Either you are in it for the tax-free income or the opulence lifestyle, migrating to Dubai is a thought that many foreign residents have pondered about.
With the many beaches, world-class malls, restaurants, retail stores, and growing industries, not forgetting incredible activities such as skiing, surfing, and more. All these goodies make the city attractive to live in.
If you want to venture into real estate Dubai business, or just want to move, either to establish a business or for work purposes, or even for vacation, you have already considered getting a property.
In 2002, the enactment of the Freehold Law gave foreigners legal right to purchase, rent, or sell an estate without requesting for permission or documentation. And with over 80% of the residents comprising expats, it is pretty obvious that foreigners would want to purchase Dubai properties and land.
With that in mind, less than 60% of the residents to not have any property in Dubai- there are reasons for this but most people blame this the fact that they aren’t sure about their duration of stay— perhaps why they prefer to rent in Dubai.
Another hurdle is the down payment of 25% required for those wanting to buy residential properties. If you can manage to overcome these challenges, getting a property could be your direct flight to the excellent Dubai real estate investment, plus a pleasurable lifestyle.
Nonetheless, it is crucial to know all the relevant details of buying a Dubai property prior to making any purchase.
How is Dubai Real Estate Market?
The Dubai real estate market has seen major shifts in recent years. Nerveless, the market in general is regarded as stable. Meanwhile, Dubai's real estate prices dropped by 17% from 2014 to 2016. During this time, industry analysts had varying opinions, although a majority were vouching for a full recovery.
The same has been witnessed in 2020, but this time around, the outbreak of the coronavirus affects not only the Dubai property market but the global industry at large. The prices have been shaky since the first quarter of the year.
Surprisingly, the third quarter of 2020 saw a rise in real estate transactions. Precisely, Q3 2020 records a total of 7115 transactions worth 13.95 billion. This clearly shows the demand for real estate Dubai property is high and continues to spike.
As such, this may be the most ideal time to purchase an estate in Dubai because property rates are low and will climb as we approach the EXPO 2020 due date. Additionally, the UAE currency is closely tied to the US dollar.
Can Foreigners Purchase a Home in Dubai?
Foreigners can legally purchase, sell, or lease their properties.
Average Dubai Property Prices
As you start your search for property in Dubai, it is good to know estimates of the cost of land, home, or villa in the city.
The following table shares an estimate of property rates in the top neighborhoods of Dubai.
|Dubai Marina||2-Bedroom Apartment||AED 2,450,000|
|Dubai Marina||3-Bedroom Villa||AED 3,750,000|
|Al Barsha||2-Bedroom Apartment||AED 1,350,000|
|Al Barsha||3-Bedroom Villa||AED 3,000,000|
|Al Barsha||1200 m2 / 12000 ft2 plot||AED 4,000,000|
|Garhoud||2-Bedroom Apartment||AED 1,480,000|
|Garhoud||3-Bedroom Apartment||AED 3,100,000|
|Culture Village||1850 m2 / 18500 ft2 plot||AED 27, 000,000|
The above estimates are a great example to understand property rates in different communities in Dubai. However, if you have noticed, prices may differ between apartments within the same community. This is partly influenced by overhead costs and amenities.
Dubai Property Types
As a foreigner, you can purchase three types of property only: each of these types is technically associated with different styles.
Most real estate investors in Dubai prefer freehold properties because of the freedom associated with purchasing them. You can sell, lease, rent, and even pass it as inheritance.
These properties are closely linked to undeveloped lands, as opposed to apartments and homes. But, it is uncommon to purchase a pre-fabricated property under a freehold contract. If you want a freehold property, consider approaching a reputable developer.
The top-ranking developers are:
- Azizi Developments
- Damac Properties
They are characterized by long-term lease. You also get the freedom to own a Usufruct property. But you cannot destroy your estate. The lease duration for this property type is between 10 and 100 years, which depend on if you want a residential or business structure as well as the agreement.
This is what others would call condominiums. In Dubai though, owning this type of estate means you can sell, lease or give it as inheritance. The difference between this property type and freehold property is that you must cater for maintenance costs for your estate. Furthermore, the apartments are found within a community where all the estates are owned by a developer.
Factors to Consider Before Buying a Property
As you start your search for the perfect of your dreams, keep the following factors in mind:
When it comes to traffic jam, Dubai is by far the most notorious in the UAE. Driving from Dubai to Sharjah can be a nerve-wracking experience. Suppose you wish to get a project near the CBD, distance should be one of the determining factors. How about conducting inspection before making a purchaser?
