Real Estate Market in Dubai

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Located along the Persian Gulf, this commercial capital of the Middle East is known for its high-end apartments, majestic yachts, lofty buildings, largest commercial centres and exhibitions, mega events and its love for gold.

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In this case, real estate and property investment becomes more attractive and profitable due to the higher influx of people and growing population. Since 2002, legislative changes in the commerce activities allowed the foreign investors to buy property in the UAE. 

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According to one report published in CBRE, nearly 18,000 property transactions were carried out in the first two months of the current year. All of these investments were residential property investments. Property investment in Dubai is flourishing at a great pace and people are buying and selling properties for residential, buy-to-let and for commercial use. 

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The same report mentioned that the real estate market is breaking its records in residential investment with prices going up. The growth of off-plan market sales was reported at 78% along with 19% growth in secondary market sales.

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It leads us to conclude that demand for Dubai property investment is getting stronger and the time is ripe now to invest in the growth-oriented real estate market.

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Is it Profitable to invest in Dubai Real Estate?

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According to Bloomberg, Dubai's real estate has become the busiest real estate market following the world's first three real estate markets. In 2021, the Dubai investors made 219 property investments worth $10 million, as described by the same report. During the same year, New York closed the year with 244 sales, Los Angeles with 225 and London with 223 property sales. 

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These real estate statistics are enough to entice property investors to buy property in Dubai. The secure and high-yielding profits in Dubai have become a great source of achieving the biggest property investments that is expanding with each passing year.

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The booming real estate market ensures promised returns on luxurious apartments, splendid villas and opulent penthouses. If you’re considering buying a property to live in Dubai, then residential investments are also a great option for you as a foreigner.

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What are the Different Types of Property investments in Dubai?

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In this cosmopolitan destination for luxury living and investment, the potential investors can invest their money into sumptuous apartments, extravagant villas, spacious townhouses, seaworthy beach fronts and magnificent penthouses. However, if you want to invest in residential investments, you need to consider the two other options for the sake of earning a promising Return on Investment (ROI).

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Different types of properties in Dubai offer a number of options to the investors. The residential investments have been divided into two categories:

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Ready: Fully furnished apartments, villas and penthouses are a great option for the investors who want to invest in the luxurious residential units instantly. They can invest in these ready properties for buy-to-let or living with their family.

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Off-Plan: Dubai has become popular for off-plan investments due to the lower prices of the properties offered by the property developers who sell the property during its construction phase. The buyer enjoys the smaller investment and resell the property at higher prices once the real estate project is complete. This type of property can be used for the rental purposes by the buyer who enjoys the perks of buying this high-value property at the lower price.

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However, there are two more categories of property investments for the foreigners who want to become a part of the luckiest investors who are enjoying the promising returns in Dubai. 

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Can Foreigners Buy Property in Dubai?

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Yes, foreigners can buy property in Dubai. The investment-friendly ecosystem of Dubai has opened new avenues for the investors and they can buy a house or any property in Dubai after legislation changes in 2002. As a result, a great inflow of foreign investment in real estate was observed. On the contrary, the zero-tax policy on the property investments is the major reason for the highest number of property sales in this commercial hub of Gulf countries.

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However, the areas where they can invest have been divided into categories. Let’s discuss each of them!

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Leasehold Ownership: In this type of ownership, a lease is issued for 99 years and then the property goes back to the authorities because it was purchased by the foreigners or expats on lease rather than the full ownership of the property.

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Leasehold Properties: Leasehold properties are lower in prices and contracts can be renewed at the end of the leasehold term. The investor has limited control over the property. The owner’s consent will be required for subletting the leasehold property and for making any alterations to it.

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Freehold Ownership: In this type of ownership, the investor buys the property and becomes the owner of it. The owner can resell, rent out or occupy as he desires. He has complete control over his property unlike freehold property where he doesn’t own the property land.

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Dubai Land Department grants the ownership of the freehold property to the foreigners and it can be inherited as the owner will have a title of deed of the property. The owners of freehold properties in Dubai can enjoy the visa renewal regulations and can renew the visa of their family for the five to ten years.

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The landlords of freehold properties can let, alter or resell the property whenever they want. They can also live with their family in it.

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Where Can Foreigners Buy Property in Dubai?

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As discussed above, foreigners can invest either in leasehold or freehold properties. The areas for the property investment or buying a home in Dubai have been divided into leasehold and freehold areas. The leasehold areas are the areas where the property is in the centre of the city of Dubai. 

