A Complete Guide To Buying a House in Dubai For Expats - Prices & Process
From an investment perspective, Dubai is a prime real estate market where all sorts of properties, including residences and luxury properties are up for sale. Since the Dubai government changed the laws and allowed foreigners to buy houses and apartments in Dubai, a lot of people have been looking to invest in the city. With the massive potential for return of investment, buying a house in Dubai for expats comes with a lot of benefits.
Dubai offers hundreds of properties for the purpose of future investment. These include villas, condominiums, apartment buildings, and single-family homes. If you are interested in making an investment in a property in Dubai, you must take out the time to investigate the important available options.
One of the best possible things about investing in Dubai’s real estate market is that a lot of available condos, properties, apartments, and residential types can fulfill every person’s requirements. This also means that individuals are not forced to settle for properties that may not suit their personal budget or preferences.
Dubai's real estate market has also significantly attracted the attention of overseas investors that prefer investments for high return and high-income properties. These properties can be found in premium locations, such as Dubai Marina, Jumeirah Lake Towers, and various other famous locations. You should also find the relevant home loan rates through our real estate agents. Visit https://www.damacproperties.com/ to look for premium locations with the best prices.
Types of Properties in Dubai
From a residential perspective, there are primarily three property types that you can buy as a foreigner in Dubai. Each of these properties correlates to a different style of home or land within Dubai. Before buying real estate in Dubai, you should thoroughly assess the market.
Freehold properties are most commonly sought by foreigners who are interested in investing in the UAE, or who plan to buy a flat in Dubai. Individuals living in the UAE have access to freehold properties that can be rented, sold, and inherited if required.
Freehold property has also been associated with relatively undeveloped parcels of land rather than homes or apartments. This allows owners to develop a property of their choice on the land.
Since the investor enjoys the full ownership of the property in perpetuity, the property can be used for any purpose. It also requires less amount of paperwork and does not require consent from the state.
If you are looking to purchase a freehold property in Dubai, you will have to purchase this through a government-approved property or real estate developer, such as DAMAC Group.
Another type of property that can be purchased by potential investors in Dubai is commonhold. These properties consist of primarily condominiums, apartments, and non-residential units in a building. Purchasing a commonhold property provides you the individual right for buying, selling, or renting a property for the purpose of inheritance.
This is similar to a freehold property. However, since commonhold properties are very similar to apartments, the owners have to make fee payment for the property maintenance as well as its common areas. These buildings are usually owned by a real estate or property developer.
A common type of arrangement for property within the UAE is called usufruct. This is primarily regarded as a lease for long-term investment. The occupant of the property does not have the right to amend or change a usufruct property in any way.
Leases for usufruct properties have a life that could go up to 100 years.
Identify Your Motive For Buying Property In Dubai
One of the most essential aspects that an individual must consider before purchasing a property in Dubai is to evaluate whether they want it for investment purposes or personal use. The motive for identifying a personal property in Dubai is explained as follows:
Purchasing Property In Dubai For Investment Purpose
The real estate market in UAE is very popular and there are many benefits of buying a house in Dubai. These include high rental yield, high market capitalization, and a transparent process for businesses. Most foreigners or expatriates hope to buy an affordable house in Dubai that can get them a massive return on their investment. A thorough assessment of the market can help to buy an apartment in Dubai at a good rate.
Purchasing Property In Dubai For Personal Use
Over the years, Dubai has become a huge real estate and business hub. The city is now home to several expatriates that have come from various parts of the world. Dubai-based properties are often regarded as highly expensive and out of reach for several foreigners that work as blue-collar workers.
But, such things have now changed. Individuals that are employed or have a personal business in Dubai are now more inclined towards purchasing their personal property and not renting them out because of loosening of restrictions imposed by the government.
If your personal motive for purchasing property in Dubai is to reside, then you should consider whether the site is close to hospitals, supermarkets, restaurants, and schools. Raising your family in a progressive and developed city like Dubai can be a very rewarding experience.
To find properties, apartments, or houses in Dubai that meet your requirements, check Dubai property prices with DAMAC.
