A Guide to Buying a Property in Dubai

• Laws of Buying Property in Dubai
• Legal Steps of Buying Property in Dubai
• Cost of Buying Property in Dubai
• Risks of Buying Property in Dubai
• FAQs

Dubai, with its vibrant real estate scene and luxurious lifestyle, offers an array of opportunities for property buyers. Whether you’re considering an off-plan investment or exploring the ready-to-move property, careful consideration and due diligence are essential. This comprehensive guide aims to provide potential buyers with valuable insights into the process of purchasing real estate in Dubai. You will also explore the legal procedures and cost of purchasing property in this dynamic city.

All About Buying a Property in Dubai

Dubai, with its iconic skyline and thriving economy, has become an attractive destination for real estate investment. However, like any property market, there are risks associated with buying property in Dubai.

There are several benefits of buying property in Dubai such as no taxes, attractive returns and an exceptional lifestyle. The futuristic city lives up to its reputation, making it a top choice for tourism, work and investment.

Let’s explore all about buying property in Dubai along with associated risks and strategies to mitigate them.

Laws of Buying Property in Dubai

The rules for buying property in Dubai are governed by Real Estate Law No. 7 of 2006: Land Registration Law. According to Article (4) of this law, property ownership is open to:

1. UAE citizens
2. GCC citizens

For foreigners, the law allows property ownership in specific areas designated for foreign buyers. There are two main types of ownership for foreigners: freehold and leasehold. When you opt for leasehold, you have property rights for a specific time. 

On the other hand, choosing freehold gives you complete ownership of both the property and the land it sits on. Understanding these distinctions is essential when navigating the property market in Dubai.

Understanding the Dubai Real Estate Market

Before diving into property acquisition, it’s crucial to understand the dynamics of the Dubai real estate market. Factors such as market trends, property types, locations and pricing variations should be thoroughly researched.

Choosing Between Off-Plan and Ready-to-Move

Deciding between off-plan and secondary market properties is a critical step. Off-plan projects often entice buyers with attractive payment plans, allowing a lower upfront investment. However, the risks associated with potential delays and uncertainties during construction should be considered. On the other hand, the ready-to-move properties come with lower risk, but at a comparatively higher price. For more understanding go through our guide on ready vs off-plan properties in Dubai.

Engaging a Registered Broker

When dealing with real estate agents, it is crucial to work with a registered broker. Always ask for their RERA registered broker number, ensuring they are licenced and regulated by the Dubai Land Department. Requesting references from previous clients can provide additional assurance of their credibility. 

Choosing the Right Community

Consider the long-term implications of your property purchase by evaluating the surrounding community. Factors such as family-friendliness, nearby schools and upcoming developments play a significant role. Communities like Dubai South, with upcoming projects like Expo 2020, offer potential for future growth and development.

Thorough Building Research

Beyond evaluating the community, delve into the specifics of the building or complex you’re interested in. Research the developer’s reputation, maintenance standards and service fees. Engage with current residents to gather insights into the overall living experience and the developer’s track record.

Financial Considerations

• Budgeting: Determine your budget and factor in additional costs such as registration fees, agent commissions and maintenance expenses.
• Financing: Understand the mortgage structure in Dubai along with the terms and conditions offered by local banks in Dubai. Be aware of interest rates, loan tenure and eligibility criteria.

Legal Steps to Buy Property in Dubai

Whether you’re searching for a dream home or a profitable real estate investment, the process of buying property in Dubai is quite straightforward. There are four main legal steps to follow. Dubai has specific regulations governing real estate transactions. It is essential to familiarise yourself with the legal framework, including property ownership laws, visa requirements and the role of regulatory bodies such as the DLD.

Step 1: Establish the Buyer/Seller Contract

Once you’ve identified your ideal property on dubizzle, engage in a discussion with the seller to agree on terms. Whether you opt for a cash payment or explore mortgage options, drafting a precise contract is crucial. While the involvement of a real estate agent or lawyer is not mandatory at this stage, a carefully crafted contract is essential. Clearly outline pricing, payment methods and other relevant terms to avoid future misunderstandings.

Step 2: Execute the Real Estate Sale Agreement

The next step in buying property in Dubai is to download the sale contract (Form F). The form also known as the Memorandum of Understanding (MOU) available at the official DLD’s website. Feel free to include your terms in the contract. Once finalised, both parties – you and the seller – should sign it in the presence of a witness, preferably at the Registration Trustee’s office. Additionally, pay a 10% security deposit on the property to the Registration Trustee, which you’ll recover upon completing the entire transaction.

Step 3: Obtain a No Objection Certificate (NOC)

Initiate a discussion with the developer to secure a No Objection Certificate (NOC) and finalise the ownership transfer. If there are no outstanding service bills or charges on the property, the developer will issue the certificate.

Step 4: Transfer Ownership at the Registrar’s Office

Prepare the necessary documents and either personally attend or send an authorised representative to the Registrar’s Office for the ownership transfer. The process involves a few straightforward steps:

1. Submit the required documents.
2. A payable cheque is required for the property price.
3. Emirates ID and passport of both seller and buyer.
4. Submit the original NOC and the signed Form F contract.
5. Verify the data.
6. Pay the applicable fees and obtain a receipt.
7. Receive the approval email and the new title deed, issued in your name as the new owner.

By following these steps diligently, you can navigate the property purchase process in Dubai with confidence, ensuring a successful and secure transaction.

