From an investment perspective, Dubai is a prime real estate market where all sorts of properties, including residences and luxury properties are up for sale. Since the Dubai government changed the laws and allowed foreigners to buy houses and apartments in Dubai, a lot of people have been looking to invest in the city. With the massive potential for return of investment, buying a house in Dubai for expats comes with a lot of benefits.
Dubai offers hundreds of properties for the purpose of future investment. These include villas, condominiums, apartment buildings, and single-family homes. If you are interested in making an investment in a property in Dubai, you must take out the time to investigate the important available options.
One of the best possible things about investing in Dubai’s real estate market is that a lot of available condos, properties, apartments, and residential types can fulfill every person’s requirements. This also means that individuals are not forced to settle for properties that may not suit their personal budget or preferences.
Dubai’s real estate market has also significantly attracted the attention of overseas investors that prefer investments for high return and high-income properties. These properties can be found in premium locations, such as Dubai Marina, Jumeirah Lake Towers, and various other famous locations. You should also find the relevant home loan rates through our real estate agents. Visit https://unitedestates.com/properties-search/? to look for premium locations with the best prices.
Types of Properties in Dubai
From a residential perspective, there are primarily three property types that you can buy as a foreigner in Dubai. Each of these properties correlates to a different style of home or land within Dubai. Before buying real estate in Dubai, you should thoroughly assess the market.
Freehold properties are most commonly sought by foreigners who are interested in investing in the UAE, or who plan to buy a flat in Dubai. Individuals living in the UAE have access to freehold properties that can be rented, sold, and inherited if required.
Freehold property has also been associated with relatively undeveloped parcels of land rather than homes or apartments. This allows owners to develop a property of their choice on the land.
Since the investor enjoys the full ownership of the property in perpetuity, the property can be used for any purpose. It also requires less amount of paperwork and does not require consent from the state.
If you are looking to purchase a freehold property in Dubai, you will have to purchase this through a government-approved property or real estate developer.
Another type of property that can be purchased by potential investors in Dubai is commonhold. These properties consist of primarily condominiums, apartments, and non-residential units in a building. Purchasing a commonhold property provides you the individual right for buying, selling, or renting a property for the purpose of inheritance.
This is similar to a freehold property. However, since commonhold properties are very similar to apartments, the owners have to make fee payment for the property maintenance as well as its common areas. These buildings are usually owned by a real estate or property developer.
A common type of arrangement for property within the UAE is called usufruct. This is primarily regarded as a lease for long-term investment. The occupant of the property does not have the right to amend or change a usufruct property in any way. Leases for usufruct properties have a life that could go up to 100 years.
Identify Your Motive For Buying Property In Dubai
One of the most essential aspects that an individual must consider before purchasing a property in Dubai is to evaluate whether they want it for investment purposes or personal use. The motive for identifying a personal property in Dubai is explained as follows:
Purchasing Property In Dubai For Investment Purpose
The real estate market in UAE is very popular and there are many benefits of buying a house in Dubai. These include high rental yield, high market capitalization, and a transparent process for businesses. Most foreigners or expatriates hope to buy an affordable house in Dubai that can get them a massive return on their investment. A thorough assessment of the market can help to buy an apartment in Dubai at a good rate.
Over the years, Dubai has become a huge real estate and business hub. The city is now home to several expatriates that have come from various parts of the world. Dubai-based properties are often regarded as highly expensive and out of reach for several foreigners that work as blue-collar workers.
But, such things have now changed. Individuals that are employed or have a personal business in Dubai are now more inclined towards purchasing their personal property and not renting them out because of loosening of restrictions imposed by the government.
If your personal motive for purchasing property in Dubai is to reside, then you should consider whether the site is close to hospitals, supermarkets, restaurants, and schools. Raising your family in a progressive and developed city like Dubai can be a very rewarding experience.
To find properties, apartments, or houses in Dubai that meet your requirements, check Dubai property prices with United Estates.
Factors To Consider Before Investing In Dubai’s Real Estate
One of the most essential elements that you should consider before investing in Dubai’s real estate properties is location. Individuals who want to invest in an apartment property or buy a luxury house in Dubai should research the best locations for future investment in real estate. Some of the prime locations in the city, such as Dubai Marina, have a particular set of facilities associated with them that provides opportunities for a high-quality lifestyle.
Hence, investors should look to buy property in Dubai that could be beneficial for them.
Research and Analyze Market Stats
It is certainly difficult to select a specific location when there is a wide range of highly-tempting options. To get the best return on your investment, it is essential to start your personal research of the property market.
As an interested investor, you can also read about the current trends, predictions, and patterns on financial investments. Newer projects for investment in Dubai may be more attractive for investors. The more you research, the more benefits you can extract from UAE’s real estate market.
