Dubai real estate: All you need to know

Dubai real estate has been a sought-after asset for both domestic and overseas investors for over 2 decades now.

Like all other investment markets it has periods of growth and decline and at its peak, Dubai offered some of the biggest returns you could find across any property market in the world.

As we move through 2022 and into a post-pandemic economy, the market is very buoyant once more – particularly on global terms. Furthermore, among analysts and investors alike there is a feeling this third growth cycle will be more sustained and robust than the previous two.

Last year was the start of this growth curve and it continued in spectacular fashion into 2022. Such was the demand for real estate assets in Dubai that more than 20,000 properties were purchased in just the 3 months between January and March – the highest number of transactions for a Q1 period in history.

Demand was spread among all asset types with both villas and apartments sales increasing massively, while sales of off-plan assets increased by nearly 100% and secondary market sales increased by almost 75%.

The result of this demand on prices? As you would expect if you’d have purchased Dubai Property last year, there’s a good chance you’d have seen some staggering 1-year returns. Data shows villa prices have increased by 20% in the past 12 months, while apartment prices have delivered strong growth too – almost 10% capital appreciation.

Even in a global economy that looks set to slow, analysts still forecast sustained growth for the Dubai market, with average annual capital returns of between 3 to 5% all the way through 2024. Remember this will be during a period when it is likely many other real estate markets may suffer a dip or more substantial correction. 

Now, with a concrete status as one of the world’s leading investment markets, Dubai has really cultivated and streamlined the process of buying real estate within the emirate.

Even overseas investors who have never purchased in the United Arab Emirates or even the wider GCC take confidence from a robust and transparent framework.

Here we take a look at the Dubai property buying process and answer some of the most common questions our investors ask us.

How to buy property in Dubai

What documentation and paperwork do you need to have to buy Dubai real estate?

Ahead of the purchase, it is very simple. If you want to invest in Dubai property all you need to have is a passport. This is pretty much the same for all transactions. Obviously, this is much simpler with off-plan properties due to the extra luxury of time and developer payment plans, but for all transactions, no special permit or documents are required.

Once the transaction itself begins – and this can happen much quicker in the secondary, completed sales market – there are more forms required, but again, the process is relatively straightforward and universal.

There will be a Form A contract between seller and broker or agent and there will be a Form B contract between the buyer and broker or agent. Of course, legal counsel is advised.

Finally, there’s a Form F contract and sale agreement between all parties to signify the transaction. This memorandum of understanding is like the exchange stage in many other global property markets and as such, it’s at this point when you as the buyer must pay a 10% deposit. In most cases, it is actually a security deposit and is refunded (or more likely deducted from the outstanding purchase price) when the transaction is finalized.

What about leasehold and freehold in Dubai?

In Dubai, like most prime real estate markets in the world, properties are classified as either freehold or leasehold. Freehold is relatively simple in that after the transaction you’ll own both the property and the land it is built on.

Leasehold properties are purchased on a long lease, essentially only reserving the property and land for a finite amount of time. In Dubai these leases are 99 years in the main. In reality, the classification of leasehold and freehold tends to make little difference to future values unless the lease period is drawing to a close.

And what about off-plan and secondary market properties in Dubai, which is better?

There is no clear-cut preference among our investors, and both types of real estate have some strong advantages over the other.

Off-plan properties tend to be cheaper, and that’s because there is more risk involved, you are purchasing a property that doesn’t exist yet. That said, you’ll not be paying all the money upfront.

Payment plans for off-plan properties vary between each of Dubai’s many developers, but comprise a series of regular instalments over the build period, finishing at completion and handover. Some payment plans can be extended even further beyond completion too.

Obviously, secondary market purchases are ready to move into or lease as soon as the transaction is completed. It is also far easier to secure a mortgage on a completed property as opposed to off-plan properties. You’ll tend to find most lenders expect you to have around 25% of the purchase available as a deposit.

Ultimately the choice between an off-plan asset and a completed property is one that only you can make. It’ll be influenced by your timescale, cash flow, risk appetite, as well as standard property factors such as location and build quality.

Once purchased what else do you need to do as an investor?

Obviously, you’ll want to ensure both the transaction and your ownership are registered with the relative authorities. You can see more info about this here, but in most cases, the registration will be handled by your broker or agent.

After that, it’s a simple matter of paying any service charges and setting up the utilities. As a lot of Dubai properties are purchased off plan, the connection of utilities usually happens around the time of the final payment. If you are purchasing assets on the secondary market, be sure the seller has cleared all existing balances with utility providers and ask for a No Objection Certificate from the developer to get your new connections up and running.

Again, if you plan to let the property your lettings management company can help with this.

What is Dubai’s Golden Visa?

It’s a Dubai government-backed scheme that aligns real estate purchases with residency.

The Golden Residence Scheme offers a 10-year visa. It was recently updated and simplified to streamline the criteria and provide additional benefits and flexibility to visa holders. You can find more info on the Golden Visa, and what it means to the buying process here, but in summary, it is now possible for you to gain residence when purchasing Dubai property off plan and with a mortgage.

What are the popular areas to invest in depending on your budget?

It is important to remember that all real estate in Dubai is pretty much prime real estate on a global scale. Wherever you buy you can be assured of quality and a prestigious location. However, within the micro markets of Dubai, you can find different areas to suit differing budgets.

More affordable places to invest include the likes of Jumeirah Village Circle (JVC), Jumeirah Lake Towers and Damac Lagoons. JVC in particular is popular due to its slightly lower rents, and therefore the high demand of tenants looking to live there.

Mid-market options tend to focus on established markets such as Dubai Marina and Business Bay. The Marina is one of the most mature sub-markets in the whole of Dubai, which is currently experiencing a rise in demand for property of over 35%. You can read more about Dubai Marina here.

The top of the market tends to be the Palm Jumeirah for villas and Downtown Dubai for apartments. The Palm has recently experienced huge growth in demand and prices as people look for properties offering more space, while Downtown Dubai – home to the Burj Khalifa – is consistently regarded as the prime property hotspot in Dubai.

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