Cost of Buying Property in Dubai

Whether you’re buying your first home purchase or adding another property to your portfolio, understanding the costs involved is key to a smooth journey. Let’s break down the expenses into five categories to simplify the process.

Mortgage

• Down Payment: This initial payment is usually 20% of the loan amount.
• Bank Mortgage Processing Fee: Typically 0.5% of the loan amount + 5% VAT.
• Property Valuation Fee: Varies between AED 2,500 to AED 3,500 + 5% VAT.

Government

• Transfer Fee: 4% of the Purchase Price + AED 580.
• DLD Property Registration Fee: AED 4,000 + 5% VAT.
• DLD Mortgage Registration Fee: 0.25% of the loan amount + AED 290.
• Oqood Certificate (if off-plan): AED 5,250.

Service

• Security Deposit: Typically 10% of the purchase price is payable to the seller.
• Agency Fee: 2% of the property price + 5% VAT.
• Conveyance Fee: Ranges from AED 6,000 to AED 10,000.

Maintenance

• Maintenance Fee: Calculated based on the square foot.
• DEWA (Dubai Electricity and Water Authority), Gas, AC, Internet: Charges from various providers.

Insurance

• Life Insurance: Mandatory for mortgage buyers, ranging from 0.4% to 0.8% per annum on the remaining loan amount. Also, check the other hidden costs of buying property in Dubai before you seal the deal.

Understanding Upfront vs. Ongoing Costs

There are two types of costs involved when buying a property in Dubai. 

Upfront Costs

Upfront costs refer to the initial expenses that you need to pay at the beginning of the purchasing process. These costs are typically associated with the acquisition of the property itself and are incurred before the completion of the transaction. Here are some common upfront costs when buying a property:

• Down Payment
• Bank Mortgage Processing Fee
• DLD Property Registration Fee
• Property Valuation Fee
• DLD Transfer Fee
• DLD Mortgage Registration Fee
• Oqood Certificate (if the property is off-plan)
• Conveyance Fee
• Agency Fee
• Security Deposit

Ongoing Costs

Ongoing costs, in the context of buying and owning a property, are the regular and recurring expenses that you need to pay after the initial purchase. These costs are incurred regularly throughout your property ownership. Here are some common ongoing costs when owning a property:

• Life Insurance
• Property Insurance (recommended)
• Mortgage Payments
• Maintenance Fee
• DEWA (Dubai Electricity and Water Authority)
• Gas
• AC
• Internet

Therefore, for an AED 1 million home, expect approximately AED 281,000 in upfront costs. Ongoing costs include AED 4,200 per month for mortgage payments annually AED 37,500 for maintenance fees and AED 4,200 for insurance.

Acquiring a residence in Dubai requires a specific income for individuals to comfortably make this investment. Here is all about the salary required to buy property in Dubai.

Risks of Buying Property in Dubai

Investing in Dubai’s real estate market offers lucrative opportunities, but it’s essential to be aware of potential risks. Here’s a concise overview of common risks of buying property in Dubai:

• Market Volatility: Economic fluctuations can impact property values, but government measures aim to stabilise the market.
• Miscommunication Risk: Understand legal restrictions for foreign buyers, seek legal advice and ensure compliance.

• Developer Reliability: Verify developers through site visits and RERA and consider past projects.
• Construction Delays: Investigate developers’ reliability and factor in potential rent loss during delays.
• Unforeseen Expenses: Account for hidden fees, ongoing costs and potential renovations.

However, by using these tips you can minimise the property investment risk in Dubai.

FAQs

How long does the property buying process in Dubai take?

The entire process typically spans two to ten weeks, with potential extensions if the property is mortgaged.

How to buy property in Dubai on a mortgage?

For mortgage buyers, pre-approval is advisable before signing the sale agreement. Additional fees include a 1% Bank Mortgage Arrangement fee and a Property Valuation fee (AED 2,500 to 3,500 + 5% VAT). Additionally, it is crucial to assess both the pros and cons of buying property in Dubai before deciding to purchase it.

Can foreigners buy property in Dubai?

Non-resident foreigners can own property in Dubai Land Department freehold areas such as Palm Jumeirah, Dubai Marina, Downtown Dubai and Arabian Ranches, with adherence to specific conditions and UAE property ownership rules. For a better understanding, read our guide on buying property in Dubai as an Expat.

How to buy off-plan property in Dubai?

Steps include budget determination, thorough research on developers and projects, consultation with a real estate agent, reservation with a deposit, signing the MoU, choosing a suitable payment plan and completing the legal process with NOC, property registration and obtaining the title deed. However, before you invest here are some important things to consider when buying an off-plan property in Dubai.

Can you buy property in Dubai without an agent?

Yes, it is possible to purchase property in Dubai without the involvement of an agent. In various communities, properties can be acquired directly from developers or individual sellers.

With this, we end our guide to buy property in Dubai. Also, this comprehensive guide to legal procedures ensures a smooth investment journey in Dubai’s real estate market. Explore various properties for sale in Dubai, including expansive villas or affordable options in popular areas, making informed choices tailored to your preferences and budget.

Besides apartments, you can also find a range of houses for sale in Dubai.

You can explore dubizzle’s Verified Properties listed on the website to avoid any potential scam.

Stay tuned to the dubizzle property blogs for more detailed guides and real estate updates.