Factors To Consider Before Investing In Dubai’s Real Estate
One of the most essential elements that you should consider before investing in Dubai’s real estate properties is location. Individuals who want to invest in an apartment property or buy a luxury house in Dubai should research the best locations for future investment in real estate. Some of the prime locations in the city, such as Dubai Marina, have a particular set of facilities associated with them that provides opportunities for a high-quality lifestyle.
Hence, investors should look to buy property in Dubai that could be beneficial for them. Looking for such properties can be time-consuming work; however, DAMAC offers you a list of the best real estate in Dubai at ideal locations that can provide long-term yield on investment to foreign buyers.
Research and Analyze Market Stats
It is certainly difficult to select a specific location when there is a wide range of highly-tempting options. To get the best return on your investment, it is essential to start your personal research of the property market.
As an interested investor, you can also read about the current trends, predictions, and patterns on financial investments. Newer projects for investment in Dubai may be more attractive for investors. The more you research, the more benefits you can extract from UAE’s real estate market.
Before investing in Dubai’s real estate market, you should evaluate the overall tenure for which you plan to remain in the UAE. This is important as it will help you to determine the total value that you can derive from your potential return on investment. However, if you are not sure of your possible commitment or long-term plans in the UAE, renting a property is better.
One of the most important factors that are considered globally for purchasing real estate property is affordability. An individual’s housing expense on a monthly basis must not increase more than 25% of their total income. Your budget should also be enough for upfront fees. This could be nearly 9% of the property’s overall price of purchase.
Being an owner of a real estate property in Dubai, you would also need to keep track of the maintenance fees and payment of the annual service charges.
Currently, because of the low property prices caused by the pandemic, the real estate market in Dubai has become a buyer’s market. Hence, this is a great time for investors looking for houses and properties on discount to invest in Dubai.
If you are thinking of renting out your property in Dubai, you should focus on how much monetary gains you will get. This will help you assess if the potential rental income is adequate for covering your repayment, mortgage, and maintenance expenses.
Typically, investors can get a gross yield of anywhere between 5% and 9%.
The real estate properties that are valued at AED 1 million or above in the UAE can help you gain a residency visa. This could be subjected to specific guidelines.
There are mainly two types of residence visas that are typically available in the UAE. One is a six-month multi-entry. The other is a two-year visa for residency. Owners of real estate properties also have an option to sponsor residence visas for their families.
A property in Dubai that has been valued at AED 5 million or more, has no specific mortgage value attached to it and has been retained for 36 months or more can help potential expatriates or foreigners get a residency visa of 5-years or more. This depends primarily on specific conditions for eligibility.
Costs Required For The Purpose Of Purchasing A Property In Dubai
There is a specific cost of buying a house in Dubai. It is important that you have an idea of all the fees associated with buying a house in Dubai in advance. This is essential to set your budget in a relevant manner.
Fees for NOC: This is usually in the range of AED 500 to AED 5000. It can be paid directly to the real estate or property developer.
Fees for registration: Nearly 4% of the total purchase price of the property may be paid to DLD.
Commission of the real estate agent: This is nearly 2% of the property’s price of purchase.
Apart from the potential costs, there could also be extra charges. They could be applied to the office of the property developer as well as the DLD. You may also have to pay fees for a community/building to the real estate developer.
If you do plan on taking out a mortgage, it is important to determine the terms and conditions of the mortgage loans available for foreigners or expatriates that are residents of Dubai. Other guidelines that should be considered by the central bank for the purpose of taking a mortgage are as follows:
- Foreigners or expatriates who want to invest in a real estate property that is valued at nearly AED 5 million have an option for borrowing nearly 75% of the total value of the property. On the contrary, citizens of the UAE have the option to borrow nearly 80%.
- For real estate properties that are valued at AED 5 million or more, initial or first-time buyers have an option to borrow nearly 65% of the total value of the property. On the contrary, citizens of the UAE have an option to borrow nearly 70% of the value of the property.
- Expats that want to invest or purchase a second property have an option to borrow nearly 60% of the total value of the property.
- If you plan to purchase properties that are off-plan, a deposit of 50% would be required from expatriates as well as citizens of the UAE.
- The debt-to-income ratio of the buyer must not be 50% or more.
- The period of the mortgage must not be more than 25 years. This is because there is an age limit (This is usually in the range of 60 to 75 years).
