Basic requirements to buy a property in Dubai
The process of looking for a property that encompasses maximum facilities at affordable prices is a wish that every individual wants to have. But you seldom notice the nuances that you may encounter while buying property in Dubai or in any city. This entire process includes a number of factors such as consultation with the field experts, reaching out to agents, researching the legal status and hidden costs of the purchase. Prime gives you a comprehensive guide on Dubai property law for foreigners. It also includes the factors involved in buying property in UAE for expats.
How much tax do I pay when buying a property in Dubai?
Before finalizing your purchase it is important to take notice of the basic factors regarding property buying. For instance the Land Department of Dubai charges a fee of 4 percent from the total purchase price plus AED 580 (Abu Dhabi 1% – 2%). The fee for the property agent usually varies around 2 percent or 3 percent of the total value of the property purchased. Similarly, the mortgage registration fee of the property costs about 0.25% of the mortgage borrowed plus additional charges of AED 290. The percentage of fee for bank arrangement is 0 to 1.5% of the total sum of loan that you have received. The trustee fee costs around AED 4,000 whereas the total valuation fee is set between the range of AED 2,500 – AED 3,000 plus Value Added Tax (VAT).
How to find a property in Dubai?
It is important that you do not purchase a property without prior consultation or research on the market and legal environment of real estate in any area that you are interested in. For your convenience we have prepared a list of the areas available for buying property in the UAE for expats.
- Al Barsha South 2
- Al Barsha South 3
- Al Jaddaf
- Al-Qouz 3
- Al-Qouz Industrial Area 2
- Al-Qouz Industrial Area 3
- Al Rowyah
- Dubai Marina
- Emirates Hills 1
- Emirates Hills 2
- Emirates Hills 3
- Jebel Ali
- Mirdif
- Nad al-Sheba
- Palm Jebel Ali
- Palm Jumeirah
- Ras al Khor
- Sheikh Zayed Road
- Sofouh 1
- Sofouh 2
- The World Islands
- Umm Hurair 2
- Warsan 1
Where to buy property in Dubai?
It has been noticed the new investors often find themselves stuck in making a choice while buying property in Dubai. The reason behind such indecisiveness is because of the variety of opportunities at the investor’s disposal. So, to make your choice easier these are the factors that you should consider:
- Potential on the investment
- Lifestyle appeal
- Your final budget
After assessing these factors you will have a rough idea of the kind of property that you are looking for. Following are the details of the areas you can buy a property in:
- CityWalk Dubai
Apartment
- Initial Asking Price (Sales): 2,150,000 AED ($585,368)
- Rental Value: 190,000 AED ($51,730)
- Average Gross Yield: 8.80%
Villa/Townhouse (4 Bedrooms)
- Average Asking Sales Price: 19,527,000 AED ($5,316,506)
- Average Transaction Sales Price: n/a
- Average Rental Price: n/a
- Average Gross Yield: n/a
- Jumeirah Beach Residence
Apartment
- Initial Asking Price (Sales): 3,300,000 AED or ($898,472)
- Average Rental Price: 90,000 AED ($24,503)
- Average Gross Yield: 2.70%
Villa/Townhouse (4 Bedrooms)
- Average Asking Sales Price: n/a
- Average Transaction Sales Price: n/a
- Average Rental Price: 160,000 AED ($43,562)
- Average Gross Yield: n/a
- Dubai Marina
- Initial Asking Price (Sales): 1,300,000 AED ($353,943)
- Rental Value: 76,494 AED ($20,826)
- Average Gross Yield: 5.90%
- Arabian Ranches
- Initial Asking Price (Sales): 4,000,000 AED ($1,089,057)
- Rental Value: 260,000 AED ($70,788)
- Average Gross Yield: 6.50%
- Dubai Downtown
Apartment (3 Bedrooms)
- Initial Asking Price (Sales): 3,600,000 AED ($980,151)
- Rental Value: 210,000 AED ($57,175)
- Average Gross Yield: 5.80%
Villa/Townhouse (2 Bedrooms)
- Initial Asking Price (Sales): 3,375,000 AED ($918,892)
- Average Rental Price: 225,000 AED ($61,259)
- Average Gross Yield: 6.70%
Why buy property in Dubai?
Exemptions on Taxes: When you have a chance to buy property with the exemption of taxes it seems that there can be no better opportunity to invest or look for a new home in a city that is rich in culture, technological advancements and is becoming a center point for all investors. So, there are the facts and now it is your choice to avail such a golden opportunity without further waiting.
Tourism and Technological Sectors: The recent years have witnessed a significant rise of tourists in Dubai from all around the world. One of the key reasons for this is the affordability and luxury that the city offers simultaneously to the visitors. It seems that more and more people have been attracted to the vibrant life of Dubai and are now exploring more about the city and the advanced facilities.
Visa Issuance: Dubai offers you an easy and stress-free process via application which gives you a good reason to move there. Buying property in Dubai will allow you to get access to the golden visa with a validity of around 5 to 10 years under the condition that your are investing a sum of AED 10 Million and above or you are a person with a specialized skills in a particular field such as a doctor, engineer or scientific researcher and can contribute in the field of research and development.
