UAE Real Estate
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Oct 2, 2008
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UAE Real Estate

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UAE Real Estate was last seen:
Nov 4, 2008
    1. UAE Real Estate
      UAE Real Estate
      Hi Ajamil,

      Thank you for your message. I personally work with a couple of developers directly when dealing with these sorts of projects since I know how they operate and they have delivered before. I’d be happy to recommend, please send me your email address to I can give you their details (I don’t want to advertise for someone else on this forum).

      With regards to how to approach the investment, giving a straightforward answer is quite tricky since you must approach the situation differently depending on what sort of deals you have been going for. When I personally invest or structure a buy-back deal there are a few things to ensure:

      Is the building completed or is it still off-plan?
      Obviously, there is more risk associated with an off-plan building. In this scenario, ask yourself who is responsible for the construction and do they have a track record of delivering on time and on budget? (this goes for the agent/broker too)

      If the building is complete, then the investment will probably be needed to finance a deposit to purchase the building.

      What are the investment funds being used for?
      Is it to finance the deposit for the building? Is it to buy an option to purchase? Or, is it to buy the land? You must assess how your money is going to facilitate this objective.

      What security is in place to guarantee the investment?
      Always look for:
      - Post-dated cheques (ideally held with the trustees or lawyers representing you)
      - MOU (Memorandum of Understanding – effectively a contract)
      - It would be a bonus if there were assets that the investment is secured against (i.e. those of the client who has structured the buy back). These assets can be in the form of other buildings/floors/cash/etc. Ensure that the assets more than cover the guaranteed amount (of the whole syndicate of investors)
      - It would be an even bigger bonus if there was a bank guarantee, however, these are not common in the current market environment.

      Who is managing your investment?
      - Unless you know who the agent is and their track record of delivering on time and on budget without any issues, you do not really want them to also be handling your investment.
      - Ideally, you should be looking for a law firm (with a reputation) to act as trustees on behalf of the investors.

      Who is the agent selling you the investment?
      - Have they had experience with buy back deals?
      - What sort of projects have they worked on before?
      - Is the value of the buy back deal likely to form a significant amount of the agent/clients balance sheet (the larger the deal is compared to the company’s assets, the riskier the investment – larger companies will not fold over one deal, but there are many smaller operators who would)
      - If possible, try to ensure that you physically go down to meet the person who is selling you the investment.
      - Do you trust them with your money? If not, do not consider the investment

      How many other investors are investing and what is the total investment amount the client is looking for?
      - Forming a syndicate with a group of investors (whether you know them or not) can be a good idea since it will spread risk amongst more people.
      - However, you want a clearer understanding of what happens if the syndicate falls out with each other – what happens in this scenario to resolve the situation? This is especially the case if you do not know the other investors.

      Are returns linked to sales?
      - Again, ideally you want the returns to NOT be linked to the sales (i.e. selling units in order to generate the returns) – since this would not be a fully guaranteed investment unless there is additional security (like assets being held as collateral).
      - However, if returns are linked to sales, then ask yourself: What is the company’s sales track record? What is the market like at the moment for that type of property? Are the projected prices conservative or are they unrealistic in order to paint a better picture to potential investors?

      What are the risks?
      - There is no such thing as a risk free investment. If there was, then we’d all be billionaires. So, ask the agent for a frank assessment of all of the possible risks.
      - Be very, very wary if they are trying to sell you the investment as ‘completely risk free’.

      What is the exit strategy?
      - It is all well and good to be promised huge returns, but, how will you realise them? I.e. how will your returns physically be paid back to you and when.
      - Look at the situation now where many people in the UAE are sitting on properties where they have achieved 100%+ returns on their investment. However, until they sell the investment they will not have made a penny.
      - Try to ensure that there is a well defined exit strategy and it fits with your investment objectives.

      How does the investment fit into your investment portfolio?
      - Always ensure that your personal investment portfolio is as diversified as possible – you do not want to put all of your eggs in one basket. This helps to reduce the overall risk of your portfolio
      - As a result, ensure that any buy back does not form a significant portion of your portfolio since you would be exposing yourself to more risk than you need to.
      - If you are looking at higher risk projects (those which are potentially going to return 15%+) then ensure you have a core of safe assets in your portfolio.
      - How is this investment going to work with your overall portfolio strategy? If you cannot answer this, you may need to take a closer look at your investments and what you are trying to achieve.

      General Tips:
      - Ask questions – a lot of people are put off by these deals because they do not understand how the investment works. As a result, many are shy to ask specific questions since they don’t want to appear as though they do not know what they are doing. Then they do not end up investing and, subsequently, they miss a big investment opportunity.

      AVOID THIS TRAP!! If there is something you are unsure of then ASK. This will be the difference between good agents and bad agents. The good agents will be willing to address any queries you have. The bad ones will brush you off and try and avoid the issues (probably because they don’t know what they are doing themselves).

      - Understand the whole process: how the investment actually works to make you money. If you don’t understand how it works, do not put your money into it.

      - Always go with your instinct, if something feels wrong or sounds too good to be true it usually is!!

      I hope this helps, if you need anything else please drop me a message.

      All the best!!
    2. ajamil
      Hi, could you give more details as to how you approached the buy back offers you invested in? Im looking at a few in Ajman that offer 50% in 6 months, and as it sounds too good to be true, Im trying to do as much research and preperation to protecting the investment. Any recommendations on who you dealt with would also be appreciated. Thanks
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