Тhings to know before buying property in the UAE

[Mila Eryomina]

Homebuyers should identify their objective, understand the mortgage cap, work with a licensed broker and study operational costs, experts say

The UAE property market has recovered well from the coronavirus-induced headwinds on the back of economic support measures and government initiatives such as residency permits for retirees and remote workers, in addition to the expansion of the 10-year golden visa programme.

The value of property deals in Dubai more than doubled last year and broke a 12-year record in terms of sales transactions. The emirate registered 61,241 sales transactions worth Dh151.07 billion ($41.13bn) last year compared with transactions worth Dh71.87bn in 2020.

The Dubai Marina skyline. Property prices have rebounded in Dubai after the pandemic disrupted the global economy. AP

This made 2021 the best year for total transactions since 2013 and the highest in value since 2009, according to listings portal Property Finder.

“Activity in the Dubai market was further fuelled by the excellent value that the market continues to offer relative to other global destinations,” says Richard Waind, group managing director of broker Better Homes.

“This is a great time to buy a property in Dubai. A growing population and strengthening economy is pushing the Dubai real estate market from strength to strength. We are seeing plenty of domestic and international buyers entering the market for the first time.”

We spoke to experts to compile a list of things to know before buying property in the UAE.

Identify your objective

Before investing in any property, buyers need to clearly understand the aim of the the purchase because this will help them to determine the type of property to buy, says Ayman Youssef, vice president of real estate company Coldwell Banker UAE.

“Ask yourself questions such as: are you an end user or an investor; what’s the investment time frame you’re looking at; what is the kind of return on investment you are expecting? Based on the answers, you will be able to conclude on several factors such as whether you want to opt for a ready or off-plan property, the area to choose, amount of investment and more,” Mr Youssef says.

Do your research

It’s important to thoroughly research and assess the market before buying a property, experts say.

“Take all factors into consideration. What are the rental yields you can expect from the property? Is the area in demand and will it be in the future? Is the community well developed and well connected? What are the amenities?” says Paul Christodoulou, chief executive of Aqua Properties.

Set a budget for yourself and research what kind of units are available, their prices as well as the payment plans being offered, Mr Youssef says.

Finally, choose the property that ticks all or most of your requirements, Mr Christodoulou says.

Freehold or non-freehold

The Dubai government has designated large parts of Dubai as freehold areas, where foreign buyers can own property outright.

“There remain several non-freehold zones, most notably Jumeirah, Umm Suqeim and Al Barsha that are open for purchase only to GCC nationals,” according to Mr Waind of Better Homes.

“However, in recent years, pockets of non-freehold areas have been developed and are now open for purchase to all nationalities, such as La Mer and City Walk in Jumeirah and Madinat Jumeirah Living in Umm Suqeim.”

Buyers should also be aware of a third type of land status known as “leasehold”, in which international buyers can purchase a long lease on the land and property for up to 99 years, as is the case in Green Community Dubai Investments Park, he says.

Before investing in any property, one needs to clearly understand the objective behind the purchase because this will help determine the type of property to buy

Ayman Youssef, vice president, Coldwell Banker, UAE

Get your finances in order

First-time buyers should also understand that a deposit is not the only fee they need to think about when purchasing property in the UAE, says Lewis Allsopp, chief executive of Dubai broker Allsopp & Allsopp.

There are transfer fees, agency fees, sales progression fees, mortgage arrangement fees and mortgage insurance fees that people need to take note of before making their purchase and calculating their return on investment, he says.

“I advise you to speak to a mortgage adviser to get all the information you need – they can talk you through all costs involved in buying your first property in Dubai,” Mr Allsopp says.

Fees linked to the transaction are largely paid by the buyer and typically add up to between 6 per cent and 7 per cent of the purchase price, Mr Waind says.

The DLD fee is 4 per cent of the purchase price, and you need to pay 0.25 per cent of the loan amount if you are taking a mortgage, he says.

“To register the purchase, there is a further fee of Dh2,000 for a property valued below Dh500,000 and Dh4,000 for a property priced above that. Your broker is likely to charge 2 per cent, unless you buy off plan where the developer will pay your broker, and you may pay further professional fees to a mortgage broker and conveyancer,” Mr Waind says.

One of the great advantages of investing in UAE property is that there are no capital gains or income taxes to take a bite out of your returns, he says.

Also, include in your budget other potential costs such as furnishings, move-in costs and utility charges, among others, Mr Christodoulou says.

Know operational costs

While researching and scouting for different property options in the UAE, always check on the operational cost involved, Mr Youssef says.

These would include any service charges and maintenance fees, all of which will vary based on the type of property you bought.

“Villas and town houses have lower maintenance and/or service charges compared to an apartment or a serviced apartment. These charges will also differ based on the area and amenities provided. These operational costs are added over and above the property value and are charged annually,” he says.

[Anna Roccova]

It has been six months since I moved to Dubai to my apartment, acquired through the agency GetProperty https://getproperty.ae/. The apartment corresponds to the plan of the developer, I took it in a complex under construction, no pitfalls. Received exactly what was promised. I recommend GetProperty!