- Foreign citizens have an option to make an application for a specific loan amount that should not exceed their yearly revenue or income by more than seven times.
Purchasing A Property Through Real Estate Developers In Dubai
When purchasing an apartment or house in Dubai, it is essential that you research the real estate developer and ensure they have a credible reputation before you sign a particular contract or agree to buy the property with a specific amount. This is done to make sure that you have made a solid and viable investment. Apart from that, there are various other things that you may need to do for creating a background before selling a property:
- Collect comprehensive data in a written form for all the fees required to be paid along with the potential due date.
- It is essential to make sure that a developer has successfully registered with a relevant regulatory organization.
- Cross verify the rates on other similar properties. This will help you to make sure that you have paid the right amount.
- Evaluate recent developments. This will allow you to view what other buyers have said regarding the personal residential properties by the real estate developer that you are considering.
- You should appoint a solicitor that possesses global experience in purchasing real estate. This will help you to better understand how the real estate process works as well as ask important questions.
Before you choose a real estate developer, you should make sure that all of the aforementioned points apply to the real estate agents or property developers. This will enable you to verify whether the real estate developer is licensed and operates in the right way. Moreover, you must also assess and review the experiences of your previous clients before making any financial investment.
Mortgage Financing and Home Loan Options For Buying Property In Dubai
Foreigners or expatriates living in the UAE often look forward to buy property in Dubai. If you do not have enough cash and are looking to buy a house in Dubai without a down payment, there are some options for you. You have an opportunity to find different mortgage financing facilities provided by various banks and financial institutions in the UAE. This allows you to provide a deposit to the seller without using your own funds as a down payment.
Before investing, however, it is essential that you find out the residential mortgage that can fulfill your individual motive. Let’s have a detailed look at the mortgage rates that are currently provided by various financial institutions to buy property in Dubai:
Emirates NBD Bank: One of the most prominent financial institutions of Dubai, Emirates NBD provides mortgage and house loans of almost AED 15 million. The house loan and mortgages are offered up to 70% loan-to-value (LTV) ratio. Apart from that, there is also the availability of pre-approval.
HSBC: Another financial institution that provides home loans as well as mortgage options to potential investors and buyers for real estate in Dubai is HSBC. Expatriates and foreigners with an income of AED 15,000 per month can apply for a mortgage or home loan in UAE through this lender.
Mashreq: Mashreq is another top financial institution in the UAE that provides mortgages and home loans. The company provides loans for expatriates and foreigners living in the UAE. Mortgages, as well as home loans, are provided for employed and self-employed expatriates having a monthly income of AED 15,000. With this type of financing, expats can buy a house in Dubai in installments.
ADIB And DAMAC Properties Alliance
DAMAC Properties has made a partnership with Abu Dhabi Islamic Bank (ADIB) to provide some of the best mortgage deals for individuals looking to purchase a property within the UAE.
These properties by DAMAC are provided through one of the best available plans for mortgage in Dubai. Individuals who want to purchase a property can look out for various financial deals provided in collaboration by DAMAC and ADIB.
With a span of nearly 7 years for the property, the alliance of ADIB and DAMAC has an interest rate of only 1.99%. This is also applicable to expatriates and foreigners interested in purchasing property through DAMAC. Moreover, this service by DAMAC does not have any processing or evaluation fee. It also ensures a low cost for loan acquisition when purchasing a property.
Citizens of the UAE have an option to get access to the mortgage payment, as well. It allows them to avail of home loans or mortgage payments for almost 85% of the total value of any property they want to purchase. Foreigners and expatriates also have an option to obtain loans of almost 80% of the property's total price. The overall tenure of the loan or mortgage will be 25 years.
If you are interested in taking advantage of these deals, visit https://www.damacproperties.com/en/projects/ today and find a house, villa, or apartment that is right for you.
Buying a House in Abu Dhabi
In 2019, Abu Dhabi introduced several legal changes that were designed to make the housing market attractive for expats, including allowing expats from countries around the GCC to buy freehold land and properties within the investment zone. This was done in a bid to inject foreign direct investment into the economy and boost it further.