Increasing Value: The demand and value of property in the coming years is expected to grow at a much higher rate than it is currently and keeping this in mind the value of your investment will grow far more than any other investment option. Thus there should be no hesitance in going for it if you are prepared and have gone through all the nuances of Dubai property law for foreigners.
Is now a good time to buy property in Dubai?
Since the first half of 2024 has already passed, we have noticed how profitable buying property has been for those who saw it as an opportunity and bought a land unit or an apartment. It is certainly a great time to invest in property in Dubai, the real estate market has observed a remarkable rise in the business and it has been noticed that the deal is worth it.
Can foreigners buy property in Dubai?
Areas specially designated for expatriates such as Dubai Hills are the areas allowed for the foreigners to buy property. But it is really important to consult a credible real estate agent to avoid fraud and unregistered, illegal or forged properties.
The Ruler of the Emirate of Dubai has determined a dynamic Dubai property law for foreigners which specifies several regions allotted for foreigners including:
- Palm Jumeirah
- Downtown Dubai
- Dubai Marina
- Arabian Ranches
- Jumeirah Beach Residence
Is buying a property in Dubai a good investment?
Considering the lack of property taxes, increasing demand for rental apartments along with the booming population makes Dubai property purchase a golden opportunity of investment. When you have so much to receive such as tax exemptions, green visa, growing market of real estate and tourism in return of the investment that you are making, it becomes crystal clear in assessing the benefits of investing in the property sector of Dubai.
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Land Department Regulations
The landscape of the UAE has been through quite a lot of dynamic changes over the years. Dubai property law for foreigners was not exercised earlier in the UAE for a long time. Nevertheless, the past few decades have seen rapid developments in all sectors of life giving way for the authorities to allow buying property in UAE for expats and own land and property in the UAE. Dubai was the first emirate to legalize buying land by expatriates. It was later followed by Abu Dhabi, Sharjah and other cities once they saw it could be profitable for attracting foreign investment. However, the land department of the UAE’s government introduced several property ownership categories that are as follow:
Freehold Areas: Dubai allows foreigners and expatriates to own land only in designated areas that are considered to be freehold. This property is reserved for those who want to buy land in Dubai but are not citizens of the UAE. This law allows expatriates to own both the property and the land on which the unit is built.
Ownership Deeds: As an expatriate you can buy a unit extending to a period of 99 years. It allows the people who have bought the property to fully dispose of the building such as the apartment or the villa built on the property unit that they had been allotted.
Long-Term Lease: You can also buy property for lease in Dubai for at least a period of 25 years at the initial stages. The lease gives the owner complete custody of the property but restricts the ownership of the land on which the unit stands.
Usufruct contract explained: An agreement for land ownership by a foreign expatriate that allows purchase of a property unit up-to a period of 99 years. It also restricts the owner from making any alterations or further constructions on the unit without the prior approval of the authorities. It gives expatriates the right to own residential land for over 99 years. However it says that you can enjoy the facilities of the property but cannot make any changes to the place unless the authorities ask you to do so.
Musataha
It is a contract that allows foreigners to own, construct and alter a property unit for a specific time period.
Residence Visa: After the launch of the golden visa in UAE acquiring a residence visa has become easier for expatriates. One of the key points investors consider while they invest in a business is to look how much ROI it can get them. In that regard one of the benefits of purchasing property in Dubai is that the government offers you a residence visa to the investors. You can acquire a residence visa for five years if you have a property of 5 Million AED (Which makes around USD 1.36 Million). If you are above the age of 55 and have retired you can leverage from the five year program for foreigners who own a property of above AED 2 Million or USD 544.5k. The program launched collaboratively by the General Directorate for Residency and Foreign Affairs (GDRFA) and Dubai tourism has a lot of benefits for those who want to live in Dubai after their retirement.
Taxation Laws: As of now the government of UAE does not impose any taxation on foreign investors which allows them to enjoy good profit margins and can help the government to gain more investors. Thus, the relaxation on property taxes makes it a lucrative investment for the foreigners as you can get maximum benefits out of the investment without having to worry about the taxes.
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Can foreigners buy land in an area outside the freehold?
As a foreigner investor you will be able to buy property only in the freehold areas. According to the Dubai land department the purchasing of a property outside the freehold region is restricted for foreigners and can only buy in the designated areas i.e. freehold.
Duration of a Long-term Lease:
The duration period of a long-term property lease in Dubai and its validation by the Land Department of Dubai in its rule for long-term lease made it compulsory to last for at least a period of 25 years and not less. It does not give the buyer the ownership of the land on which the purchased property stands.
Distinguishing a freehold and leasehold agreement:
The freehold and leasehold property laws for foreigners in Dubai differ in giving the buyer custody of the land on which the unit stands. For instance, the first law allows the investor to have ownership of both the land and property for a period of 99 years but the latter one only gives ownership of the property unit to the investor.
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