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Tips for choosing real estate in Dubai

  • Dubai is the most famous and largest city in the UAE. A center of attraction for finance, investment, tourist flows and emigrants. Purchasing real estate in Dubai is a popular investment for that part of buyers who are focused on living in a resort region with a fairly hot climate. The market for real estate offers in the capital of the emirate is quite extensive, see for yourself at https://dubai.etagi.com/en-us/realty_out/doma/. It includes apartments and villas, single-family housing and condominium housing. Choosing among the offers is not easy; to do this, you need to familiarize yourself with the market, determine the motive for purchasing real estate and the price categories of housing that will not become a burden to pay for its maintenance.

    Purpose of buying property in Dubai

    When planning to purchase real estate in the UAE, a person must decide whether he needs an apartment/villa/office to make a profit - that is, to be an investment that should pay off in the foreseeable future. Or he buys real estate for personal use - residence, family relocation. It is no secret that almost 80% of the UAE population are foreigners who were recruited to work in Emirati companies and did not have their own housing when they arrived in the country.

    Those considering real estate as an investment are attracted by:

    • no taxes when leasing
    • high market capitalization
    • possibility of renting at a high cost
    • simplicity and transparency of doing business with real estate

    Real estate for personal use is not available to all visiting foreigners. In order to purchase an apartment in the capital of the emirate, you must have a long-term, well-paid contract or own a stable profitable business. Residential real estate in Dubai is not cheap. However, with the development of tourism and the flow of emigrants, it is becoming increasingly accessible to more foreign citizens.

    This is due to changes in the legislation of the UAE and the emirate of Dubai, whose government has simplified the procedure for purchasing residential real estate for foreigners living and working in the country.

    It is much easier for specialists from European countries to purchase Dubai real estate. Therefore, when considering the purchase of an apartment or villa in order to settle in Dubai, they pay more attention to the choice of areas located near developed urban infrastructure: supermarkets, hospitals, leisure facilities, kindergartens and schools.

    Of course, a convenient location affects the cost. With the same area and technical characteristics, the difference in cost can be significant. Therefore, before purchasing, it is recommended to study real estate prices in different areas and decide on the priority of values: what is more important – comfortable housing, or developed infrastructure, which will be necessary for children or other family members.

    What should a foreigner pay attention to?

    Location

    The location of the property being purchased is one of the most important conditions in choosing an investment property. To do this, you need to familiarize yourself with the city map. Dubai is a large city, partially divided by a natural branch of the sea (Khor Dubai). It has several main districts, each of which has its own specifics:

    Bur Dubai  is  a historical area where the first settlement was founded

    Deira  – predominantly commercial, old district

    Downtown  - the business and financial center of the city, skyscrapers and Burj Khalifa, the Dubai Mall is also located here

    Sobha Hartland  - a completely new and fresh area of ​​the city near the business center, blue lagoon, premium apartments and villas from the developer Sobha Realty

    Dubai Creek  is also a new area with its own harbor, yacht clubs, and snow-white beaches. The foundation of the Dubai Creek Tower, the future record holder for height (1345 m), was laid here.

    Other areas:  Jumeirah  and  Umm Suqeim  - coastal areas of low-rise buildings on the shores of the Persian Gulf,  Dubai Marina  - also on the shores of the gulf, but has the character of high-rise buildings - there are many skyscrapers, yachts, cars and traffic jams, always many tourists, very lively and noisy area.

    Knowing the specifics of the areas, it is easier to navigate the choice of real estate. If the acquisition is made for the purpose of investment: business development, rental, then preference should be given to an area where prices for renting premises or offices remain consistently high. If we are talking about purchasing real estate for living, then preference is given to residential and sleeping areas with a well-developed social infrastructure, a large number of shops, schools, entertainment centers and a convenient transport system.

    Study and comparison

    Dubai provides enormous opportunities for purchasing high-quality housing, which is not inferior in attractiveness to the generally recognized world real estate centers: Eterno Prestige Villas, Costa Brava or Santorini. But. It’s one thing to read or hear, it’s quite another to see for yourself, get acquainted with the living conditions, evaluate the advantages and disadvantages.

    Only after this, make a choice in favor of purchasing real estate in the UAE, and not in other popular resort centers. The biggest advantage of Dubai is the combination in one city of the advantages of comfortable living close to the sea (Persian Gulf) with the opportunity to enjoy the advantages of the largest metropolis - the largest and richest city in the Middle East.

