Ways to Buy Property in Dubai

A Guide to Buying Real Estate in Dubai

Dubai's real estate market is in a state of continuous expansion. Currently, there are 2.5 times more sales and purchase transactions in the Emirate than there were 5 years ago. Many new complexes and villas are being built in areas where foreigners are permitted to buy.

Who Can Buy Property in Dubai?

Citizens of Dubai are allowed to purchase real estate with full ownership anywhere in Dubai. This also applies to citizens of some other Middle Eastern countries, such as Saudi Arabia, Oman, Bahrain, Kuwait, and Qatar.

Foreigners from other countries can buy property in the United Arab Emirates under specific conditions. In special areas called freehold zones, it is permitted to purchase property with full ownership. Anywhere else in Dubai, only a leasehold on a real estate object is allowed.

In the case of a leasehold, a person only owns the physical property for 50-99 years, not the land on which it is built.

With full ownership of a property in a freehold zone, foreigners can obtain a Dubai Golden Visa. There are 9 freehold zones in Abu Dhabi and about 50 in Dubai.

4 Advantages of Real Estate Investment in Dubai

1. Appreciation of property prices. Demand for real estate in Dubai is growing. As of the end of 2022, the number of real estate sales transactions reached 25,500, a 60% increase compared to the same period last year.

Due to increasing demand, prices are also rising. For example, at the end of 2022, the average cost of an off-plan apartment was AED 1.3 million, which is 15% more than a year before.

2. Opportunity to rent out the property. Property owners have the right to lease their property. The rental yield is approximately 5-8% per year.

Among those who rent housing are tourists, business people, and highly skilled employees who come to the country for work.

3. No taxes on real estate. There is no annual property tax that real estate owners have to pay. Owners also do not pay taxes on the income they receive from renting out their property.

Taxes only need to be paid when buying or selling a real estate object. Still, the rate is quite low, at 2-4%. The tax amount is usually shared between the buyer and the seller.

4. Obtaining a Golden Visa. Individuals who purchase real estate in freehold zones can participate in the Dubai residency program. The visa is issued for 2 or 10 years, depending on the total amount of the real estate investment.

With a Golden Visa, investors can open bank accounts for international transactions. At the same time, it is not necessary for them to reside permanently in the country.

Real Estate Costs by Area in Dubai

Dubai is the most popular area for buying property. Foreigners purchase real estate here four times more often than in the country's capital, Abu Dhabi.

The average price per square meter in downtown Dubai is higher than in Abu Dhabi: $3,755 versus $3,340, respectively. However, apartments outside the city center are more expensive in the capital than in Dubai: the average price in Abu Dhabi is $2,947, and in Dubai, it is $2,380.

Among the Dubai areas where investors most frequently buy real estate are Business Bay and Dubai Marina. The most expensive apartments are located in the Burj Khalifa and Palm Jumeirah areas.

On average, you will need $300,000-600,000 to buy an apartment in Dubai. If you decide to buy a villa, be prepared to pay $500,000-1,000,000.

Average Prices for Apartments and Villas in the 10 Most Popular Areas of Dubai

Types of property in Dubai

The types of properties that foreigners can buy include apartments, townhouses, villas, and commercial properties. A foreigner can choose a completed property or a property under construction to qualify for a Dubai residence visa.

Apartments are purchased almost 5 times more often than villas: according to the Dubai Real Estate Market Report for the 2nd quarter of 2023, the number of purchased apartments reached 23,244, while the number of purchased villas was 4,808.

New or secondary market property: Which is better to buy?

In Dubai, you can buy a property that is newly built or still under construction from a developer. The other option is to purchase a property that has had a previous owner. Each type has its pros and cons, so the choice depends on your goals and preferences.

A new property is usually built in line with modern trends. It may be more optimized in terms of space and energy efficiency. New property can also be bought at different stages of construction, offering more options to choose from.

Off-plan properties usually have the lowest price. They require a down payment of 10-20% as an initial cost. The remaining amount is paid after the construction is completed. However, construction may take longer than expected, or the project may be abandoned altogether.

Resale properties may require a lot of money for renovations and repairs. However, you won't have to wait very long to take ownership and move in.

Secondary market real estate is more tangible. You can see exactly what you are buying, including the location, surroundings, amenities, and even the neighbors.

If you are applying for a 2-year residence visa, you cannot invest in a property under construction – the real estate must be finished. This rule does not apply to the 10-year Golden Visa, which requires an investment of AED 2,000,000.

Property purchased for a residence or Golden visa can be new or resale, as this factor is irrelevant.