Before this, expats were only allowed to own floors and apartments, but never a piece of land. The new provisions in Article 3 stipulate that foreign nationals be allowed to own and acquire all original and in-kind rights in housing and real estate properties within the investment areas.
The four main systems that allow buying housing in Abu Dhabi are given below:
Musataha: Mustaha contracts allow expat buyers to use, construct, or alter a purchased housing unit for a period of time. They can own the residence for up to 50 years and the contract can be renewed for the same period of time with the concerned parties.
Ownership Deeds: Expats who want to buy a house are given ownership deeds of the residential unit for a period of 99 years. With the exception of land ownership, foreign house owners in Abu Dhabi can fully dispose of the houses, villas, and apartments they buy.
Long-term Lease: The expat is given a long-term lease of the property, which is at least for 25 years.
Usufruct: This agreement allows expats to buy luxury houses in Dubai as well as villas, and apartments for over 99 years. However, the owner cannot change the properties and facilities during that time.
Abu Dhabi Freehold Properties
According to the new provisions, it is now possible for expats to buy freehold properties in Dubai. The best places to invest in Abu Dhabi are Al Raha Beach, Masdar City, Saadiyat Island, and Yas Island.
Prospective expats who want to buy a house in Abu Dhabi also benefit from visa extensions. In 2019, Abu Dhabi started granting visas to foreign nationals who bought real estate in cash, allowing expats who were once unwilling to invest to now have the golden opportunity to invest for the long term. This will enhance the competitive edge of Abu Dhabi’s economy and give foreign talent more incentive to stay.
The cost of living in Abu Dhabi is another factor that is incentivizing foreign expats to buy a house here. According to the human resource consulting company, Mercer, Abu Dhabi ranks 33rd out of 209 cities when it comes to the cost of housing, food, clothing, transport, and entertainment. In comparison, Riyadh ranks 35th, while Tokyo ranked 2nd, Los Angeles 18th, Milan 45th, and Paris 47th.
Buying a House in Dubai
One of the most common questions that people ask is “How to buy a house in Dubai?” Expat property ownership in Dubai is allowed in areas that are designated as freehold. This basically means that foreign buyers can get freehold ownership rights, rather than usufruct rights, leasehold rights, and restrictions for up to 99 years.
The Dubai Land Department is responsible for issuing the title deeds. In addition, there is also no age limit to buying a house in Dubai.
Some of the most popular freehold areas in Dubai include Downtown Dubai, Business Bay, Dubai International Financial Districts, Discovery Gardens, and more.
Buying a House in Sharjah
In 2014, Sharjah made innovative real estate reforms about real estate property ownership for expats. The original amendments allowed non-GCC members to buy property in Sharjah if they had a valid residency visa. With this, expats could purchase up to five properties.
Recent changes to the law have now made it possible for expats to buy real estate in Sharjah without a residency visa through usufruct for a maximum of 100 years after being registered with the Sharjah Real Estate Registration Department. Foreign nationals can now invest in properties in specific areas of Sharjah, which includes Alijada, Al Mamsha, and Tilal City.
Restrictions On Expats Buying Property
At the start of the new millennium, expats were not able to buy any property in Dubai. However, in recent years, thanks to new real estate legislation, this has changed so expats do not have many restrictions when it comes to buying property in Dubai.
There are some specific areas that are not freehold. These places are closed off to foreign buyers, but there are plenty of other places where expats can easily invest in. In addition, there are specific factors that incentivize buying of property in Dubai.
- You do not need to have a specific residency to invest in Dubai.
- There are no regulations like foreign buyer permits that need to be considered.
Because of the lack of restrictions, buying property in Dubai is a pretty straightforward process. Many Dubai properties are bought as freehold but leasehold properties also allow you to own the property for anywhere between 30 and 99 years.
How to Choose the Right Dubai Property
As an interested buyer, you have a lot of options to choose from, including houses, villas, apartments, locations, and new developments. Here is how you can find the right properties in Dubai:
- Go through DAMAC’s online property listing.
- Contact our real estate agent for any questions
- Visit the property to get in-depth knowledge and feel of the location and the layout.
- Also, frequently visit the neighborhood to see the amount of traffic and noise in the area.
- Also, find out if the property you are buying has good parking space.
