The United Arab Emirates real estate is making history by proving itself a profitable market for investors worldwide.
Find out the things you should know and consider before becoming a real estate stakeholder in the United Arab Emirates.
Defining Your Objective
Are you seeking to buy a family home for yourself and your family, or is it purely for investment? If ROI is your priority, finding properties in strategic locations should be part of your criteria. Knowing your objectives and goals is the most important thing to consider when buying real estate.
With a definite goal and objective, you can search for the right property and location within your budget.
Freehold vs Leasehold Properties
The government of the UAE changed its real estate policies from 2000 onwards.
Today, large patches of land around the UAE are freehold properties. Expats and foreign investors can easily buy freehold properties if they have the capital and fit the necessary requirements.
Another type of real estate is non-freeholds, exclusive to Emiratis and GCC nationals. As per the Dubai Court of Cassation, Property ownership in non-freeholding areas in Dubai is limited to UAE nationals and GCC nationals.
These lands are leasable by foreign nationals for a period of 10 years up to 99 years. If ROI is your top priority, finding properties in strategic locations should be part of your criteria.
Buying Off-Plan Real Estate
What is off-plan property in Dubai?
Off-plan property is a property or development fully planned and registered in the Dubai Land
Department with an escrow bank account. It is sold with a payment plan which might involve post- handover payments to maximize the ROI.
In the UAE, off-plan properties fare very well because the country is known for its high ROI and
foreign investors worldwide appreciate the modern and forward-thinking architectural developments.
The off-plan properties could be an apartment, villa, or townhouse sold by an investor (secondary market) or a property developer such as Emaar, Meraas, Damac, and Sobha (primary market). You can purchase an off-plan property during the planning or construction phase. Investors usually prefer to buy off-plan projects due to the flexible payment plan and hope for a capital appreciation and high ROI after the handover.
The buyer can move in or rent it out after the construction, and the property is ready to be occupied.
Factoring In All the Costs
You need to know all the costs you will be required to pay on top of the selling price so that you can anticipate and include this in your budget.
The closing costs can go up to 8% of your purchase price. See below as your guide:
|
| 4% of the purchase price + AED 580 admin fee for apartments and offices or AED 430 for land or AED 40 for off-plan |
| Property Registration Fee |
|
Dubai Land Department Mortgage Registration Fees | 0.25% of the loan amount + AED 290 |
Furthermore, agency fees will be around 2% of the property price. In Dubai, all purchases must be registered with the DLD within 60 days of the transaction; if the transaction is not registered within 60 days, the purchase will be void. The buyer also bears the cost of the Property Registration Fee. When the home is purchased via a bank loan, the buyer must also pay an additional fee of 0.25% of the total loan amount to the DLD to register the mortgage against the property. For a cash buyer, this expense is not applicable.
Area and Location Research
One factor that matters most in the real estate industry is location.
The UAE has family-friendly neighbourhoods with nearby schools, clinics and sports entertainment, business hotspots, easy transport options, trade markets, and banks.
The decision is for you to make. You need to choose the right location according to your goals and objectives.
For example, Dubai Marina, Jumeirah Village, and Jumeirah Towers could be your investment points if you are looking for a mixed-purpose area. Dubai Downtown, where the iconic Burj Khalifa is located has a high rental return for short-term rent especially as tourists prefer this location close to Dubai Mall.
Keeping Liquidity In Mind
Real estate investing is highly diversified and encompasses a wide range of investment options. Each real estate investing plan entails a different level of liquidity risk. Liquidity measures the rate at which an asset can be purchased or sold on the market at a price that reflects its current value. In simple terms, it refers to how easily the property can be traded for money without affecting its market price.
Investors should be aware that each asset type carries a different level of liquidity risk.
Therefore, when it comes to real estate investing, the liquidity of a property is something to consider before signing the contract.
Property Legacy:
A one-stop destination for prime real estate listings across the UAE and beyond, we offer seamless access to sought-after properties in the world's most desirable locations. From private home buyers and investors to institutional clients and organizations, we deliver property-centric solutions that are outstanding in value and extraordinary in calibre.
Offering local expertise with a global reach, our consultants have an unparalleled understanding of every market we operate. Our expansive network of prime residential and commercial listings worldwide empowers the process, enabling you to find your dream home or investment property anywhere you want in the world.
For detailed information on the types of locations in the UAE, please get in touch with Senior Sales Consultant Daniela von Rotz at +97156 138 2474.
