In Dubai, You Will Find a Footing
If you are one of the many nationalities that have lately relocated to the UAE, you are probably aware that if you have a fair means of income, Dubai offers the best of living standards. If you presently live in a rental flat and are thinking about making the switch from renter to homeowner, you are about to make one of the most significant financial and emotional commitments of your life.
The UAE property market has recovered successfully from the effects of the coronavirus thanks to economic assistance measures and government programs such as residency permits for retirees and remote employees, as well as the expansion of the 10-year golden visa program. The value of real estate transactions in Dubai more than doubled in 2021, breaking a 12-year high in terms of sales transactions. In 2021, the emirate had 61,241 sales transactions worth Dh151.07 billion ($41.13 billion), compared to Dh71.87 billion in 2020.
In this article, Sirwiss-affiliated moving service specialists outline the most important factors to consider before beginning your trip to Dubai, particularly if you intend to stay in the UAE for a few years and acquire your own house away from home.
Factors to Consider When Buying a Home in Dubai
Purchasing a home can be an exciting experience, especially if it is your first. With Dubai’s expensive rents, many foreigners believe that acquiring property is a better investment. Because this is such a significant transaction, you must guarantee that everything is done correctly.
One key trait is required for real estate investing success. Instead of allowing instincts or your heart to guide your selections, make well-informed choices. To make the best decisions, you must do the following actions.
1. Determine what you are looking for
Make a financial plan. Whether you’re buying with a mortgage or cash, for personal use or as an investment, your purchase should be cost-effective.
2. Determine what you need
The number of bedrooms, closeness to schools, work, and shopping, and the scenery in the neighborhood should all be on your priority list. Consider your family’s requirements as well as its life cycle. Consider, for example, what kind of residence would best fit you, and then cross off those necessities. Do you prefer an apartment, a ready-to-move-in house, or a house from the ground up?
3. The third step is finding a location
Investigate known locations or undertake considerable research on the chosen location. What are your goals? When do you intend to move in, and what is your resale strategy? Make sure to choose an experienced Knowledge Partner who is knowledgeable about the topic you’re interested in. Make informed judgments with the help of a specialist who understands contracts, taxes, and other legal matters.
4. The fourth step: Research
Once you’ve determined your requirements, conduct some market research to compile a list of the best possibilities for you. Create fact sheets for each option, ask questions, go to the location, assess the local market, and gather vital information. The median price per square foot, the quantity and value of transactions in the area, and the current and prospective supply of property in the area are all considerations. Investigate the price per square foot and overall property cost of the area’s most recent five sales. Compare the advertised price to the statistics to see if the offer offers exceptional value. All of this information is available on the internet. This will assist you in identifying the most potential investment opportunities.
5. Maintenance costs:
The Dubai Land Department will charge you annual maintenance fees on your property based on the RERA Service Charge and Maintenance Index. This index, which varies by community, provides a specific rate per square foot. Fees are available straight from the DLD’s website.
- Savings: The down payment is perhaps the most significant element to consider when buying a property. The minimum deposit necessary for foreigners is 25% of the purchase price for houses valued less than AED 5 million, and 20% for nationals, according to UAE Central Bank Regulations. A personal loan from a local bank cannot be utilized to finance your down payment; you must use your own funds. The above-mentioned upfront transaction charges, agency fees, and bank fees, on the other hand, may be financed using a personal loan.
- Rental yields: If you wish to convert your home into an investment property in the future, you should consider if the estimated rental income will be enough to meet your monthly mortgage repayment and maintenance expenses.
- Residence visa: If you own a property worth more than AED 1 million, you may be eligible for a resident visa if certain conditions are met. There are two types of visas available: a 6-month multi-entry visa and a 2-year resident visa. Property owners can also sponsor visas for members of their close family. Property valued above AED 5 million with no mortgage attached and held for three years may entitle you to a five-year resident visa, subject to specific eligibility restrictions.
6. Make sure that the seller owns the property and can legally sell it
You should have them look over the title deed to see that their name is on it and that it matches the name on their passport.
7. Ensure that the property is free from any debts (mortgage, tenancy rights, charges, etc.)
This is verified through a No Objection Certificate (NOC)
8. Verify your broker’s card and confirm they’re registered with the Dubai Land Department
Every broker in Dubai needs to be individually registered through the Real Estate Regulatory Authority (RERA) and has a valid broker ID card on him. Keep a copy for your records
9. Make sure your finances are covered
Expats can borrow up to 75% of the property’s value for the first time if it is worth less than Dhs5 million, or up to 65% if it is worth more. Your monthly wage will also be considered, and your mortgage payments cannot exceed 35% of your income. In addition to your deposit, which is typically at least 25% of the property price, you will be required to pay the following:
- Agent fees – normally 2% of the purchase price
- Property transfer fees – Normally between 1 and 7 % of the purchase price
- Registration fees – 1.5% of the purchase price, with an extra 0.25% if you have a mortgage
10. Have the proper clauses in your Memorandum of Understanding (MOU)
The MOU paper outlines the terms and conditions of a two-party sale agreement. Normally, a small deposit (5%) is required at the time of signing. It should include at the very least the following:
- Details of the property
- Total purchase price and terms of payment
- Time frame to close the deal (including NOC from developer and transfer of title)
- Consequences for failing to complete the deal
11. Final Decision
Before signing any contract, double-check that it covers everything from maintenance to repairs to key exchange. Always consult your expertise Partner before negotiating a transaction on your behalf. Before you finish, consult with a real estate and tax specialist. They are professionals who will handle everything. Finally, if you’ve found the ‘perfect offer’ on a Dubai property, don’t wait to purchase it or risk losing it.
12. Building equity, building wealth
Sure, the initial costs of purchasing exceed the amount of your first year’s rent. This disparity, however, narrows over time. What is the main distinction? You are getting closer to buying your own house with each monthly mortgage payment. The terrible reality is that with each monthly rental payment, you are effectively paying someone else’s mortgage.
In addition to lowering your debt over time, long-term property ownership should result in capital appreciation. The increase in the market value of your property over the purchase price is referred to as capital appreciation. The longer you own the home, the more likely it will appreciate in value, increasing your entire equity.
Becoming a homeowner is a significant achievement that necessitates considerations beyond the down payment. When thinking about investing in the real estate market, examine your long-term commitment to Dubai, compare your rent vs. buy costs, including all hidden fees and levies, and conduct your due diligence.
Dubai, one of the world’s fastest-growing metropolises, is famed for its towering skyscrapers, picturesque waterfront tourist sites, and some of the world’s top malls. Due to its ever-changing character, investors and homeowners alike are continually looking to acquire property in Dubai. However, before you make a decision, consider the advantages and disadvantages of purchasing a property in Dubai.