The Dubai property market has become increasingly interesting for investors and expatriates alike in recent years. Therefore, this article explains everything you need to consider when buying a property.
Starting from the process, through costs to legal aspects. Additionally, we share personal experiences and recommendations for established German estate agents.
TOP 5 Buying Criteria
A purchase should be well considered and not made rashly. Here are the key criteria that are crucial for a purchase.
Purpose
One of the most important aspects for a person to consider before purchasing a property in Dubai is whether they intend to purchase the property for investment purposes or for personal use. The motive for identifying a personal property in Dubai is explained below:
Investment
The UAE property market is very popular and there are many advantages to buying a house in Dubai. These include high rental yields, high market capitalisation and a transparent process for companies. Most foreigners or expats hope to buy an affordable house in Dubai that will give them a high return. A thorough assessment of the market can help in buying an apartment in Dubai at a good price.
If you're considering renting out your property in Dubai, you should focus on how much money you'll earn. This will help you assess whether the potential rental income is sufficient to cover your mortgage payments, interest, and maintenance costs.
As a rule, investors can achieve a gross return of between 5% and 9%.
Personal use
Over the years, Dubai has developed into a vast real estate and business hub. The city is now home to numerous expatriates, who hail from various parts of the world. Property in Dubai is often considered to be very expensive and unaffordable for many foreigners working as labourers.
But this has now changed. People employed in Dubai or who own their own businesses are now more likely to buy their personal property rather than rent. As the government has lifted certain restrictions on property ownership, buying property in Dubai is no longer so complicated for foreigners.
If your personal motive for buying a property in Dubai is to reside there, then you should pay attention to whether the location is near hospitals, supermarkets, restaurants, and schools. Raising your family in a progressive and developed city like Dubai can be a very rewarding experience.
Location
One of the most important elements you should consider before investing in real estate in Dubai is the location. People who wish to invest in an apartment or a luxury home in Dubai should research the best locations for future property investments. Some of the best locations in the city, such as Dubai Marina, have a range of facilities that enable a high quality of life.
Therefore, investors should look for locations that could be advantageous to them. The search for such properties can be time-consuming. However, Real Estate offers you a list of the best properties in Dubai in ideal locations that can offer foreign buyers long-term returns.
Condition
One of the most important aspects, which also differs from German standards, is the quality and condition of the property.
The construction quality in Dubai is only very good with the largest developers like Emaar, Meeras or Damac. That is basically the first thing one must look for. The second aspect is whether the property is still under construction, a first-time occupation, or second-hand.
Off-plan apartments Buying while still under construction also has several advantages. The prices are significantly cheaper, and there's also the possibility of an interest-free payment plan. This makes it highly interesting for investors. However, as delays can occur, it's usually not the best choice for owner-occupiers.
For properties that are already completed, you usually pay a bit more. In return, you get a new, ready-to-move-in flat. However, if you opt for new areas, you can expect price increases over the next few years (e.g. Dubai Creek Harbour)
Second-hand properties tend to achieve lower yields, but are still a good investment in terms of rental yield. Those who opt for established areas such as Downtown, Business Bay or Marina are making a very secure investment. (provided the quality is still acceptable, of course)
Price
The price naturally determines the attractiveness of the property. The better you negotiate it, the higher, logically, the return on the capital invested. Here, it is important to familiarise yourself with the market somewhat and not to get ripped off. Ideally, you would obtain offers through a trusted estate agent, who also supports or takes over the negotiation; more on this later.
Especially in the off-plan market, special offers are used to entice buyers, along with promises of high sale prices upon completion. However, these statements are not reliable, and many off-plan projects are now severely overpriced. Buying early no longer guarantees savings. You definitely face increased risk and not always a better price. Furthermore, capital is tied up for years in off-plan projects, whereas with completed properties, it can be put to work immediately.
Additionally: Reputable estate agent
One of the most important aspects when buying an apartment in Dubai is an experienced and competent estate agent. In Dubai itself, there are countless estate agencies; however, it is advisable to trust the biggest ones.
The broker should fulfil the following aspects:
- Information on all costs
- Professional & fast processing
- Ongoing support for further questions
- Local knowledge (as new projects are constantly emerging)
Please feel free to contact us regarding this, as we work exclusively with professional brokers from Germany, Austria, and Switzerland who have settled in Dubai and with whom we have been successfully collaborating for years.
Incidental purchase costs
Buying a flat in Dubai comes with certain costs. It is important to have an overview of all the fees associated with buying a home in Dubai beforehand. This is important for budgeting accordingly.
- NOC fees These typically range from AED 500 to AED 5,000. They can be paid directly to the real estate company or developer.
- Registration fees: Approximately 41% of the total purchase price of the property may be paid to DLD.
