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Chapter 4: How to buy luxury properties under construction in Salalah, Oman for renting after completion
Buying a property in Salalah, Oman, for renting after completion can be a lucrative and sustainable investment, as you can benefit from the rental income and the return from the property management. However, buying a property, especially one that is under construction, can also be a risky and challenging investment, as there are many legal, financial, and market aspects to consider. Therefore, it is advisable to formalize the purchase of the property with the help of a real estate broker, who can assist you with the process, the documents, the payment, the taxes, the fees, the risks, and the insurance.
A real estate broker is a licensed professional who acts as an intermediary between buyers and sellers of properties. A real estate broker can provide a range of services, such as property search, valuation, negotiation, contract, payment, transfer, registration, visa, and after-sales support. A real estate broker can also help you with different investment strategies, such as renting out your property after completion of construction, depending on your goals and preferences.
However, not all real estate brokers are the same, and choosing the right one can make a big difference in your experience and outcome. Therefore, when choosing a luxury real estate broker in Salalah, Oman, to buy a luxury apartment, house or villa under construction in 2024, according to Real Estate Group, the following factors should be considered:
1. Research: Before you contact any broker, you should do some research on the market, the areas, the prices, and the legal aspects of buying property in Oman.You can use an online search to get some information and compare different options. You can also read some articles, blogs, reviews, and testimonials from other buyers and investors who have bought property in Oman before.
2. Reputation: You should look for a broker that has a good reputation, experience, and track record in the market. You can check their website, social media, reviews, testimonials, and awards to get an idea of their quality and credibility. You can also ask for referrals from friends, relatives, or colleagues who have bought property in Oman before. You should avoid any broker that has a history of complaints, disputes, or lawsuits from their clients or partners.
3. Services: You should look for a broker that offers a range of services, from property search to after-sales support. You should also look for a broker that has a professional and qualified team, including agents, lawyers, accountants, and consultants, who can guide you through the whole process and handle any issues that may arise. You should also look for a broker that can help you with different investment strategies, such as renting out your property after completion of construction, depending on your goals and preferences.
4. Fees: You should look for a broker that charges reasonable and transparent fees, and does not have any hidden or extra costs. You should also look for a broker that works on a commission basis, meaning that they only get paid when the deal is closed. You should avoid any broker that asks for upfront or non-refundable payments, or that has a conflict of interest with the seller or the developer.
In order to formalize the purchase of a property under construction in Salalah, Oman, for renting after completion, you will need to follow these steps with the help of your chosen real estate broker:
1. Booking: You will need to book the property that you have chosen, by paying a booking fee, which is usually 10% of the purchase price. This fee is refundable if you change your mind within a certain period, usually 15 days. You will also need to sign a booking form, which is a preliminary agreement that outlines the basic details of the property and the deal.
2. Reservation: You will need to reserve the property that you have booked, by paying a reservation fee, which is usually 5% of the purchase price. This fee is non-refundable if you cancel the deal. You will also need to sign a reservation agreement, which is a binding contract that specifies the terms and conditions of the deal, such as payment schedule, delivery date, warranty, penalties, and cancellation.
3. Contract: You will need to sign the final contract of the property, which is a legal document that transfers the ownership of the property from the seller to the buyer. You will also need to pay the remaining balance of the purchase price, which is usually 85% of the purchase price. You will also need to pay the registration fee, which is usually 3% of the purchase price, to the Ministry of Housing and Urban Planning, which will issue the title deed of the property in your name.
4. Delivery: You will need to receive the delivery of the property, which is the physical handover of the property from the seller to the buyer. You will need to inspect the property and make sure that it matches the contract and the specifications. You will also need to receive the keys, the manuals, and the warranty documents of the property. You will also need to pay any service charges, utility bills, or maintenance fees that may apply to the property.
5. Visa: You will need to apply for a residency visa, which is a permit that allows you to live in Oman as a property owner. You will need to submit the required documents, such as passport, title deed, health certificate, and police clearance, to the Royal Oman Police, which will issue the visa in your name. You can also apply for visas for your family and parents, if they are eligible. The visa is valid for two years and renewable as long as you own the property.
