Dubai has become one of the most interesting locations around the globe in which to buy Real Estate. With its beautiful skyline, modern way of life, and tax benefits, more and more people are looking to purchase property in Dubai. Whether you want to generate rental income, sell at a profit at a later date, or live in Dubai, you really need to understand three important things before you buy.
This article clearly outlines everything you should know about how to buy property in Dubai – in a simplified way – so you can make smarter decisions and avoid making costly mistakes.
1. Foreigners Can Own Property in Dubai- But Know the Rules
There is good news! If you are not from the UAE, you can still own property in Dubai. However, whether the property is owned by foreigners is dependent on where you purchase the property. Foreigners are legally able to own properties in what the UAE government refers to as “Freehold” property ownership areas (freehold areas), specialist zones approved by the government.
There are two main types of property ownership:
- Freehold: You own the property outright, including the land.
- Leasehold: You have long-term ownership of the property, usually for 99 years.
Be sure to check that the property developer is approved by authorities, and that you have all your documents prepared before you make any payment.
2. Location is Key
Dubai is a huge metropolis with many different areas that each offer something unique. Certain areas will be more desirable for high rental income, while others provide better long-term growth or luxury living already.
The most popular areas to invest include:
- Downtown Dubai – the area is great for luxury living and resale value.
- Dubai Marina – granted high rental income and tourist friendly.
- Business Bay – this is an area used primarily for business purposes and is currently driving high demand.
- JVC (Jumeirah Village Circle) – an area that is affordable and still expanding.
If you’re confused and unsure of where to start, then it is best to consult with the best real estate agents in Dubai. They have an established understanding of the market, so they can help you find the right area depending on your budget and investment plans.
3. Be Wary of All Additional Costs
Most inexperienced buyers think they only have to pay the purchase price of the property, but there are several additional costs you should be prepared for:
- Dubai Land Department Fee (DLD): Usually 4% of property price.
- Agency Fee: 2% of sale price.
- Registration Fee: AED 4000 if the purchase price is over AED 500,000.
- Service Charges: Additional yearly fees for maintaining the building and the facilities.
Knowing the additional costs beforehand will cause you to better budget and plan accordingly.
4. Decide Between Off-Plan and Ready Properties
Now you’ll need to decide whether you’re going to buy an off-plan (under-construction) or ready-to-move-in property. They both have their advantages and disadvantages.
- Off-plan: Generally cheaper, have flexible payment options, but these can come with the risk of the project being delayed or changed.
- Ready: You can rent it out right away and see exactly what you’re paying for.
If you choose to buy off-plan, be sure to check out the developer’s track record, ensure the project is registered with the government, and other similar recommendations.
5. Know what your investment goal is
Ask yourself these questions; Are you buying for rental income or are you going to sell later for more profit?
- For rental income: Look for a property in an area that is desirable for potential tenants like Dubai Marina or JVC where people are always searching for rentals.
- For future profit: Buy in an area such as Downtown Dubai or Palm Jumeirah where property values are on the increase.
There is a strong rental market in Dubai because of tourism and business, and short-term rentals (e.g. Airbnb) are quite popular as well. Always check the short-term rental rules and regulations.
6. Mortgage options for buyers
You do not have to pay all cash. Banks in Dubai, both local and international, will extend mortgages to residents and non-residents, but the rules and regulations are different.
- Residents: Can borrow up to 80% of the property value.
- Non-residents: Can borrow up to 50% – 60%.
You will need documentation such as a passport, bank statements, and proof of income. Furthermore, prepare to pay a deposit of at least 20% – 25%.
7. No Property Tax = More Profit
If you’re thinking of buying property in Dubai, there’s a significant upside: there are no property, rental, or capital gains taxes. That means more money stays in your pocket.
However, there is another advantage if your new property is AED 750,000 or greater – you may be eligible for a UAE residency visa, which is a big advantage if you’re a long-term investor.
8. Dubai Lifestyle Adds Real Value
Dubai is not just a fantastic place to invest, it’s also a great place to live in. It offers:
- Word-class shopping and dining
- Excellent hospitals and schools
- Stunning beaches and parks
- Street public transport
With new projects underway, such as the Dubai 2040 Master Plan and the expansion of Expo City, property values in Dubai will continue to rise over the next few years. Key areas like Dubai South and the neighboring communities are expected to see rapid growth.
9. Consider Your Exit Strategy & Plan
One day you will likely want to sell your property. Some areas and homes are easier to sell than others, so think carefully about where to buy. In higher demand locations, selling your property will take less time.
Keep all your documents in a safe place – title deeds, service charge receipts and renovation documentation, among others. Having these will enable you to maximize the resale value of your property.
10. Work with Trusted Professionals
Purchasing real estate in another country is a complex process. That’s why it’s extremely important to work with professionals who are savvy to the process and who can look after your interests.
Make sure your realtor is RERA-certified, and work with trusted legal and financial advisors. A good team can help you avoid scams, save you money, and keep the whole process smooth and stress-free.
Concluding Thoughts
Real estate in Dubai is booming, and many analysts believe now is a good time to buy. Prices are still low and the emirate continues to attract tourists, businesses, and expats from all over the world.
If you are ready to buy in Dubai, make sure you do your due diligence, understand the market and get the right advice. There is still a long way to go for the best properties to invest in Dubai, and great properties are available now, from luxury villas to smart city apartments. You just need to make sure you are looking for the right ones for your goals.
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