchases, the decision framework should follow yields. The rule of thumb is straightforward: if your rental yield can cover your mortgage, you have a sustainable foundation.

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If the rent cannot cover your mortgage payments, the investment must make sense purely as a capital appreciation play, he says. The ideal scenario combines sufficient yield to cover the mortgage with surplus cash flow, plus capital appreciation potential, he reckons.

For end-use purchases, Mr Varghese urges buyers to start by identifying their purchasing power, then take a look at whether that price point can achieve their dream home.

Ms Chaurasia warns buyers not to overleverage and have a financial backup to service their mortgage in case of an emergency. Have an idea of what percentage of your income you can commit towards housing, she adds.

Developer’s track record

Similarly, Elena Yurgeneva, a property owner, deters people from buying from a developer with no proven track record in the UAE.

“If you can’t physically visit or verify their previous projects, it becomes very hard to assess build quality, delivery timelines, or even how reliable they are in honouring handover commitments,” she says.

Citing a “regrettable investment” in the Golf Views project by Seven Tides, Ms Yurgeneva says construction has been delayed multiple times and is currently stalled.

“The project has been frozen at least twice since my purchase, and to date, there’s no clear communication or visible progress on site. It’s a painful reminder that even projects that look promising on paper can face serious execution risks,” she warns.

Farooq Syed, chief executive of Springfield Properties, says the margin for error lies in process shortcuts and documentation gaps. Photo: Springfield Properties

When purchasing property anywhere in the world, including the UAE, buyers should watch for red flags across all stages of the transaction. These could manifest as disparities between listings and viewings, poor maintenance and high-pressure sales tactics, among others.

Inspect broker credentials

Even within Dubai’s structured and well-regulated real estate market, the margin for error lies in process shortcuts, documentation gaps and intermediary inconsistencies, explains Farooq Syed, chief executive of Springfield Properties.

“In Dubai, all brokers are required to be licensed by the Real Estate Regulatory Agency. Buyers should always request the broker’s Rera ID. A lack of transparency around this, refusal to facilitate physical viewing, or reliance on heavily staged or misleading visuals should be treated as a red flag,” he warns.

“Payment channels are equally non-negotiable. In the off-plan segment, the project must be officially registered with the Dubai Land Department, and all payments are to be made directly to the project’s escrow account. For resale transactions, payment must be made directly to the seller, not to the broker or any third-party entity.”

Unpaid service charges

Zacky Sajjad, director of business development and client relations at property consultancy Cavendish Maxwell, picks legal issues such as unpaid service charges, unresolved mortgages, or invalid power of attorney as some risks, and also building-level concerns like developer or owner’s association disputes, excessive service charges, and incomplete utility connections.

He also urges caution dealing with offshore ownership structures. To mitigate these risks, buyers should always engage a licensed conveyancer or valuer, insist on official Rera forms and no-objection certificates, and verify the property’s legal ownership, title deed and presence of any mortgage or disputes by scanning its QR code through the DLD or the Dubai Rest app, Mr Sajjad recommends.

Request a formal, RICS-compliant or bank-approved valuation before agreeing to the price, he adds. Also, inspect the property in person to confirm condition, maintenance and ensure everything is as per the listing.

Understand total cost of ownership

One of the biggest risks for any buyer is pricing decisions driven by sentiment rather than data, Mr Varghese warns. Valuations should be anchored to recent comparable sales, rental yields and projected supply, particularly for off-plan properties, he explains.

Buyers must also remember that the total cost of ownership extends beyond service charges to include maintenance reserves, insurance, potential major repairs (especially for older buildings), while for new developments, it includes community fees, sinking funds and utility connections, according to Mr Varghese.

“For investment properties, factor in vacancy periods and property management costs. These hidden costs can significantly erode returns if not properly accounted for upfront,” he says.

Confirm handover timelines

Mr Syed of Springfield Properties says completion dates must be clearly defined and contractually stated in off-plan deals. A lack of specificity around handover timelines should be treated as a material risk, he warns.

The rule of thumb is straightforward: if your rental yield can cover your mortgage, you have a sustainable foundation

P.P. Varghese,
head of professional services, Cushman & Wakefield Core

“In investment properties, tenancy terms must be reviewed. Properties with unpaid rents, invalid eviction notices, or leases that fall short of the legal 90-day notice requirement may lead to complications post-transfer,” he says.

“Similarly, unauthorised modifications, particularly in villas, should be reviewed closely. A snagging expert can help identify defects or alterations not captured in the marketing narrative.”

Consider area development

Mr Varghese warns buyers not to avoid undertaking due diligence on area development. Understand the broader area's development pipeline, as oversupply can hurt both rental yields and capital appreciation, he says.

Research infrastructure development plans, new transport links, and zoning changes that could enhance or diminish property values over your intended holding period, he adds.

“Beyond price, buyers should negotiate holistically: payment schedules, escrow arrangements, delivery guarantees, and any fit-out or completion obligations can carry substantial financial implications and should be scrutinised as part of any transaction,” he suggests.

Tips for non-resident UAE investors

While there are no hidden fees for non-resident UAE investors, broker commission, DLD registration and trustee fees apply as standard, Mr Syed says. However, he warns that paperwork requirements can be extensive and processing may take longer due to additional documentation.

Mortgage access remains limited for non-residents, and timelines may be affected depending on nationality, financing method and complexity of regulatory approvals, he explains. Cross-border fund transfers may also be subject to regulatory or institutional constraints, he adds.