- Estate agent's fees This amounts to almost 21% of the property’s purchase price.
Aside from potential costs, there may also be additional fees. These could arise with both the developer's office and the DLD. You may also have to pay fees for a community/building to the developer.
Process
The process of buying an apartment in Dubai (for an off-plan apartment)
Price negotiation
The buyer and the seller agree on the terms of sale and the price of the property.- Letter of Intent
Both the buyer and the seller sign a Memorandum of Understanding (MOU) before proceeding with the transfer of the property, setting out the terms of the agreement. The Memorandum of Understanding must be registered with the DLD. At this stage, a deposit of 10% is paid. - Certificate of no objection
Both parties must obtain a No Objection Certificate (NOC) from the developer to transfer the property. A fee is charged for the issuance of the NOC. - Payment
In accordance with the provisions of the DLD, the buyer must make payment in the form of manager's cheques payable to the seller on the day of property transfer. If the buyer is paying with the assistance of a mortgage, a representative of the bank must be present during the completion of the relevant paperwork and formalities.
If the seller has taken out a mortgage on the property at the time of sale, it is the buyer's responsibility to settle the mortgage before applying for the NOC. - Land register entry
The transfer of the property must be officially registered with the DLD, and a transfer fee of 4 % is payable at that time.
Once all of the above formalities have been completed, a new title deed will be issued in the buyer's name, and the property will be officially transferred from the seller to the buyer.
Financing
Fundamentally, there is a financing option available for all kinds of buyers. This, of course, only applies to completed projects. Off-plan projects cannot be financed by third parties and are subject to a payment plan anyway.
Financing through a local bank is the most common way. However, this is not only possible for Emiratis, but also for residents and non-residents, for example, people who still live in Germany.
Residents
For all those located in Dubai, they already have a so-called credit score. Creditworthiness is determined by regular income, timely payment of all daily bills, age, and other factors. This information is already partially available to local banks and only needs to be partially submitted to receive a financing offer.
Non-Residents
All those who cannot lie in Dubai can also benefit from financing from a local bank. However, there are restrictions and not all countries of origin are permitted. EU countries are generally preferred. Furthermore, all documents simply need to be prepared and submitted cleanly, and the deposit is higher. Among the documents are:
- Proof of income
- Bank statements
- Credit statement if available
- Assets
- Proof of residence
- Passport
Required documents
Required documents for a Private buyer
- Buyer's passport
- Legal identification document
- Proof of address
- Contact details
Required documents for Business buyers:
- Original of the founding deed or business registration certificate
- Original of the Memorandum of Association and Articles of Association
- Legal translation of the memorandum and articles of association
- Certificate of Incumbency (no older than 3 months)
- Copies of shareholders' passports
- Original of the Resolution Approving the Purchase
- Original Power of Attorney
- Original Passport of the Authorised Representative
FAQ
Below is an overview of the most frequently asked questions when buying an apartment in Dubai.
Do I get a Golden Visa by purchasing?
Property buyers in Dubai are granted a renewable 2-year residency visa. The minimum investment for a visa is AED 1 million and the property must be in a condominium. The visa also permits the sponsorship of dependants, including personal staff and domestic helpers. Property owners should not spend more than six consecutive months outside the UAE for the visa to remain valid.
We can gladly assist you with obtaining a so-called Golden Visa.
How much does an apartment in Dubai cost?
First, you need to get your financial situation clear. Whether you have savings you can rely on, or are looking to apply for a mortgage, you should find out the maximum you can spend on a property without stretching yourself too thin. Try to figure out the approximate amount you can borrow for a home loan before you start your search so that you can look at properties you know you can afford. The average price for a property in Dubai ranges from AED 300,000 to AED 350,000. Even below AED 300,000, you can probably buy an International City studio, which is closer to AED 260,000-270,000. USD 100,000 is the average entry price into Dubai.
Buying an apartment in Dubai as a German citizen - is that possible?
It is entirely possible for a German national to buy a flat in Dubai. There are even numerous local banks in Dubai that can provide financing of up to 60%. Provided you have the necessary financial resources or income, it is possible to buy a flat and arrange financing locally in Dubai.
Experiences
In our experience, Dubai is a great place to buy property, provided you work with the right people. Those who rely on the right estate agents or developers will definitely have a positive experience.
Summary
Dubai is a distinctly interesting location for private and also commercial property investors, and the yield or return potential is far above the European average. If one knows and observes the fundamental aspects (developers, condition, fees…), buying an apartment in Dubai is definitely a sensible investment.
We are happy to support you throughout the entire process. To do this, simply arrange a no-obligation initial consultation to get to know each other and for any questions to be answered beforehand.
