However it has recently come to light that there is widespread property fraud in the Dubai market at present.
There are a few scams in particular circulating with fraudsters in Dubai.
Packaging Non Existent Properties For Sale
Criminals are packaging non existent properties for sale and including photographs of properties that have, and never, will exist.
It’s claimed that one such fraud in a major property development firm is linked to the ruling family of the UAE city-state. Buyers handed over deposits to the firm because they were shown made up construction photographs of the proposed site.
Companies or individuals are approaching owners in the guise of helping owners to renegotiate their mortgages, or to save them from repossession, for a fee which is taken upfront. They then leave with the money having done nothing.
Off Plan Non Sales
One of the most widespread frauds is the selling off-plan developments and fleeing the country. These projects will never be built. Full payment upfront is often requested. Many developers are abandoning their projects part way through too, leaving those who have paid deposits in limbo.
Typically these types of Dubai property frauds will be very short term. They spring up and disappear within three to six months. Investors are lured by promises of high unattainable ROI. Returns of 30 to 40 percent a month have been promised to investors.
Mortgage Appraisal Fraud
This is a more sophisticated form of property fraud involving many participants. In the first instance the property is sold at an over valued amount, then the mortgage brokers, property flippers,agents and lawyers all profit from the higher appraisal. This happened in the UK market before the crash and is being repeated in Dubai property fraud.
Dubai government imposed a news blackout to journalists which exacerbated the situation because investors were not being told of any wrong doings and the news of problems were not allowed to be reported.
Dubai property valuations are said to be under review by The City’s Real Estate Regulatory Agency (RERA.) The recent slump wiped over $100bn off the emirate’s property market assets.
It should be noted that:
“Only 30 percent of Saudis actually own homes and less than one percent of all homes purchased are financed by mortgages,” Waseem Saifi, the global Islamic Banking head at Standard Chartered Bank said earlier this month.
The Dubai market is very volatile right now, and should be regarded as a high risk location for investments.