Depending on your preferences, some of the above factors may not be important for you; however, it is a good idea to check the neighborhood in the area considering some places in Dubai have less developed roads and heavy traffic.
At DAMAC, we can assist you to find the right property in your preferred areas that matches your lifestyle, interests, and budget.
Rules for Buying a Property in the UAE for Foreigners
The main reason why UAE is such a hot real estate market among expats is that it has lifted many rules and regulations in recent years that make buying property difficult. For expats, this is an excellent time to buy houses and properties in Dubai since the procedure is quite uncomplicated.
There are two ways you can purchase property in Dubai: through a private seller or buying an off-plan property from a developer.
Buying from Private Seller
The steps are quite straightforward:
- Terms and conditions are agreed upon between the buyer and the seller.
- The two parties sign a Memorandum of Understanding, which sets out the terms of agreement for clarity but is not legally binding. A 10% deposit is usually paid.
- The buyer can get a mortgage if it is required.
- The transfer of deed occurs, during which the buyer needs to pay the full purchase price of the property.
The process follows the steps below:
- A reservation form is filled which sets out the terms of the sale agreement, the personal details of the buyer and seller, and how the payment will be made.
- The sale and purchase agreement is made after a 5% to 20% deposit. This agreement is legally binding.
- If required, the buyer obtains the mortgage.
- The property deeds are transferred at the developer’s office. The full price of the property is paid at that time.
Freehold Versus Leasehold Property Ownership For Expats
Freehold property ownership allows buyers full ownership of a property in Dubai. This includes the structure and the land on which the house or property has been constructed. Owners of freehold properties can make amendments to their properties and have complete rights to lease or sell them.
Leasehold properties, on the other hand, can be taken on a lease for up to 99 years. It involves buying the rights to live in the property for a specific period of time, which is mentioned in the contract agreement. The ownership of the property will be reverted to the original owner once the lease ends; however, the contract may also be renewed with the same owner.
Guidelines For Attaining High Return On Investment (ROI) In UAE
In Dubai, it is typically apartments that tend to provide high yields on rents when compared with villas and townhouses. This is mainly due to the population in those areas comprising low-income families. Because of that, their investment for homes is focused mainly on places that are small and affordable.
Investors can select small apartments if they want to buy property in Dubai. This could include a 1 bedroom or studio apartments in communities that are relatively affordable and have a good infrastructure. They also should have access to important facilities, such as healthcare, transport, retail, and education.
Reselling smaller apartments is usually a swift process. Moreover, it provides value that is higher when compared with other properties that may be larger in size. This is primarily due to the fact that a significant percentage of the expat population in Dubai has the option to purchase and afford them when an investor wishes to release equity.
The yearly maintenance charges that are payable to DLD are based on service charges of the Dubai Real Estate Regulatory Agency (RERA) Charge and Maintenance Index, which can have a significant impact on the total ROI. In addition, the index also determines a particular charge per square foot and changes from community to community.
The property fees or payment charges can be easily accessed through the website of DLD. Potential investors can research the charges applicable to the selected community prior to making any possible investment.
How To Apply For A Mortgage In The UAE
If expatriates or foreigners in UAE want to apply for a home loan or residential mortgage, they have an option to contact a financial institution directly or get sound advice regarding investment from a high-caliber real estate developer, such as DAMAC properties.
A financial advisor or mortgage broker can prove to be an asset for expatriates or foreigners living in Dubai. Their advice could be highly beneficial for getting an idea of the possible fluctuation within the market. It can also allow individuals to benefit from the best possible opportunities within the community if they want to buy property in Dubai.
Documents required for purchasing property in Dubai
When purchasing property in Dubai, your first step is to find a property and agree to a particular price for that. After that, you may be also expected to sign the contract.
This will allow you to establish better contracts and avoid any potential miscommunication in the near future. The transaction for acquiring real estate only takes a very short period. This is because it takes merely 30-days from when the agreement is signed for purchase until the sale has been completed or finalized.
You have to comply with these important conditions if you are interested in purchasing properties in Dubai.
