Thanks to its high returns, investor-friendly tax system and Golden Visa program, Dubai’s real estate market is on the rise. Many investors are attracted by the idea of having no income taxes, capital gains, or inheritance taxes, experiencing one of the most advanced healthcare systems, and living in an economically stable city.
However, there are many things to know before buying property in Dubai. In this article, we’ll highlight the key points that every real estate investor needs to consider.
- Learning about the legal considerations, costs involved in buying property, and property market trends are some things to know before buying property in Dubai.
- The key Freezone areas in Dubai include Downtown Dubai, Dubai Marina, Palm Jumeirah, Palm Jebel Ali, Business Bay, and Jumeirah Village Circle.
Dubai’s Property Market
According to Statista, in 2023, the real estate sector in Dubai accounts for 8.2% of the Emirate’s GDP and is a primary employment motivator for its expatriate working population. As Dubai remains one of the Emirate’s main tourist locations, it also represents an attractive investment option for many investors. Approximately 72,000 of the urban buildings are investment villas and around 40,600 are private villas.
Based on their database, DXB Interact reported that 2024 had seen 150.7K property sale transactions (i.e. apartment sales, villa sales, etc), an increase of 37.11% compared to 2023. All this shows how much Dubai’s real estate market is growing. This is one of the key reasons why investors are interested in Dubai’s property market. However, there are several other things to know before buying property in Dubai. Let’s list some of them.
3 Things to Know Before Buying Property in Dubai
Many advantages come with investing in the real estate market in Dubai. Some of them are:
1. Investor-Friendly Tax System
Dubai has no tax rate on income, no tax rate on capital gain, and no inheritance tax. This city has free zones that come with properties that guarantee 100% ownership, unlike many other markets in the world.
2. The Chance to Get a Golden Visa
The Golden Visa is the first step toward obtaining citizenship, but you need to be eligible for it by investing a minimum of AED 2,000,000 (~$545,000) into the Dubai property market.
3. High Rental Returns
The returns on rentals in Dubai are somewhere between 5-8% thus making its property investment one of the most rewarding and sought-after. Dubai is primarily associated with a favorable geographical position. Because Dubai is located between East and West, tons of tourists come, leading to the rising demand for residential and commercial estate.
Costs Involved in Buying Property
Buying an apartment in Dubai offers numerous benefits to investors, such as 0% annual property tax and income tax. However, buyers should consider the one-time and ongoing costs that come with property acquisition. Here are the main expenses you will need to consider:
- Registration Fee: The most significant fee that you’re gonna pay is the one-time charge to DLD for your property registration. It’s typically 4% of the property.
- Agent Fees: Finding a property and making an investment all on your own in Dubai is a big challenge. That’s why a lot of investors work with specialized agents. Agent charges may differ according to your terms.
- Property Maintenance Charges: The property maintenance charges may vary as per the property size, type, and location. The annual rent range goes from AED 100 to 270 per sqm.
Legal Considerations When Buying Property in Dubai
There are plenty of things to know before buying property in Dubai. As an initial step, you need to learn whether you’re eligible to purchase real estate there. The key legal considerations include:
Right To Freehold Ownership
A foreign investor will be allowed to purchase only the properties that are located in specifically modified regions known as freehold areas. So check that you are permitted to invest there before you do.
The Dubai Real Estate Regulatory Authority (RERA)
This also takes an active role in ensuring investors are safe - requiring them to only work with licensed agents and comply with unique registration requirements.
Legal Forms for Ownership
Foreign investors can choose among several types of ownership: individual ownership, company ownership, joint ownership, or investment through real estate investment trusts (REITs). There are legal implications associated with each of those structures, and you must consider them before choosing one.
Adherence to AML Laws
Foreign investment must comply with AML rules, and proof of ownership and origin of funds must be provided.
Legal Fees and Transaction Costs
Upon purchase, it is necessary to pay about a 4% registration fee (aka the Dubai Land Department fee), agency fees, and transfer fees. You will understand these costs so that you can make a good informed financial plan.
To sum it up, in this article, we’ve talked about the things to know before buying property in Dubai, listing the legal considerations, benefits, costs and market trends.
Consulting experts like Mirabello Consultancy makes sure you have a seamless process from property purchase to residency applications, helping your Dubai real estate journey become stress-free and rewarding
FAQ
Many UAE banks offer mortgages to non-residents. As a foreigner, you’ll need to look for the best option that has the most convenient down payment. Alternatively, you can finance your property with the money you save or with loans from your home country.
The UAE Golden Visa program is designed to grant 10-year residency to investors, entrepreneurs, and professionals. As an applicant, after meeting the eligibility criteria (mentioned in this article), you need to make at least AED 2 million investment in the real estate market.
Hiring a real estate agent isn’t mandatory, yet it’s highly recommended. An expert can guide you through the whole process, make it seamless, and update you on every slight change in the legal process.
There’s no such thing as property tax in Dubai. However, in your buying stage, you need to pay a registration fee to DLD (Dubai Land Department). The fee is typically 4% of the real estate’s price.
