Installment plans in Dubai: a guide for real estate agents

The real estate market in the UAE remains unique. While in the rest of the world, buying an apartment in a new building requires either a 100% down payment or a loan with exorbitant interest rates, the Emirates operate under a different system that is far more advantageous for clients.

For a beginner real estate agent, understanding how installment plans work in Dubai is fundamental. Knowledge of this financial strategy will open doors for most clients, especially non-residents. Imagine: a prospective buyer reserves an apartment, puts down 10-20%, and pays the rest in installments over several years without interest. The property’s price is locked in at the time of booking, and the buyer doesn’t pay a single dirham more.

For the investor, this means they “lock in” the price today but pay with money “from the future,” which has already been eroded by inflation. For a client from a country with a volatile currency, this is also a good way to preserve capital.

How does interest-free installment payment work?

1. It all starts with a down payment (ranging from 10% to 20%). After reserving the property and paying the deposit, the customer makes the first installment. An important detail: along with this payment, you usually need to pay 4% of the property’s value — the DLD fee. This is a one-time payment for registering ownership rights.
2. After the first payment, the property is registered in the buyer’s name. An Oqood certificate is issued — the main document proving ownership of the property under construction. This is official confirmation of the reservation from the government.
3. Next, the client makes payments according to a schedule, which can vary significantly: for example, over 3, 5, or 8 years.
4. Receiving the keys. At this stage, the buyer pays the final installment, signs the handover certificate, and receives the keys.

It seems simple, but as always, there are nuances. So let’s look at the main installment plans you need to know. 

In Dubai, there are two types of installment plans, and it is critically important for a real estate agent to understand the difference.

Handover plan

Part of the money is paid in installments during construction, and the remaining balance is paid upon handover. For example, a good 60/40 plan: you pay 60% before receiving the keys and 40% in a single payment at handover. This payment plan is ideal for investors planning to resell. Typically, the maximum price increase occurs just when the house is almost ready for occupancy, and by selling the property at this stage, you can make a good profit.

Post-Handover plan

The most convenient option. The buyer pays 30-50% during construction, receives the keys, moves in or rents out the apartment, and pays the remaining balance POST handover, over a period of 1-3 years. This is ideal for those looking to generate passive income. The apartment is already being rented out, tenants are bringing in money, and the client uses these funds to cover the remaining payments to the developer. The asset pays for itself.

Hidden nuances: what you can’t keep quiet about

Installment plans are great, but they have certain features you must warn clients about to protect their money and your reputation.

Plans with a 1% monthly payment are popular right now. The client thinks, “Oh, that’s easy — I’ll just pay 1% a month!” But there’s a catch. First, such payments may only apply to the construction period (usually 2-3 years). Let’s say 36 months at 1% — that’s only 36% of the apartment’s cost. Plus the down payment (10-20%). So by the time they receive the keys, the client will have paid about 50-55% of the apartment’s cost — and that’s normal. It’s just important to understand whether they’ll be able to come up with the remaining 45-50% over those 3 years (or take out a loan for the balance).

Also, the UAE has very strict laws regarding late payments. If a client delays payment, the developer has the right to charge late fees (usually a percentage of the amount for each day of delay), and in extreme cases — even to cancel the contract, refund the money (often minus a 30-40% penalty), and put the apartment back on the market at a higher price.

In addition, installment plans are only available for new buildings. This is a strict rule. You cannot purchase a completed apartment on an installment plan from the owner: only a mortgage or 100% payment is allowed.

Case study

Property: an apartment in Dubai Islands for $500,000. Three years remain until construction is completed. The payment plan is 50/50 (50% during construction, 50% upon handover).

1. The client pays 10% ($50,000) upfront. 
2. Over the course of 3 years, they pay an additional 40% ($200,000). Total investment: $250,000.
3. Over the 3 years, the market has grown, and similar apartments now cost approximately $650,000. Two to three months before completion, the client sells their rights to the apartment to another investor.
4. The new owner pays him $250,000 (to cover his investment) plus $150,000 (the difference in market price compared to the start of construction).
5. As a result, the client made a $150,000 profit without completing the transaction, and now has $400,000 on hand ($250,000 of their own plus $150,000 in profit), which they can already put toward a new project with an installment plan. 

Examples of popular payment plans

Here’s a quick guide for agents on the most common payment schemes: 

– 70/30: 70% paid before handover, 30% upon receiving the keys; 

– 50/50: half before, half after;

– 40/60: most of the payments are deferred until the property is handed over;

– 1% monthly: for those who find it psychologically easier to pay smaller amounts more frequently (requires careful calculation of the total prepayment before receiving the keys!) 

Most importantly, remember that installment plans in Dubai are a flexible financial tool. Therefore, your job as a professional is to listen to the client and find the best investment plan for them.