Examples of available properties for investors in Dubai

Dubai

$5,526,000 – $8,205,000

Three-story luxury villas overlooking a private golf club

1052 m² – 1629 m²

Dubai

$1,883,000 – $3,074,000

Luxury apartments in an exclusive project on the banks of the Dubai Canal

176 m² – 257 m²

Dubai

$698,000 – $1,130,000

Apartments in a new residential complex with its own infrastructure

109 m² – 262 m²

Documents for an Expat to Buy Property in Dubai

The list of documents may vary depending on the emirate and the conditions of the property purchase. Here are the documents an investor needs to prepare to buy property in Dubai:

1. Current residence visa or residence permit in Dubai.
2. Sales and Purchase Agreement, also known as a Memorandum of Understanding or Contract F. This document sets out the terms and conditions of the property purchase.
3. No Objection Certificate from the developer or previous owner if the property is purchased from the secondary market. The certificate confirms that there are no outstanding fees and that the transfer of ownership is possible.
4. Power of Attorney if the investor uses a proxy or representative to carry out the transaction.

If the investor is buying property with a mortgage, they need to get pre-approval before signing the sales agreement. The Dubai Land Department requires mortgage approval before applying for a No Objection Certificate.

After all legal procedures are completed, a title deed will be issued in the investor's name. They will officially be a property owner in Dubai from then on.

The Process of Buying Real Estate in Dubai

The process of buying real estate in Dubai takes about 6 weeks. The investor does not need to complete the procedure on their own: lawyers accompany the deal. They check the terms of the contract and the legal purity of the property.

Sales and Purchase Agreement

The seller and the buyer sign the sales and purchase agreement, which contains the following information:

• The address, size, and cost of the object;
• The terms and conditions of the deal;
• Who pays the associated fees;
• The date of substantial completion.

Obtaining the No Objection Certificate (NOC)

If the investor buys real estate with a mortgage, they need to get a No Objection Certificate from the bank. Other required documents are a payment schedule from the developer and a property transfer certificate.

Registering ownership

After all the money is paid and the contract is signed, a buyer and a seller must register their deal with the Dubai Land Department.

The application for contract registration is made through the Real Estate Regulatory Agency app.

Real Estate Taxes and Maintenance Costs in Dubai

The following taxes and fees are paid when purchasing real estate:

1. Transfer tax: 4% in Dubai and 2% in Abu Dhabi. The tax amount is usually split in half and paid by both the seller and the buyer.
2. Registration fee: $545 if the deal is less than $137,000, and $1,090 if the deal is more than $137,000;
3. Administration fee for tax payment — $147.
4. Administration fee for issuing an ownership certificate — $68.

When buying commercial property, buyers additionally pay 5% VAT.

While owning the property, no annual tax is levied.

If you rent out a property, the rental income is not subject to tax.

After selling a property, the seller pays half of the transfer tax, for example, 2% of the property value in Dubai or 1% in Abu Dhabi.

Utility bills. The average cost of basic services for an 85 m² apartment is $163 per month. The Internet costs about $95-100 per month.

Obtaining a Dubai Golden Visa by purchasing real estate

A foreigner who buys real estate for full ownership is entitled to a Dubai Golden Visa. It is issued for a period of 2 or 10 years, depending on the cost of the property.

To get a 10-year Golden Visa, an investor needs to buy real estate for at least AED 2,000,000, or about $545,000. In this case, the investment amount does not depend on the composition of the investor's family.

To obtain a 2-year residence visa, investors need to buy real estate for AED 750,000, or about $204,000. This sum is valid if the investor owns a property alone. If the ownership is registered for two spouses, the real estate must cost at least AED 1,000,000, or about $272,000.

The investor can take out a loan to buy real estate; the down payment must be at least 50%.

The process of obtaining a Golden Visa takes at least 2 months and consists of 5 steps:

1. Preliminary Due Diligence. Immigrant Invest lawyers check the investor and their family members against different international databases. This check is necessary to reveal the risks of refusal and increase the chances of getting a visa.
2. Preparation of documents and obtaining a 6-month visa. The lawyers give the investor a list of the necessary documents. Then they translate and notarize them and conduct consular legalization procedures. After that, the investor gets a 6-month entry visa.
3. Buying real estate. The investor does not need to come to Dubai to buy a property: we can help you do it remotely.
4. A medical check. The investor and their family members participating in the Dubai Golden Visa program need to undergo a medical check, as they must not have any serious diseases. Applicants are tested for dangerous infectious diseases and undergo fluorography.
5. Main Due Diligence. The applicants come to Dubai to apply for a visa and submit biometrics. The application review process takes 5-7 days. When approved, the investor and their family members get visas.