Before investing in Dubai’s real estate market, you should evaluate the overall tenure for which you plan to remain in the UAE. This is important as it will help you to determine the total value that you can derive from your potential return on investment. However, if you are not sure of your possible commitment or long-term plans in the UAE, renting a property is better.
One of the most important factors that are considered globally for purchasing real estate property is affordability. An individual’s housing expense on a monthly basis must not increase more than 25% of their total income. Your budget should also be enough for upfront fees. This could be nearly 9% of the property’s overall price of purchase.
Being an owner of a real estate property in Dubai, you would also need to keep track of the maintenance fees and payment of the annual service charges.
Currently, because of the low property prices caused by the pandemic, the real estate market in Dubai has become a buyer’s market. Hence, this is a great time for investors looking for houses and properties on discount to invest in Dubai.
If you are thinking of renting out your property in Dubai, you should focus on how much monetary gains you will get. This will help you assess if the potential rental income is adequate for covering your repayment, mortgage, and maintenance expenses.
Typically, investors can get a gross yield of anywhere between 5% and 9%.
The real estate properties that are valued at AED 1 million or above in the UAE can help you gain a residency visa. This could be subjected to specific guidelines.
There are mainly two types of residence visas that are typically available in the UAE. One is a six-month multi-entry. The other is a two-year visa for residency. Owners of real estate properties also have an option to sponsor residence visas for their families.
A property in Dubai that has been valued at AED 5 million or more, has no specific mortgage value attached to it and has been retained for 36 months or more can help potential expatriates or foreigners get a residency visa of 5-years or more. This depends primarily on specific conditions for eligibility.
Costs Required For The Purpose Of Purchasing A Property In Dubai
There is a specific cost of buying a house in Dubai. It is important that you have an idea of all the fees associated with buying a house in Dubai in advance. This is essential to set your budget in a relevant manner.
Fees for NOC: This is usually in the range of AED 500 to AED 5000. It can be paid directly to the real estate or property developer.
Fees for registration: Nearly 4% of the total purchase price of the property may be paid to DLD.
Commission of the real estate agent: This is nearly 2% of the property’s price of purchase.
Apart from the potential costs, there could also be extra charges. They could be applied to the office of the property developer as well as the DLD. You may also have to pay fees for a community/building to the real estate developer.
If you do plan on taking out a mortgage, it is important to determine the terms and conditions of the mortgage loans available for foreigners or expatriates that are residents of Dubai. Other guidelines that should be considered by the central bank for the purpose of taking a mortgage are as follows:
- Foreigners or expatriates who want to invest in a real estate property that is valued at nearly AED 5 million have an option for borrowing nearly 75% of the total value of the property. On the contrary, citizens of the UAE have the option to borrow nearly 80%.
- For real estate properties that are valued at AED 5 million or more, initial or first-time buyers have an option to borrow nearly 65% of the total value of the property. On the contrary, citizens of the UAE have an option to borrow nearly 70% of the value of the property.
- Expats that want to invest or purchase a second property have an option to borrow nearly 60% of the total value of the property.
- If you plan to purchase properties that are off-plan, a deposit of 50% would be required from expatriates as well as citizens of the UAE.
- The debt-to-income ratio of the buyer must not be 50% or more.
- The period of the mortgage must not be more than 25 years. This is because there is an age limit (This is usually in the range of 60 to 75 years).
- Foreign citizens have an option to make an application for a specific loan amount that should not exceed their yearly revenue or income by more than seven times.
Purchasing A Property Through Real Estate Developers In Dubai
When purchasing an apartment or house in Dubai, it is essential that you research the real estate developer and ensure they have a credible reputation before you sign a particular contract or agree to buy the property with a specific amount. This is done to make sure that you have made a solid and viable investment. Apart from that, there are various other things that you may need to do for creating a background before selling a property:
- Collect comprehensive data in a written form for all the fees required to be paid along with the potential due date.
- It is essential to make sure that a developer has successfully registered with a relevant regulatory organization.
- Cross verify the rates on other similar properties. This will help you to make sure that you have paid the right amount.
- Evaluate recent developments. This will allow you to view what other buyers have said regarding the personal residential properties by the real estate developer that you are considering.
- You should appoint a solicitor that possesses global experience in purchasing real estate. This will help you to better understand how the real estate process works as well as ask important questions.
Before you choose a real estate developer, you should make sure that all of the aforementioned points apply to the real estate agents or property developers. This will enable you to verify whether the real estate developer is licensed and operates in the right way. Moreover, you must also assess and review the experiences of your previous clients before making any financial investment.
