Investors advised to read carefully the SPA first before purchasing a property in Dubai
12/03/2013
Since 20012, Dubai’s property market has witnessed a positive growth, including the impressive increase in sales prices for both residential apartments and villas that climbed to 9 per cent during the last quarter of the same period. Most of the transactions were registered in the following development areas: The Springs; Jumeirah Islands; Arabian Ranches; The Greens; Palm Jumeirah; and Downtown Dubai, a district in which the prestigious and stunning tallest tower in the world is located.
Such impressive results are still on-going in the above-mentioned real estate industry. Hence, some of the developers have imposed restrictions in their Sale and Purchase Agreement (SPA) with regards to investors to sell their properties to the secondary market in particular. One of them is the Emaar Properties, a builder of Burj Khalifa Tower. It has already imposed such kind of restrictions in its SPA that will require its investors to pay a percentage of the total price of the property or the number of the installments before they can be able to sell the property on the said secondary market.
According to Shahram Safai, a Real Estate Partner at Afridi and Angell, he said that most of the developers in the previous years have also imposed some conditions such as any secondary investor is required to make certain accelerated payments to the developer upon purchasing the property before being permitted to sell the property.
So, those investors who are about to purchase a property on the secondary market is advised to read carefully the SPA so as to make sure that the first owner has the right under the SPA to sell his property. If ever the latter is not permitted to do so, the sale transaction may not be considered valid under the SPA as well as if the minimum number of installments has not been paid yet. For this reason, they should know that it is indeed very essential to verify first if the secondary investor has the right to sell or not at all; for any off-plan sale of a property which is not registered in the Interim Real Estate Register will not be valid under the Dubai property laws.
Such impressive results are still on-going in the above-mentioned real estate industry. Hence, some of the developers have imposed restrictions in their Sale and Purchase Agreement (SPA) with regards to investors to sell their properties to the secondary market in particular. One of them is the Emaar Properties, a builder of Burj Khalifa Tower. It has already imposed such kind of restrictions in its SPA that will require its investors to pay a percentage of the total price of the property or the number of the installments before they can be able to sell the property on the said secondary market.
According to Shahram Safai, a Real Estate Partner at Afridi and Angell, he said that most of the developers in the previous years have also imposed some conditions such as any secondary investor is required to make certain accelerated payments to the developer upon purchasing the property before being permitted to sell the property.
So, those investors who are about to purchase a property on the secondary market is advised to read carefully the SPA so as to make sure that the first owner has the right under the SPA to sell his property. If ever the latter is not permitted to do so, the sale transaction may not be considered valid under the SPA as well as if the minimum number of installments has not been paid yet. For this reason, they should know that it is indeed very essential to verify first if the secondary investor has the right to sell or not at all; for any off-plan sale of a property which is not registered in the Interim Real Estate Register will not be valid under the Dubai property laws.
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