In order to get a residence permit in Oman when buying real estate, you will need to meet the following options and conditions:
Option 1: You can apply for a residency visa through real estate investment, which is available to non-Omani citizens who buy freehold properties in Integrated Tourism Complexes (ITCs) or waterfront resorts. These properties are licensed by the government agencies and subject to the approval of the Ministry of Housing. You will need to invest a minimum of OMR 50,000 (US$ 129,000) in the property and hold it for at least four years. You will also need to provide the required documents, such as passport, title deed, health certificate, and police clearance, to the Royal Oman Police, which will issue the visa in your name. You can also apply for visas for your family and parents, if they are eligible. The visa is valid for five years and renewable as long as you own the property.
Option 2: You can apply for a residency visa through commercial investment, which is available to non-Omani citizens who invest in any business sector in Oman. You will need to invest a minimum of OMR 150,000 (US$ 389,000) in the business and create at least five jobs for Omanis. You will also need to provide the required documents, such as passport, business license, financial statements, and tax clearance, to the Ministry of Commerce, Industry and Investment Promotion, which will issue the visa in your name. You can also apply for visas for your family and parents, if they are eligible. The visa is valid for ten years and renewable as long as you maintain the investment.
In order to provide and request the documents for buying a property under construction in Salalah, Oman, for renting after completion, you will need to follow these guidelines:
- Documents to provide: You will need to provide the following documents to the seller, the developer, the broker, and the authorities, as applicable:
- Copy of your passport and visa
- Copy of your proof of income and bank statements
- Copy of your proof of address and utility bills
- Copy of your reservation agreement and booking form
- Copy of your final contract and payment receipts
- Copy of your title deed and krookie
- Copy of your health certificate and police clearance
- Documents to request: You will need to request the following documents from the seller, the developer, the broker, and the authorities, as applicable:
- Copy of the seller’s passport and visa
- Copy of the seller’s proof of ownership and title deed
- Copy of the developer’s license and registration
- Copy of the project’s master plan and specifications
- Copy of the property’s floor plan and layout
- Copy of the property’s warranty and maintenance documents
- Copy of the property’s service charges and utility bills
In order to pay for the property under construction in Salalah, Oman, for renting after completion, you will need to follow these steps:
1. Booking fee: You will need to pay a booking fee, which is usually 10% of the purchase price, when you sign the booking form. This fee is refundable if you change your mind within a certain period, usually 15 days. You can pay this fee by cash, cheque, or bank transfer, depending on the seller’s preference.
2. Registration fee: You will need to pay the registration fee, which is usually 3% of the purchase price, to the Ministry of Housing and Urban Planning, which will issue the title deed of the property in your name. You can pay this fee by cash, cheque, or bank transfer, depending on the authority’s preference.
3. Taxes, fees, and other charges: You will need to pay some taxes, fees, and other charges that may apply to the property, such as:
3.1. Income tax: This is a tax that is levied on the rental income that you receive from the property. The income tax rate is 15% of the rental income, but it is waived if you rent the property for personal use or for less than OMR 30,000 (US$ 77,900) per year.
3.2. Service charges: These are charges that are paid to the developer or the management company for the maintenance and upkeep of the common areas and facilities of the property, such as landscaping, cleaning, security, etc. The service charges vary depending on the type, size, and location of the property, but they usually range from OMR 1 to OMR 3 (US$ 2.6 to US$ 7.8) per square meter per year.
3.3. Utility bills: These are bills that are paid to the utility providers for the consumption of water, electricity, gas, etc. The utility bills vary depending on the usage, but they usually range from OMR 20 to OMR 50 (US$ 52 to US$ 130) per month.
3.4. Maintenance fees: These are fees that are paid to the contractor or the service provider for the repair and replacement of any defects or damages in the property, such as plumbing, wiring, painting, etc. The maintenance fees vary depending on the condition, but they usually range from OMR 100 to OMR 500 (US$ 260 to US$ 1,300) per year.