Mortgage Financing & Home Loan Options for Buying Property in Dubai
Foreigners or expatriates living in the UAE often look forward to buy property in Dubai. If you do not have enough cash and are looking to buy a house in Dubai without a down payment, there are some options for you. You have an opportunity to find different mortgage financing facilities provided by various banks and financial institutions in the UAE. This allows you to provide a deposit to the seller without using your own funds as a down payment.
Before investing, however, it is essential that you find out the residential mortgage that can fulfill your individual motive. Let’s have a detailed look at the mortgage rates that are currently provided by various financial institutions to buy property in Dubai:
Emirates NBD Bank: One of the most prominent financial institutions of Dubai, Emirates NBD provides mortgage and house loans of almost AED 15 million. The house loan and mortgages are offered up to 70% loan-to-value (LTV) ratio. Apart from that, there is also the availability of pre-approval.
HSBC: Another financial institution that provides home loans as well as mortgage options to potential investors and buyers for real estate in Dubai is HSBC. Expatriates and foreigners with an income of AED 15,000 per month can apply for a mortgage or home loan in UAE through this lender.
Mashreq: Mashreq is another top financial institution in the UAE that provides mortgages and home loans. The company provides loans for expatriates and foreigners living in the UAE. Mortgages, as well as home loans, are provided for employed and self-employed expatriates having a monthly income of AED 15,000. With this type of financing, expats can buy a house in Dubai in installments.
Buying a House in Dubai
One of the most common questions that people ask is “How to buy a house in Dubai?” Expat property ownership in Dubai is allowed in areas that are designated as freehold. This basically means that foreign buyers can get freehold ownership rights, rather than usufruct rights, leasehold rights, and restrictions for up to 99 years.
The Dubai Land Department is responsible for issuing the title deeds. In addition, there is also no age limit to buying a house in Dubai.
Some of the most popular freehold areas in Dubai include Downtown Dubai, Business Bay, Dubai International Financial Districts, Discovery Gardens, and more.
Restrictions On Expats Buying Property
At the start of the new millennium, expats were not able to buy any property in Dubai. However, in recent years, thanks to new real estate legislation, this has changed so expats do not have many restrictions when it comes to buying property in Dubai.
There are some specific areas that are not freehold. These places are closed off to foreign buyers, but there are plenty of other places where expats can easily invest in. In addition, there are specific factors that incentivize buying of property in Dubai.
- You do not need to have a specific residency to invest in Dubai.
- There are no regulations like foreign buyer permits that need to be considered.
Because of the lack of restrictions, buying property in Dubai is a pretty straightforward process. Many Dubai properties are bought as freehold but leasehold properties also allow you to own the property for anywhere between 30 and 99 years.
How to Choose the Right Dubai Property
As an interested buyer, you have a lot of options to choose from, including houses, villas, apartments, locations, and new developments. Here is how you can find the right properties in Dubai:
- Go through our online property listing
- Contact our real estate agent for any questions
- Visit the property to get in-depth knowledge and feel of the location and the layout.
- Also, frequently visit the neighborhood to see the amount of traffic and noise in the area.
- Also, find out if the property you are buying has good parking space.
Depending on your preferences, some of the above factors may not be important for you; however, it is a good idea to check the neighborhood in the area considering some places in Dubai have less developed roads and heavy traffic.
Rules for Buying a Property in the UAE for Foreigners
The main reason why UAE is such a hot real estate market among expats is that it has lifted many rules and regulations in recent years that make buying property difficult. For expats, this is an excellent time to buy houses and properties in Dubai since the procedure is quite uncomplicated.
There are two ways you can purchase property in Dubai: through a private seller or buying an off-plan property from a developer.
Buying from Private Seller
The steps are quite straightforward:
- Terms and conditions are agreed upon between the buyer and the seller.
- The two parties sign a Memorandum of Understanding, which sets out the terms of agreement for clarity but is not legally binding. A 10% deposit is usually paid.
- The buyer can get a mortgage if it is required.
- The transfer of deed occurs, during which the buyer needs to pay the full purchase price of the property.
The process follows the steps below:
- A reservation form is filled which sets out the terms of the sale agreement, the personal details of the buyer and seller, and how the payment will be made.
- The sale and purchase agreement is made after a 5% to 20% deposit. This agreement is legally binding.
- If required, the buyer obtains the mortgage.
- The property deeds are transferred at the developer’s office. The full price of the property is paid at that time.
Freehold vs Leasehold Property Ownership for Expats
Freehold property ownership allows buyers full ownership of a property in Dubai. This includes the structure and the land on which the house or property has been constructed. Owners of freehold properties can make amendments to their properties and have complete rights to lease or sell them.
Leasehold properties, on the other hand, can be taken on a lease for up to 99 years. It involves buying the rights to live in the property for a specific period of time, which is mentioned in the contract agreement. The ownership of the property will be reverted to the original owner once the lease ends; however, the contract may also be renewed with the same owner.