The Perfect Neighborhood Matters
Location is everything! Whether you wish to do business or live in Dubai, selecting the best location is important to enjoying the city, and this means the prices will be high if you do not wish to live here.
Among the popular communities in the city are:
- Dubai Marina
- Al Barsha
- The Greens
- International City
If you are getting an apartment or a prefabricate property, it’s easy to forget about parking. However, buying a home that does not have parking is a costly mistake. With temperatures clocking 50 degrees on time, cars parked outside can be difficult to drive and damage quickly.
Steps To Follow When Purchasing a Property
Choose the Right Property
Figure out your ideal property— an apartment, villa, commercial structure, or a parcel of land.
You can approach a property developer or a real estate broker.
Check to verify that you can purchase property and live in Dubai. You also should have sufficient funds.
Remit the deposit. Seek financing from a lender with good rates.
The next step is the shift of ownership from the property owner to your name.
Requirements for Making Purchase
It is not uncommon to encounter difficulties during a real estate transaction process. It is good to hire a reputable lawyer in Dubai. Furthermore, any form of mishaps between the purchaser and the buyer, should be escalated to RERA. This will help you deter downfalls and scams.
Charges and Taxes
We’ve shared a table containing fees you may incur when purchasing a Dubai property in Dubai:
|Dubai Land Department (DLD)||4%, and Admin Fee of AED 540|
|Registration Fees||For properties below AED 500,000: AED 2,000, plus 5% VAT
For properties above AED 500,000: AED 4,000, plus 5% VAT
|Mortgage Registration Fee||0.25% of the loan amount, plus AED 290|
|Mortgage Processing Fee||Usually up to 1% of the loan amount, plus 5% VAT|
|Estate Agency Fee||2% of the purchase price + 5% VAT|
|Conveyancing Fees||Approximately AED 6,000 to AED 10,000|
|Valuation Fee||AED 2,500 to AED 3,500, plus 5% VAT|
|Oqood Fees||4% of the original property price|
One advantage of purchasing a property here is easy tax structure. For one, you must remit a single lump sum to the DLD. Both the seller and the buyer share the amount 50/50, but in most occasions, it is the purchaser that caters for the whole amount.
You must remit the funds to the land department and you should do this during ownership transfer. Other than this tax, you will not pay any other property tax and you will also not pay any tax if you choose to rent your property.
How Loans and Mortgages Work
Normally, potential property investors in Dubai will take a home loan or mortgage for a house.
Finding a Lender
You can apply for mortgage or loan to any financial lender. However, the most recognized financiers include HSBC, and Mashreq Bank. Foreigners can apply for loans from any of these banks, but HSBC, being and international company, has higher chances of financing buyers.
Luckily, if your credit score is high and your salary range appealing, you may easily get a loan and mortgage. So, submit your credits to your prospective lender or a bank you've been a member. If you already have an account, learn to setup it up for loan.
Documents Required for Loan Application
To apply for financing, you should submit the following documents:
- Proof of visa or residence.
- Your passport copy and its copies.
- Details of current address.
- Proof of Income or salary certificate.
- At least six months’ worth of bank statement.
If you are not luck enough for a mortgage, you can still find reasonable payment plans that span 25 years, which is the maximum duration you can get. Also, the monthly installments should not exceed 35% of the estate’s revenue. The total value of the mortgage should be less than sixty times the total monthly household revenue.
On the other hand, if you have an incredible credit score, you can easily qualify for loan in various banks in the city. You can obtain a loan before you decide on the best property. This is actually great as it can speed the transaction process and it is favorable with many sellers.
Another option is to get loan from your home country to fund your purchase. However, this is quite uncommon. But if you can secure financing in Dubai, then go for this option. The vast majority of international bankers are quick to remit home loans in what is regarded as a high-risk property market.
It is important to determine how much you'll require to start your purchase. To be precise, you must figure out if you've enough down payment, which is normally 25% of the value of the property.
Some Dubai property developers would want you to pay 100% beforehand for off-plan projects. This figure can increase depending on various factors. Therefore, it would be best if you tool enough loan or save up something big to be able to acquire the property.
If you wish to make deposit from abroad, there are different services you can use such as Transfer Wise, although there are many other options to choose from. And because the figures can skyrocket, it would be best to cut down the related fees to save funds.
With all these, we wish you well in your search.