The Dubai real estate market is experiencing unprecedented growth, largely due to the increasing number of expatriates and the rapid economic development of the emirate.
Over the past 5 years, the growth rate of this sector has reached an all-time high, turning real estate into one of the region’s key assets. The region’s calling card used to be oil, but now it is square meters, which have become a new center of attraction. The current geopolitical situation, including a significant influx of investment from around the world, has only intensified the market dynamics, which has affected both purchase and rental prices.
While UAE real estate investment is attractive, the fast-growing market inevitably attracts unscrupulous players. Despite the reputation of the United Arab Emirates as one of the safest countries, cases of real estate fraud do occur. That is why it is critical to understand the specifics of the local market and know how to protect your interests in transactions.
The most common fraud
schemes include selling properties without legal title, using forged documents and manipulating prices. Fraudsters may pose as legitimate property owners or create fictitious agencies offering non-existent properties at attractive prices. Far more than once in our experience such a situation has happened. And prompt response in symbiosis with a high level of professionalism helped to eliminate potential costs at the early stages of the problem.
A special danger is represented by cases of “double sales”, when unscrupulous agents try to sell the same object to several buyers at the same time. In such situations, the victims are not only the buyers who lost their money, but also the legal owners of the property, whose property finds itself in the center of legal disputes.
Any brand that positions itself as the best concierge service in the world can help avoid such situations by providing professional support at all stages of the transaction. Experienced specialists will conduct a thorough document check and help make sure that all aspects of the purchase are legal.
Verifying the seller and his title
The first and almost the most important step when buying real estate in the UAE is to thoroughly verify the seller’s title. This involves requesting and verifying all original documents through official authorities. In Dubai, all real estate transactions are registered with the Dubai Land Department (DLD), where you can get up-to-date information about the status of the object and its legal owner.
When working with a real estate agency, you should check for a valid RERA (Real Estate Regulatory Agency) license. All legal agencies must be registered with this regulatory agency and have the appropriate permits to operate.
Read also: How to issue a power of attorney for the purchase of housing in the UAE.
Legal Due Diligence (Legal Due Diligence) is a critical step when buying real estate in the UAE. It includes analyzing title documents, checking for encumbrances and restrictions, researching the history of the object and verification of all permits.
As trivial as it may seem, real estate maintenance services play an important role in this context, helping buyers to get a full picture of the property’s technical condition and potential risks. Professional property management companies can provide a detailed report on the condition of engineering systems, the quality of finishes and the need for repairs.
According to Dubai Land Department statistics for 2024, around 15% of all real estate transactions are subject to additional due diligence due to identified discrepancies in documentation. This emphasizes the importance of a thorough due diligence before making a purchase. It is thanks to related services that the UAE continues to maintain its unwavering status as one of the safest countries in the world.
Financial security of the transaction
In the UAE there is a strictly regulated system of financial transactions in the purchase of real estate. In 2024, the average cost of residential real estate in the prestigious areas of Dubai is about $ 1,500 per square foot, which is 20% higher than in similar locations in London and 30% higher than in New York.
It is recommended to use letters of credit and escrow accounts to ensure secure settlements. All payments should be made through wire transfers with clear documentation of the movement of funds. Cash settlements are strongly discouraged due to high fraud risks.
In case of off-plan property purchases, all payments should be made only through the developer’s special escrow account registered with RERA. This guarantees the targeted use of funds and protects the interests of the buyer.
Checking the condition of the property
Technical audit of the object is a mandatory stage in the purchase of real estate in the UAE. Professional appraisers conduct a detailed inspection, including checking:
- structural elements of the building
- engineering systems and communications
- quality of finishing materials
- presence of hidden defects
Special attention is paid to air conditioning and ventilation systems, taking into account the climatic peculiarities of the region. In 2024, the average cost of a technical audit is about AED 2,500 for a standard apartment and can reach AED 10,000 for a villa.
Signing a sale and purchase аgreement
The process of finalizing a transaction in the UAE is strictly regulated. Sales and Purchase Agreement (Sales and Purchase Agreement, SPA) must contain all the essential terms of the transaction, including:
- an accurate description of the property
- agreed price and settlement procedure
- terms of transfer of the property
- warranty obligations of the seller
- liability of the parties for breach of conditions
All contracts are subject to mandatory registration in the Land Department of Dubai. This ensures the legality of the transaction and protects the rights of the new owner.
A real-life example of fraud in the UAE
The level of seriousness of the issue is quite difficult to understand unless one is directly confronted with such cases in real life. In 2021, a Dubai Police investigation uncovered a sophisticated criminal scheme where real estate fraud was just the tip of the iceberg. A group of miscreants led by Alex Chang set up an investment company called Elite Property & Digital Assets, which allegedly specialized in two areas – luxury real estate in Dubai and a proprietary platform for trading digital assets.
Investors were offered a comprehensive scheme: invest in apartments under construction, and place money in the company’s “high-yield” digital assets during construction. Chang claimed to have developed a unique trading algorithm that allegedly yielded 25% annualized returns in cryptocurrency. To be convincing, the company rented an entire floor in Dubai Marina and created its own crypto exchange with fake charts of token value growth. The scammers used the real objects of large developers under construction, forging documents of ownership. They even organized tours of construction sites, negotiating with local foremen for bribes. In parallel, clients were shown growing balances of their cryptocurrency wallets in the fake system.
The scheme fell apart when several investors simultaneously tried to sell their completed apartments and discovered that the real owners were other people. The investigation revealed that the company had raised about $300 million, most of which was withdrawn through a network of shell companies in Hong Kong. The cryptocurrency platform turned out to be completely fictitious, and all transactions existed only on investors’ screens.
Alex Chang and his main accomplices managed to leave the UAE before the arrest. It is noteworthy that among the victims were even some OneCoin victims who, trying to recover their lost funds, fell into a new fraudulent scheme. This story clearly showed how modern fraudsters skillfully combine traditional schemes with technological innovations, while using real assets to lend credibility to their scams.
At the same time, in 2023, a major fraud scheme involving the sale of non-existent apartments in one of Dubai’s elite neighborhoods was uncovered. Attackers created a fake website of a well-known developer and offered apartments at prices 30% below market. Potential buyers were shown fake documents and even organized viewings in real existing but not owned properties.
Read also: How to assess the investment attractiveness of housing.
Could such fraud have been prevented? Certainly, if buyers had done their due diligence and not trusted everyone and checked information through official channels. Every real estate developer in UAE has a unique registration number which can be checked on the RERA website.
Conclusion. Buying real estate in UAE can be a profitable investment provided all the necessary precautions are followed. The key factors for a successful and safe transaction are thorough document verification, working with licensed professionals and using official channels for settlements.
Contact me, Konstantin Lyutovich and our 20-88 Real Estate team and I will help you conduct the transaction as safely and professionally as possible. We have already saved our clients’ investments more than once and saved a large number of everyone’s nerve cells. Our experience and knowledge of the local market will protect your investment and ensure transparency at all stages of buying real estate in the UAE. Was this article interesting and useful? Want to learn more about the real estate market in the UAE? Subscribe to the website of Konstantin Lyutovich, co-founder of a real estate agency, and get notifications about new publications.