Get Information for Company Formation in Dubai

Factors to Consider Before Buying Property in Dubai

Affordability. The first thing to consider is whether you can afford the real estate. Keep in mind not just the property price but also the maintenance costs, administrative fees, and taxes. They can reach 7-8% of the purchase price.

Rental yields. Rental yields in Dubai are about 5-8% per year. If you plan to rent out your real estate, ensure the rental income covers your mortgage and maintenance expenses.

Length of stay. Before you invest in real estate in Dubai, it is worth considering whether you want to tie your life to Dubai for a long time. Sometimes renting a property can be more profitable than buying your own.

Trends and market conditions. It is a good idea to explore the current trends and find out how the real estate market will change. New properties may be built soon, or prices may drop in some areas. The more you know about market conditions, the more chances you have to get the best offer.

Location. Consider your family's lifestyle and what facilities you want nearby. You might need kindergartens and schools, or cafes and restaurants might be essential for you. It is important to choose the best option for your needs.

Quality. Check the age of the property you are investing in and whether it requires renovation. Also, make sure the developer who built your real estate has a good reputation.

Eligibility for a residence visa. If you plan to get a residence permit in the Emirates, make sure the property you are buying meets the requirements. The minimum investment amount is AED 750,000 ($204,000).

Frequently Asked Questions

Can foreigners buy property in Dubai?

Yes, foreigners are allowed to buy property in Dubai. However, there are certain location restrictions. According to them, foreigners can only buy real estate in specific places called freehold zones. Most of them are located in Dubai.

Is it worth investing in Dubai real estate?

It is profitable to invest in Dubai real estate as property prices are constantly growing. In 2022, the cost of real estate was 1.5 times more than 10 years ago.

Owners can rent out their property without paying taxes on the income they get from renting it out. Thus, real estate in Dubai can be an additional source of income.

How much does an average house cost in Dubai?

The cost of a house in Dubai depends on the area where it is built. On average, you can buy a villa for $500,000-1,000,000. Some of the cheapest areas are Dubai South and Damac Hills 2.

Do you get residency if you buy a house in Dubai?

It is possible to get a residence permit in Dubai if you buy a house there. There are two residence visa options: for 2 and 10 years. The first one is issued if the investor buys real estate for AED 750,000 ($204,000), and the second one is for the investment worth AED 2 million ($545,000).

What are the pros and cons of buying property in Dubai?

The benefits of buying property in Dubai are:

• No property tax and no income tax from renting properties out;
• Constant growth of property prices;
• The opportunity to rent properties out and get 5-8% of income from it;
• The opportunity to get a residence visa in Dubai.

The main disadvantage of buying an apartment in Dubai is that a foreigner cannot buy it everywhere, but only in freehold zones. However, there are about 50 of them, which means that every investor can find a suitable place.

Where can foreigners buy a house in Dubai?

Foreigners can buy real estate in the freehold zones of Dubai. There are about 50 of them. Damac Lagoons, Town Square, and Tilal Al Ghaf are the most popular ones for buying houses.

Are property prices in Dubai dropping?

No, they are actually rising. In April 2023, the Dubai property market recorded a 33% drop in sales transactions and an 18.3% drop in sales value compared to the previous month. It was the first time since December 2022.

Market analysts and investors considered it a short-term fluctuation. The data at the beginning of May showed a fast return to the first quarter of 2023.

At the end of 2023, the Dubai real estate market is expected to have an unprecedented price increase, reaching AED 300 billion. Experts attribute the increase in prices to the growth in sales volume. Even though real estate prices are rising, luxury housing in Dubai is still more affordable than anywhere else in the world.

Is it cheaper to rent or buy an apartment in Dubai?

It depends on your goals and financial situation. If you do not plan to stay in Dubai for a long time, renting might be cheaper, as all you have to pay is the rent.

The average rent for a 1-bedroom apartment in the center of Abu Dhabi is $1,444 per month, and outside the center, it is $1,179. In Dubai, the same apartment in the city center will cost about $2,004 per month.

If you consider staying in Dubai for a long time and applying for a Dubai Golden Visa, buying a property might be a smarter choice. To buy an apartment in Dubai, you need $300,000-600,000. Buying a villa will cost $500,000-1,000,000.

In addition to the property cost, real estate owners also pay transfer, administrative, registration, and management fees to issue a title deed.

The purchased property can bring you a stable income if you decide to rent it out. Rental yields here are about 5-8% per year. In Dubai, real estate owners do not pay annual property or income taxes, but they have to pay a maintenance fee of $15-60 per square meter annually.