Options Galore in Dubai Property

Dubai property scene is constantly under a state of flux. More and more people in Dubai property market are opting for their own roof over their heads, instead of renting property in Dubai. Overseas visitors are getting to experience the cosmopolitan culture here and are investing in Dubai property.

Why is Dubai property selling like hot cakes? Quality lifestyle is one reason. And secondly, there is an abundance of options in Dubai property! It offers anything from studio apartments and individual villas to town houses and condominiums.

A condominium or condo for short is a property type with individually owned units in a multi-unit development. In addition to these privately owned apartments, the common areas such as foyers, recreational areas and lawns are jointly owned by all the residents of the development. Dubai property market is flooded with condo options, more often condo hotels. Individual owners can put their unit to personal use or pool it with the hotel’s management team for rental. Condo hotels are one of the prominent Dubai property options available at present. They have close access to recreational facilities, theme parks, casinos, etc. These hotels have the potential to generate high rental yields for the owner in the Dubai property market. Rentals of up to 8 percent per year are guaranteed.

An independent apartment in Dubai property market can range between 500,000 to 12,000,000 AED*. A studio apartment is a bachelor apartment with one large hall which is used as a living room, dining room and bedroom all rolled in one. Even the kitchen is usually a part of this room and the apartment is complete with a smaller room as a bathroom. The minimum price of a studio apartment in Dubai property market is 275,000 AED. It can go up to 500,000 AED. At the same time, a studio apartment in Dubai can be rented for about 400 AED a day.

A villa is an upper class house which has its own compound. It is usually located in a countryside or sub-urban locality. The price of a villa starts at about 1,500,000 AED and can soar up to 20,000,000 AED in Dubai property market, depending upon the location and property area. Palm Islands, Dubai Land, Meadows and Arabian Ranches are some of the premium villa locations in the Dubai property matrix.

A townhouse is an independent house usually in the urban area. There can be a group of town houses in a community. Each town house is individually owned by the buyer who also owns the land on which the house has been built. Buying a town house property in Dubai provides the luxury of having access to swimming pools, golf courses, private beaches and lush gardens. Dubai property industry offers these at a starting price of around 900,000 AED.

Overseas investors, both individual and commercial, look upon Dubai property as a site to extend their investment portfolios with more promising returns than their respective home countries.

*AED: Emirati Dirham; 1 US Dollar = 3.67370 AED; 1 AED = Rs.11.10112

Property Buying Process in Dubai

Due to the wise planning by the Dubai leadership, the property buying process in Dubai has been incredibly lucrative. With development areas for the highest residential tower and largest mall in the world, Dubai is experiencing a booming real estate market. Owing to strong fundamental demographics, Dubai is enjoying a vibrant real estate market boom. In Dubai, real estate prices have risen due to high demand and supply shortages.

The Dubai government has managed this economic boom with a push-pull management. The Crown Prince relaxed foreign ownership regulations in the year 2002, thereby allowing for 100% foreign control of “freehold” property which could be sold, rented or leased. As a result of this move international investment has flowed into Dubai. Other offers like no capital gains tax in the UAE and no stamp duty on UAE real estate has all induced more real estate property investment in Dubai.

The Dubai Strategic Plan for 2015 is an ambitious plan that targets high GDP growth rates with an increasingly skilled workforce, through extensive investment in financial, construction and tourist sectors. While other regions in the world are experiencing credit crunches due to mismanagement, Dubai has a credit surplus and is an emerging international financial centre.

The UAE property market has options available for commercial properties, short-term rental properties and office spaces. It also has residential properties that include apartments, luxury villas and mixed-use gated communities. These are also waterfront properties, beach resorts and penthouses. The opportunity is awesome as many real estate developments have extensive waiting list and the Dubai rental property offers high yields of around 12 - 15% per annum.

Property Investment In Dubai, UAE

Payment schedules can range from increments of 10% up to 20%. It is at the discretion of the developer how they structure it

The benefit of buying off-plan is that re-sales command relatively high premiums therefore reducing any profit margin in the investment considerably.

Who Can Buy?

Any investor, overseas or resident, can purchase in Dubai’s luxury property developments.

Home Financing

If you are looking for home financing options in Dubai, most developers offer finance packages. However, Tamweel is certainly one of the best options. Tamweel offer a wide range of products for you to choose from. Tamweel finance properties that are ready to move into, as well as those that are under construction. They will even pre-approve your loan before you start looking so that you will know exactly what your budget is. In addition, Tamweel offer you the option of owning the property outright, or leasing it from them with an unconditional offer to own it at the end of the lease period - whatever suits you better. All of their products have been designed keeping your individual needs in view, especially the need for stability and peace of mind, and that is what makes us sure that they have a solution that is just right for you.

Payment Terms

In general, a deposit representing 10% of the buying price is required at the contract-signing stage for all new development properties. This is followed by what are known as stage payments that are made at regular intervals through to completion. Contact us for project-specific details.

Bank Accounts

Buyers do not need a local bank account to arrange purchases, though these can easily be arranged through our partners in Dubai.

Appreciation

Property prices in Dubai have experienced considerable growth, and are forecast to remain this way for some time. This can be clearly seen if comparing current prices with those of 6 months ago. Like all investments, however, property prices can go down as well as up.

To Buy on the Secondary Market or the Resale Market:

If during the construction stage of a property a second party wishes to purchase the property from the owner then the process is straight forward.
The buyer pays the owner an agreed sum which includes those payments the owner has already made to the developer and any premium applied by the owner.