In order to deal with the risks and uncertainties of buying a property under construction in Salalah, Oman, for renting after completion, you will need to pay special attention to the following aspects:
1. Market fluctuations: The real estate market in Salalah, Oman, is influenced by various factors, such as supply and demand, economic conditions, political stability, tourism trends, etc. These factors can affect the price, demand, and appreciation of the property, and may result in losses or gains for the investor. Therefore, you should monitor the market closely and regularly, and adjust your strategy accordingly. You should also diversify your portfolio and invest in different types of properties and locations, to reduce your exposure and risk.
2. Project delays: The completion and delivery of the property under construction in Salalah, Oman, may be delayed due to various reasons, such as technical issues, financial problems, legal disputes, weather conditions, etc. These delays can affect the cash flow, return, and profitability of the investment, and may result in penalties or cancellation of the deal. Therefore, you should check the developer’s reputation, experience, portfolio, and financial status, and avoid any developer that has a history of delays, defects, or disputes. You should also read and understand the contract carefully, and make sure that it includes clauses that protect your rights and interests, such as warranty, penalties, and cancellation.
3. Quality issues: The quality and standard of the property under construction in Salalah, Oman, may not match the contract and the specifications, due to various reasons, such as poor workmanship, substandard materials, design changes, etc. These issues can affect the value, demand, and appreciation of the property, and may result in defects or damages in the property. Therefore, you should inspect the property thoroughly and regularly, and make sure that it meets the contract and the specifications. You should also request and receive the warranty and maintenance documents of the property, and make sure that they cover any defects or damages that may occur in the property.
4. Legal disputes: The ownership and transfer of the property under construction in Salalah, Oman, may be challenged or disputed by various parties, such as the seller, the developer, the broker, the authorities, the tenants, etc. These disputes can affect the validity, security, and profitability of the investment, and may result in lawsuits or arbitration. Therefore, you should seek independent legal advice before signing any contract, and make sure that it is clear, fair, and legal. You should also check the title deed of the property, and make sure that it is free of any encumbrances, liens, or mortgages. You should also keep all the documents and receipts of the property, and be prepared to defend your rights and interests in case of any dispute.
Want to buy real estate in Salalah, Oman? Write us on WhatsApp and Real Estate Group will find the best options for you. Everyone buys from us!
In order to secure and protect your investment in a property under construction in Salalah, Oman, for renting after completion, you will need to consider the following types of risk insurance that are available for buyers of properties:
1. Property insurance: This is a type of insurance that covers the property against any physical damage or loss caused by fire, flood, earthquake, theft, vandalism, etc. The property insurance premium varies depending on the type, size, and location of the property, but it usually ranges from 0.1% to 0.5% of the property value per year. The property insurance policy usually has a deductible, which is the amount that the buyer has to pay before the insurance company pays the claim.
2. Liability insurance: This is a type of insurance that covers the buyer against any legal liability or claim arising from the ownership or use of the property, such as injury, death, or damage to third parties or their property. The liability insurance premium varies depending on the type, size, and location of the property, but it usually ranges from 0.05% to 0.2% of the property value per year. The liability insurance policy usually has a limit, which is the maximum amount that the insurance company will pay for any claim.
3. Rental income insurance: This is a type of insurance that covers the buyer against any loss of rental income due to various reasons, such as vacancy, tenant default, eviction, etc. The rental income insurance premium varies depending on the type, size, and location of the property, but it usually ranges from 1% to 3% of the annual rental income. The rental income insurance policy usually has a waiting period, which is the time that the buyer has to wait before the insurance company pays the claim.
In conclusion, formalizing the purchase of a property under construction in Salalah, Oman, for renting after completion, with the help of a real estate broker, can be a crucial step in your investment strategy. A good broker can provide you with valuable information, advice, and support, and help you with the process, the documents, the payment, the taxes, the fees, the risks, and the insurance. Therefore, you should consider the factors and criteria that are important to you, such as research, reputation, services, and fees, and do some comparison and evaluation on the different options and brokers. You should also seek independent legal and financial advice before making any decision.
In the next chapter, Real Estate Group will discuss how to evaluate and compare the return on investment of different strategies, such as net present value, internal rate of return, payback period, etc. Stay tuned!
