Distress deal in Dubai means a transaction in which a property owner is forced to urgently sell the property for a price much lower than the market value. Usually such offers are due to money problems such as inability to pay installments anymore. Therefore, the main purpose of such deal for the owner is to get the money as quickly as possible.
For investors, a distress deal becomes a good opportunity to buy property in Dubai at a lower price.
Main reasons of a distress deal
Generally, all the reasons for such transactions are cash related. Firing the owner from a good position, relocation, bankruptcy, etc. A broker needs to have a perfect understanding of the Dubai property market so that his client does not face a distress deal as a result of an unsuccessful purchase.
Of course, the UAE has a reliable market, but even here you can meet with "non-liquid". Even the most premium projects are not always suitable for resale. Therefore, it is necessary to look for a property for investment with a cold mind and do not fall for the "hype". First of all, study analytics, compare similar properties, communicate with other brokers and developers, etc.
What happens if you don't pay the installments
In Dubai, if a client defaults on installment payments for a long time, the only option to recover their money is to sell the property to a new buyer. The developer does not refund the amounts previously paid and imposes fines for each delay, and in case of regular non-payment can terminate the contract.
Distress deal or marketing
Situation 1. Let’s assume that the property was bought for 800 000 AED, but is sold for 700 000 AED. This is a distress deal and will definitely benefit the investor.
Situation 2. Apartment was bought for 800 000 AED, but soon the owner thought that its market value was 1 000 000 AED and decided to sell the property for 900 000 AED. This is not a crisis transaction, but a marketing move.
How to check the real price of the apartment
The most direct and easiest way 一 ask the owner of the apartment for the purchase documents. If the owner for some reason refuses to do this, you should be cautious. There is a possibility that they are trying to sell you a non-liquid property.
Conclusion
Remember that a distress deal is profitable only for one of the parties. Advice that a broker should give to his clients: do not buy property in Dubai, if you are not sure of your financial solvency. Do not enter the project for the last money and hope for luck. However, if there is an inability to continue to pay by installments, a distress deal is the best solution on the Dubai market.