It is essential that you sign a memo of understanding and also submit a deposit amount. This amount could fluctuate as it depends on property value. However, you can expect a potential payment or deposit of nearly 10% of the value of the property. To go ahead with property purchase, you should have the following documents:
- A valid passport
- Residency status proof for showing that you are living in Dubai
- Evidence of current home address
- Salary certificate or proof of recurring income
- Bank statement, which is evidence that you can afford the investment
Property taxes in Dubai
From a residential point of view, Dubai is famous for having one of the most generous laws for taxation across the globe. The tax rate mainly depends on whether you want to purchase property through the means of a real estate developer. It also depends on whether you require a mode of mortgage financing. The table below illustrates some of the usual costs you may be charged to buy property in Dubai. However, not all of the charges are related or based upon sales of a property.
Fee or Tax
Rate in AED
Approximate GBP Value
Land Registry Tax
4% of Property Value Plus AED 540
4% of Property Value Plus £115
Registration Charges for Properties up to AED 500,000 in Value
Registration Charges for Properties Above AED 500,000 in Value
Estate Agent Fees
Around 2% of Property Value
Oqood Contract Fee(if purchasing through a developer)
4% of Property Value
Property taxes in Dubai
Frequently Asked Questions (FAQ’s)
Can a foreigner buy property in Dubai?
From a residential perspective, having foreign ownership of property in Dubai is allowed in areas that are designated to be freehold. These properties allow the investors 100% ownership and control of their properties, including amending or selling the properties to another interested individual.
How long do expats need to stay for buying a home to make sense?
Even if you plan to live in UAE for just a year, it makes sense to buy a home in the country. Even if you are not living in it, you can rent it out and earn a tidy profit, even if the market goes up and down. In addition, while you are living in the country, you can use that house to reside in, which will save you on rent costs. Land Registry Tax is charged at just 4% flat rate and there are no property taxes, whether you want to live in that house or rent it out.
Where can expats buy property in Dubai?
Expats can buy leasehold and freehold properties in Dubai. A freehold property consists of one of the 23 specific areas in Dubai that allow you to buy a house in Dubai Marina, the Sheikh Zayed Road, Al Barsha South, Jebel Ali, Palm Jumeirah, and other such places.
A leasehold property, on the other hand, gives living rights to an expat on a property for a specific period of time, which can be no more than 99 years. During that time, they cannot make any changes to the property.
Is it a good time to buy property in Dubai 2021?
In 2021, the property market in Dubai has become a buyer’s market since homes have become very affordable. If you compare UAE with major countries like the UK, you get a lot of value for money. A beautiful beachfront house in Dubai may cost as little as a studio apartment in London.
The Expo 2021 is also creating a lot of buzz around the city and Dubai is also establishing itself as a leader in industry and science. It is expected that prices of houses in Dubai will soar after the Expo so it makes sense to buy property now.
Can I get residency if I buy property in Dubai?
There is no automatic process that allows you to buy a house in Dubai and get a visa in return. There are some other requirements you need to fulfill first. The property you bought should be worth at least AED 1 million or move before you can start obtaining your visa. The investment needs to be on complete freehold properties, as well.
The Dubai government has also recently announced a 5-year residency visa for investors who make real estate investments of at least AED 5 million and a 10-year residency visa for investors who make real estate investments of at least AED 10 million, along with investments in other sectors.
Is it easy to buy property in Dubai?
Yes, the process of buying a house in Dubai for expats is quite simple. Since the old restrictions have been lifted, it has become very easy for expats to select and buy properties in freehold areas. These properties offer great value for money and let expats become part of a beautiful and thriving community that offers them the kind of lifestyle they want.
Is buying property in Dubai a good investment?
Indeed, it is. Dubai provides higher yields on rent when compared with several other mature real estate markets. On average, investors can attain rental yields of an average of 5-9%. Prices of property per square foot are lower when compared with many other cities around the world. This makes Dubai an affordable location for having your personal primary real estate.
What is the future of Dubai real estate?
Due to the fact that the coronavirus pandemic is going on but is being handled confidently and swiftly through vaccination and adherence to SOPs, we can safely state UAE is indeed a safe place to invest and purchase a property. In addition, with the coming of Expo 2021, Dubai's real estate is expected to see a surge in property prices, which will enable investors to resell their houses for a tidy profit once the Expo is over.