Exchange of contracts with owner at the developers head office usually within two week period.

The developer will then charge a percentage of the original price of the property (typically between 2% to 7%) to reissue the PSA with a new name on it and update their title records. This must be done either in person or with the buyer’s authorised representative. The whole process takes a matter of minutes.
Contract re-issued in buyers name - there is no legal representation for either party or any stamp duty implications.

The buyer will then continue to pay the remaining instalments to the developer as laid out in the PSA.
Commission, typically 2 to 3% is paid to the agent.
The transfer fee is paid by the purchaser.

What exactly is freehold in Dubai?

Purchasing a freehold property in Dubai now means that you own the property forever or until you decide to sell it. You are allowed to pass this property to your family for example, and they enjoy the same level of ownership as you do.

Most important for investors, your resale rights are guaranteed, as is your freedom to rent out your property to a third party, though some restrictions apply to individual developments.

You should note that although these are freehold properties, some conditions on their owners apply, because they are “private community” developments. These conditions will restrict what owners can do with their properties, and oblige them to maintain their properties to certain standards, according to the themes and quality of the communities.

When buying an apartment, the nature of ownership is different from that of a villa, because an apartment is a unit in a building. These are normally classed as “common hold”. Sale agreements for apartments do, however, usually warrant effective full ownership of the unit, subject to restrictions applying to the building, such as renting out the unit, and making modifications.

Where can you buy freehold properties?

Most property developers in Dubai offer freehold, but so far most of the freehold developments have mostly been limited to the Sheikh Zayed Road, and the area of Jumeirah (including Palm Island). However, exceptions to this include the Arabian Ranches and Emaar Towers in downtown Diera. Other future developments include Nakheel’s International City project.

What about buying in other emirates?

So far, the UAE as a whole does not have laws regarding the sale of freehold property to non-GCC nationals. Each emirate makes its own property laws, as Dubai has done. Recently Abu Dhabi announced the availability of freehold, limited to “surface rights” for non-GCC nationals in the Al Raha beach area, outside the main city limits. Ras Al Khaimah, in the north, has created a similar development. The other emirates are expected to follow suit, but there have been no definitive announcements at the federal level yet.

Are property owners eligible for residence visas in the UAE?

Many developments give you the opportunity to gain a residency visa through purchase. Read about Procedures for obtaining a residence visa in our articles under Immigration.

Property Law

The freehold property market in Dubai really started in 1998 when the Dubai Marina project was launched. At that time there was no freehold property law, and villas were sold “leasehold”, on 99 year leases. In 2002 a decree was issued by the Dubai government granting freehold rights to non-GCC nationals (The GCC is the Gulf Cooperation Council, comprising Saudi Arabia, Kuwait, the UAE, Oman, Bahrain and Qatar.) This provided the impetus that has led to the size and dynamism of Dubai’s property market today.

Dubai Residency

The Government has stated that a special category of residence visa will be granted to people buying ‘foreigner’s’ properties. The visa will allow a purchaser to live, but not work in Dubai. The arrangements for granting, and the terms of the visa, are at this time unclear.

Only the Government of the UAE can grant these visas, not the developer or estate agent.

Property Scenario in Dubai

Property in Dubai is a major investment arena for investors worldwide. The investment pours in not only from commercial companies but also from individuals abroad. In the last five years, the real estate sector has seen a marked boost in investments. This in turn has increased the supply of property in Dubai. In fact, both the processes are influenced by and in turn affect each other. In the coming years, this trend is expected to bring about an increased demand for purchasing residential and commercial units. One of the major consequences of this would be soaring property prices. Although many analysts expect that the supply would exceed demand in near future, this is believed to be an impending possibility only for the high income group.

The process of buying real estate in Dubai is simple and hassle free. Property in Dubai requires no national registration. Usually, one has to pay some amount as booking or reservation deposit. Then, there is a deferred payment schedule wherein the remaining payment is divided into installments spread over the construction period. Units are financed to non-UAE residents only on certain ventures. The interest rates of properties range between 6 to 9 percent and the term usually lasts for 15 years. Upon non-UAE transactions, one can even obtain freehold rights.

There are factors that make investing in Dubai realty a profitable exercise. The capital gains tax and rental income tax are 0 percent. Secondly, the demand-supply ratio is carefully monitored and controlled by the government so that the properties account for strong growth rate and returns. Last year, the UAE economy witnessed a 26 percent nominal GDP growth.

Moreover, although legal advice is required to purchase property units in Dubai, there is no fee to be paid for the same. There is no tax levied on the properties. But there is a land registration tax which is paid to the government on completion of the project involved. This amounts to 1.5 to 2 percent of the price. However, if the contract is resold before completion, a transfer fee ranging between 1 to 7 percent is paid to the developer. To add to the benefits of purchasing Dubai real estate, the government provides resident visas on non-UAE investments.

Even the mortgage market has developed quite rapidly over the last few years. The emergence of HSBC as an international mortgage provider for property in Dubai has changed the scenario for ever after. The mortgage rates offered by the bank on are highly competitive and flexible.

In 2002, His Highness Sheikh Mohammed bin Rashid Al Maktoum, with a vision to transform Dubai into a global city, had decided to encourage international investors towards purchasing more properties. This dream will certainly materialize in the years to come.