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Dubai Silicon Oasis, Green Community and other areas dedicated for foreigners offer leasehold opportunities. The following is the list of the freehold areas in Dubai for foreigners:

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1. Business Bay
2. Damac Hills
3. Downtown Dubai
4. Dubai Marina
5. Dubai Studio City
6. Mohammed Bin Rashid City (MBR City)
7. Palm Jumeirah
8. The Greens

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How To Avoid Property Scams in Dubai?

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Buying authentic and reliable investment properties in Dubai requires the proper research. Particularly foreign investors should hire credible real estate dealers to avoid any property scam and fraudulent activities.

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Besides, the expats need to complete the documentation and visit the official website of Dubai Land Department to learn about the guidelines on land in Dubai. Moreover, no upfront cost is required to buy property in this magnificent city. 

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The Real Estate Regulatory Agency (RERA) in Dubai is responsible for setting up rules and regulations for the real estate. If you find any problem during the property purchase, you can contact RERA to get your issues resolved.

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Why Should You Buy Property in Dubai?

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Let us change this question a little bit! Why should you not buy property in Dubai? Dubai is a peaceful and recreational city. It has the ultra-luxurious towers, penthouses and villas of the world. The business centres are landmarks that attract many businessmen and tourists towards it. So, there’s no denying to the fact that Dubai is an ideal place to buy a home.

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1. Impressive Rental Yield

The high-yields on property investments has accelerated the pace of property sales in recent years. The properties can be used to sublet, buy-to-let or for reselling. The promising yields and stable income catches the attention of the investors instantly.

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2. Tax-Free Investment

The zero-tax policy of Dubai was designed to open up new opportunities for the investors around the globe. The Dubai nationals along with expats are trying their luck in property investment and they’re earning a large sum of money from their investments.

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3. Highest Number of Tourists and Population

The high number of tourists and population makes property investment more desirable in Dubai than ever. The residence in Dubai is becoming more popular and attractive for these reasons. So, you should invest in these luxury properties for earning handsome returns for a long time.

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4. Get Residential Visas Smoothly

Dubai law allows the investors to get residential visas for the investors and his families for a period of five or ten years. The higher the value of the property, the greater the number of valid years of visas in Dubai. So, investment in real estate is a great incentive for the expats who wish to reside in Dubai for a longer period of time.

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What is the Procedure for Buying a Property in Dubai?

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The procedure of buying a home in Dubai is straightforward and smooth. Real Estate Law No. 7 of 2006: Land Registration Law defines the rules and regulations for buying property in Dubai. All you have to do is:

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1. Do a proper market research (Hire a Real estate agent)
2. Analyse the property location, type and prices
3. Evaluate property options
4. Shortlist properties
5. Design a contract between the buyer a seller
6. Sign Memorandum of Understanding (MOU) or FormF. It can be obtained from Dubai Land Department
7. Get NOC
8. Transfer of Property 

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Costs on Real Estate Property Investment

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Besides, the following costs during real estate property investment that are paid either to Real Estate Regulatory Agency (RERA) or Dubai Land Department:

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This fee is paid to the Dubai Land Department.

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• 4% of property purchase price, plus an AED580 for apartments
• AED430 for land
• AED 40 for off plan

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The following is the property registration fee:

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• For properties below AED 500,000: AED 2,000, plus 5% VAT
• For properties above AED 500,000: AED4,000, plus 5% VAT

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Dubai Land Development Mortgage Registration Fees

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• 0.25% of the loan amount +AED 290

• To purchase an off-plan property, you will need to pay an Oqood (contract) fee, which is 4 percent of the original property price.

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Other costs are:

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• Real Estate Agent Fee: 2% of the purchase price + 5%VAT
• Conveyance Fee: Approximately AED 6,000 to AED 10,000
• Bank Mortgage Arrangement Fee: 1% of the loan amount + 5% VAT
• Property Valuation Fee: Between AED 2,500 – AED 3,500 + 5% VAT
• Home and Contents Insurance: Approximately AED 1,000
• Life Insurance: Approximately 0.4-0.8% per annum on the decreasing loan balance

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Going Forward

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In the last, we can say that the property investment is the most alluring for the locals and foreigners due to the promising and stable yields in Dubai. You can also invest in these lavish and plush real estate properties and enjoy the group of highly successful investors around the world.

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In 2023, the growing real estate market and sprawling population is increasingly creating new possibilities for the property investors. You can also enjoy the tax-free business culture of Dubai and invest in the plush residential apartments, buildings and penthouses. 

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An investor can take advantage of this optimistic year in Dubai’s real estate by investing in the right kind of property. Indeed, Dubai can make your dream of becoming a successful investor come true instantly  by putting your money into the right property. So, start investing today!