I was reading an article online about escrow accounts in the UAE. I am planning to purchase a studio apartment in Dubai but am currently in Netherlands. Is it safe to invest in a project because the developer has provided their escrow account details?
Also, how can we verify if the details provided by the developer are that of an escrow account? How can we ensure that our money being channelled to this developer is safe? TG, Netherlands
The Dubai real estate market has gone through huge transformations from the early 2000s to where we are today. Along the way, investors and end-users have experienced highs and lows, which is normal for a cyclical property market. Currently, we are in challenging times because of the economic effects of Covid-19.
However, the Dubai real estate market is resilient. Entities such as the Dubai government, Dubai Land Department and the Real Estate Regulatory Agency have implemented many changes and upgrades, which make the Dubai real estate market a wise choice for investors and end-users alike.
To answer your first question, I stress that any buyer, whether investor or end-user, needs to do their due diligence on a purchase. If the property is in the primary market, the choice of developer is of utmost importance. You must check what projects they have completed in the past and their delivery timelines, whether there were any construction delays or any other issues.
Unfortunately, nobody can predict what happens to a specific project, but if you have doubts, I suggest you always err on the side of caution.
The current trend among end-users and investors is to buy ready property, especially with a post-handover payment plan, from the primary market or any property from the secondary market.
There are pros and cons for any purchase. However, if you are buying a ready property from a developer, at least the unit is built and ready, thus alleviating your fears of delivery delays.
The other trend is to buy from well-known developers or master developers such as Nakheel, Emaar, Dubai Properties and Meraas to name a few. While all of them are not immune to problems or delays, they do eventually deliver what is promised. So, you are more likely to get delivery of your unit.
Lastly, in order to verify if the project is registered and check the status of construction, you can do this via the DLD website (www.dubailand.gov.ae) or download the Dubai Rest app from Google Play or the App store on your mobile.
Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for more than 35 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com