    Stay time

    Considering that the cost of real estate in Dubai is quite high, before making an investment, you should make sure that the period of residence in the emirate will be long, and the choice of location will not create problems with subsequent liquidity. That is, when leaving Dubai, the property can be quickly and profitably sold. You should not discount the duration of the contract under which an investor comes to reside in the UAE. If the contract is short-term, does not provide for the possibility of extension, and the buyer does not have the goal of settling in the emirates for a long stay, preference should be given to renting premises. This applies equally to both residential and non-residential real estate.

    Availability

    The wave of the COVID-19 epidemic that has swept across the world has significantly changed the real estate market in the UAE. Quarantine measures and restrictions on the influx of foreign labor have reduced demand for housing. As a result, prices for even the most prestigious real estate properties have dropped significantly. In 2022, the situation began to recover. Buyers began to dictate prices on the market. This is the most favorable period for purchasing real estate in Dubai. As people adapt to the conditions of quarantine restrictions, mask restrictions are lifted, vaccinations are mandatory and self-isolation periods are reduced, life in the huge city returns to normal.

    When calculating the affordability of purchasing real estate, one should proceed from the fact that the costs of maintaining/maintaining the premises should not exceed ¼ of the owner’s monthly income, and available funds should be enough to pay the down payment. In Dubai, this is about 9% of the total cost of an apartment/villa/office.

    Rental yield

    For those who do not plan year-round living in the UAE, and will use the property only during certain seasons, or invest in non-residential properties for the purpose of renting them out, the profitability should be assessed. Gross yield in Dubai from real estate transactions (rental) ranges from 5 to 9%. This amount should fully cover the costs of utilities, maintenance, property taxes and mortgage repayment (if one is issued).

    Additional expenses

    In addition to the direct costs of purchasing real estate, Dubai legislation provides for the payment of additional fees that go to the state treasury:

    • DLD  registration fees  are 4% of the total value of the property in the emirate of Dubai
    • NOC fees range  from AED 500 to AED 5,000. It may be included in the cost of housing paid to the seller of the property
    • commission paid to the agent  - 2% of the purchase price (only on the secondary market)

    Purchasing real estate from a developer

    The initial step before signing a contract is a thorough study of the developer’s reputation. This is a common practice to prevent investments by scammers or companies on the verge of bankruptcy. It is necessary to collect all available information about the developer, the place and time of his registration as a legal entity. Study the schedule and composition of payments, if installment payments are provided, additional payments and their amount.

    In addition to studying the developer’s documentation, it makes sense to study the proposals of other developers for similar objects, their conditions and prices. To alleviate complex issues related to activities in a foreign legal field, specific legislation, it makes sense to hire a lawyer who works in the real estate market and has experience in intermediary interaction with citizens of the country in which the buyer lives and developers from Dubai.

    How to choose the right property in Dubai

    Direct selection of real estate consists of a number of sequential actions:

    • get acquainted with the widest possible list of offers for the sale of objects of various price categories and locations in Dubai;
    • visual or through a representative acquaintance with the object in kind (visiting an apartment/cottage/office);
    • studying the area where the building is located in order to study the infrastructure and population living in your chosen location;
    • clarify whether there is a parking space in the building or near it, whether you need to pay for it and how much it costs to rent a parking space;
    • spend several hours in the selected apartment/house/office in order to assess the noise level of the area from traffic and extraneous noise from neighbors.

    Fluency. The acquisition of rights to full unconditional ownership of a real estate object is acquired only with the simultaneous acquisition of the right to the land plot (share) on which the object is built. Free ownership gives the right to make changes to the layout, reorganization, reconstruction of the object. Conducting any civil transactions with him.

    Rules for purchasing real estate in the UAE for foreigners

    In recent years, the laws of the emirate regarding the purchase of real estate for foreigners and expats have become much more flexible. Anyone coming to the emirate for temporary or permanent residence has two options for purchasing real estate:

    1. on the secondary market
    2. from the developer during the construction phase (through an agency)

    In the first case, after agreeing on the cost and terms of the transaction, a preliminary agreement (memorandum) is signed. To ensure that participants do not refuse the agreed conditions, a deposit of 10% of the cost is made, which, after concluding the main contract, is taken into account as payment for the cost of the property. Under the terms of the transaction, the buyer can take out a mortgage loan if his own funds are insufficient.

    When purchasing from a developer, the buyer fills out an application to reserve an apartment/office in a building under construction. Concludes a preliminary agreement (Booking Form), following which he contributes from 5 to 20% of the cost of the object. After signing the main contract, payment is made on the agreed terms.