Things to consider when buying a property in Dubai, United Arab Emirates

Homebuyers should determine their purpose, understand the mortgage cap, deal with a licensed broker, and analyze operating costs.

On the strength of economic support measures and government programs such as residency permits for retirees and remote workers, in addition to the expansion of the 10-year golden visa program, the UAE property market has rebounded successfully from the coronavirus-induced headwinds.

Last year, the value of property purchases in Dubai more than doubled and surpassed a 12-year sales record. Last year, the emirate had 61,241 sales transactions totaling Dh151.07 billion ($41.13 billion), compared to transactions of Dh71.87 billion in 2020.

According to Property Finder, this made 2021 the best year for total transactions since 2013 and the best year for value since 2009.

"Dubai's market activity was further fueled by the great value it continues to provide relative to other worldwide locations."

"Now is an excellent moment to purchase real estate in Dubai. A growing population and a strengthening economy are driving the Dubai real estate market forward. Numerous domestic and international customers are entering the market for the very first time."

We have prepared a list of items to consider when purchasing property in the UAE.

Identify your objective

Before investing in any property, purchasers need to properly grasp the objective of the purchase because this will enable them to decide the sort of property to buy:

"Ask yourself questions such, 'Are you an end user or an investor?', 'What is the investment time frame you're considering?', and 'What type of return on investment are you anticipating?' Based on your responses, you will be able to draw conclusions about a variety of criteria, such as whether you want a ready-to-move-in or off-plan property, the location to chose, the amount of investment, and more.

Conduct research

Before purchasing a home, it is crucial, say experts, to conduct extensive market research and analysis.

"Take into account every factor. What rental yields can you anticipate from the property? Is the location desirable, and will it remain so in the future? Is the neighborhood established and connected? What amenities are offered?

Establish a budget and investigate the types of available apartments, their pricing, and the available payment options.

Choose the property that meets all or the majority of your criteria.

Freehold or leasehold?

Large swaths of Dubai have been designated as freehold zones, where international buyers can own property outright.

"Several non-freehold zones, including Jumeirah, Umm Suqeim, and Al Barsha, are still available for purchase solely by GCC nationals,"

"However, pockets of non-freehold districts have been created in recent years and are now available for purchase by all nationalities, such La Mer and City Walk in Jumeirah and Madinat Jumeirah Living in Umm Suqeim."

As is the case at Green Community Dubai Investments Park, a third sort of land status known as "leasehold" allows international buyers to obtain a long lease on the land and property for up to 99 years.

Organize your finances

When acquiring a home in the UAE, first-time purchasers should be aware that a down payment is not the only fee they must consider.

There are transfer fees, agency fees, sales progression fees, mortgage arrangement fees and mortgage insurance expenses that customers need to take note of before completing their purchase and assessing their return on investment.

"We recommend that you speak with a mortgage advisor in order to obtain all the necessary information; they will be able to walk you through the fees associated with purchasing your first home in Dubai.

Fees associated with the transaction are normally between 6 and 7 percent of the purchase price and are primarily borne by the purchaser.

According to him, the DLD fee is four percent of the purchase price and 0.25 percent of the loan amount if you are obtaining a mortgage.

"There is an additional registration charge of Dh2,000 for properties priced below Dh500,000 and Dh4,000 for properties priced above that. Your broker is likely to charge 2 per cent, unless you buy off plan where the developer would pay your broker, and you may pay further professional costs to a mortgage broker and conveyancer.

One of the many benefits of investing in UAE real estate is that there are no income taxes to reduce your returns.

Include in your budget additional prospective expenses such as furniture, moving expenses, and utility rates, among others.

Understand operational expenses

When researching and scouting for different property alternatives in the UAE, it is imperative to consider the operational costs.

Service charges and maintenance payments, which vary based on the sort of property you purchased, would fall under this category.

Villas and townhouses have lower maintenance and/or service fees than apartments and serviced apartments. These fees will also vary based on the location and amenities offered. These operational expenses are added to the property's value and billed annually."

Hire a licensed broker

To protect their rights and investment, purchasers must deal with a trustworthy and educated broker who specializes in the market sector they wish to purchase a home in.

Ensure that the agent you entrust with your property search is licensed by the Real Estate Regulatory Agency.

Asking for an agent's broker registration number (BRN) is a straightforward approach to confirm Rera certification.

"You want to make assured that the market and pricing information you are receiving is reliable. To ensure this, Rera-qualified agents have access to data from the Dubai Land Department."

Buyers should avoid freelancing agents since they will have no legal redress should such an agency work against their best interests in the transaction.

Comprehend the purchasing procedure

It is essential that you comprehend the entirety of the sale process in Dubai.

Request that your broker walk you through each step, including how to submit an offer, the negotiation process, the appropriate documentation, obtaining the no-objection certificate, transfer appointments, and the handover.

"You are about to take a huge risk and maybe spend the most money you've ever spent. Taking time to fully understand the mechanisms in place will allow you to make informed judgments as you proceed through the process.

What is the cap on mortgages?

The Central Bank of the UAE has established a loan-to-value (LTV) restriction of 80% for first-time purchasers. This limit is commonly referred to as the mortgage cap.

Those purchasing a second house or a property valued at more than Dh5 million will be required to make a deposit of 40 percent.

"Buying an off-plan property from a developer can be a good method to secure a unit today with a smaller down payment, normally 10 percent, allowing you to make step payments for up to 40 percent to 60 percent over the next year or two and then taking out a loan for the remaining amount at handover.

"If purchasing a home with a mortgage, verify Form F contains a valuation provision. Your bank will want to undertake a valuation on the property they are loan you money for, so make sure your Form F specifies this and provides you the option to walk away if the assessment falls outside of a predetermined percentage of your offer."

Ask for benefits from developers

Currently, developers in the UAE offer attractive incentives for property purchases in the UAE.

"With some investments, you can obtain a residency visa and a company license, in addition to attractive payment plans and a guaranteed return on investment, among others. Additionally, you can now choose fractional ownership.

Plan your exit scenario

Regardless of your motive for purchasing a property, you should always have an exit strategy in mind.

Understand the current property trends and keep an eye out for thriving locations as well as emerging communities. These elements will determine the property's resale value, thus it is important to evaluate them.

"Many properties provide reasonable pricing, but the absence of facilities lowers their overall value. These are unseen factors that buyers of real estate do not recognize. Only at the time of exit do they become evident.