Invest from a position of strength

Cityscape Abu Dhabi, which starts tomorrow, will mark a broad arc of the country's property market from a frothy sea of speculators to a deliberative pool of buyers looking for homes. It has also been a year of lessons learnt - many people who bought apartments and villas are now struggling to get their money out of delayed projects, or are suing companies who have not started even the most basic construction.

Perhaps the most positive effect of the sudden slowdown in sales and decline of prices is the growing power of buyers in the market, observers say. When a developer launched a new building a year ago, units would sell out in a matter of hours. There was no time for negotiation and, more importantly, no interest on the part of the developer. Now a prospective buyer can enter a sales office and set out their demands before plunking down a single fil for a piece of property.

"Before all the obligations were on the purchaser, not the developer," says Ludmila Yamalova, a lawyer with M.A.C. Davidson & Associates in Dubai. "Now, contracts need to be a lot more evenhanded. Buyers can ensure they have rights." Still, would-be homeowners need to take proactive steps to make sure their life savings are safe and retrievable if the developer breaks the agreement or if other problems arise. The most important thing to keep in mind is to enshrine your needs in a legal document. Anything that is not in the contract could evaporate into thin air.

Here is our list of the seven most important steps to take before buying in Abu Dhabi or Dubai @Body-SubheadNew:1 Do your homework For most people, buying a home is the largest investment of their financial life. If you are getting a mortgage, you are looking at monthly payments for up to 25 years. So, do your homework on everything that relates back to your purchase. Read up on all the recent articles about the developer, paying special attention to disputes that have arisen over construction or delivery dates. You need to fully understand how reliable the company you are dealing with is. This is important even if you are buying on the secondary market, because ultimately you are relying on the developer to finish the project.

If the apartment is already finished, make sure you read up on the neighbourhood and make an unscheduled visit. Your building may be ready for occupation, but a promised mall or shopping area could be years away. And you want to make sure that construction noise will not keep you sleepless for the next decade, so check on the progress of nearby buildings. In addition, check whether the master developer of the project has made progress with the infrastructure. A finished apartment building is not worth much if there is no electricity or water.

@Body-SubheadNew:2 Check with the Government In Dubai, the Government is taking an increasingly active role in guaranteeing the rights of investors. The Real Estate Regulatory Agency and Dubai Land Department have promulgated a number of laws that require that not only all transactions be registered, but also every broker, developer and escrow account. So check that all the parties you deal with are properly accredited with the Government. One of the most important things to check before you hand over money is that your check is addressed specifically to the escrow account associated with your project. This ensures that the developer cannot use the money for anything except construction of that project.

"It is important to make sure everything is registered because if you don't, there is no guarantee that your payment will go to the right place," says Ms Yamalova. She says that a buyer can go even further by making contact with the trustee of their escrow account at the bank. This person is in charge of making sure that the payments are used for appropriate things like paying construction companies and not, say, starting a new project.

Some sort of regulator is expected to be formed in Abu Dhabi, but no details of how it will work or what laws it will pass have been put forward by the municipality yet. @Body-SubheadNew:3 Make sure the developer has its ducks in a row Ask the developer to show proof that it fully owns the land they plan to build on. There have been multiple cases in Dubai recently in which someone bought from a developer, but the developer ended up defaulting on payments to the master developer. This leaves the buyer with no recourse to get their money back and no asset.

Also ask for specific details on the construction timeline and whether the developer has hired contractors to start building your new home. @Body-SubheadNew:4 Make sure you have your ducks in a row Talk to a financial adviser or make a spreadsheet of your income and expenses. Home buyers need to know their limits and not get glassy eyed when viewing apartments that are out of their league. Be realistic, or else you will increase the chances that you will default and lose some, or all, of your savings.

@Body-SubheadNew:5 Take advantage of the slow market When sellers start to get desperate, it means the buyer can push their boundaries on everything from sales price to fees to contracts. If a seller looks distressed, lowball them on a price. If they do not take the bait, then negotiate back up closer to your target price. In any case, it's a good time to attempt to find a deal. "Sellers are a lot more accommodating than they were before," says Ras Kazerouni, an estate agent with the Property Store. "It's been getting cheaper and cheaper and there is no measuring stick for a bottom line in Dubai because this never happened before."

Ms Kazerouni says that her clients have been able to increasingly leave the brokerage fees with the seller as well, which saves buyers about 2 per cent of the transaction. An estate agent can be your best friend and find you some choice deals, but do your homework on them, too. Make sure they are registered with Rera and do not let them trick you into paying more for an apartment than the seller actually wants.

This is a classic scheme to increase their take-home at the end of the transaction. @Body-SubheadNew:6 Build safety for yourself into the contract Once you've decided to go with an apartment, then you may be well served by hiring a lawyer. Buyers in Dubai should take note that this is common practice in developed property economies. It isn't just an added expense, but an insurance policy that will prevent you from getting ripped off or squeezed for more money down the road.

That being said, it will set you back about Dh10,000 for the advice of a lawyer and some negotiation. Make sure that the contract leaves you with an exit strategy in case your whole world starts falling apart. If you can no longer afford your payments because you lost your job, there should be a way for you to leave your contract and get most of your money back. Also make sure the contract lets you break off the sale if your mortgage does not come through, says Nick Clayson, the head of property law at Norton Rose in Dubai. "If you agree to a price, you shouldn't assume that a bank will agree with you," he said.

"Tell the seller that you would like your contract to be conditional on getting an acceptable valuation from the lender ... It's buyer beware in this market." Get some guarantee about your service fees, too. There have been cases where service fees shot up five-fold in a single year. These can add up to tens of thousands of dirhams. Tell the seller that you want some guarantee that this will not happen and get it added to the contract.

In short, have everything you believe you are getting for your money written down and signed by the seller. This is especially true in Abu Dhabi, where there is no central regulator. At the end of the day, contracts will be the point that two sides always go back to - it's your best friend or, if you don't pay attention, your biggest weakness. @Body-SubheadNew:7 Take your time Now that the market has slowed down, every buyer can take a step back and look at the data in front of them before signing over their fortunes.

Keep in mind that homes are not commodities. Do not let a momentary lapse in property prices scare you into selling your recent purchase at a loss. "Investing in real estate is a 10-year process," says Guy Alan Sadler, the chief executive of Profile Group Properties in Abu Dhabi. "If you wait, you will usually come out well in the end." @Email:bhope@thenational.ae