Everything You Need To Know About Buying a Property in Dubai
Dubai is now a popular location for investors, especially British expats who now find the dynamics and life style as well as business opportunities now surpass that of the original destinations such as Spain. Dubai has it all from Tropical Desert climate, cosmopolitan atmosphere and the many amenities that you can’t find anywhere else in the world. However, property prices in the emirate have increased by as much as 22% in 2013. If you’re buying a property in Dubai, then you need to conduct some in-depth research.
Many expats consider Dubai as an international property hotspot. However some experts fear that the consequent surge in price may lead to a property bubble and although demand is still exceeding supply and will not slowdown in the near future there is a lot of supply coming on the market..
If you’re planning to invest in Dubai, then this guide will help you in your decision making. Buying your first or second home in this emirate requires a lot of money, and it’s essential to conduct a thorough research to better prepare you for the big decisions ahead.
1. Familiarising yourself with Dubai City – this city consists of two main areas; the first one is Bur Dubai which is considered the older part of the city. The other one is Deira, which faces the famous Dubai Creek and is now the central business hub of the city. Although Westerners prefer residential locations which are spread out across the emirate. Some of the residential areas will include Jumeirah, an area close to the coast and is located at the southwest of the city centre, Al-Garhoud which is situated on the northeastern of the creek and is close to the airport. The property boom in recent years has enlarged these popular areas, and this is due to the growing demands which were facilitated by the investors.
2. Choosing your kind of home – there are many types of homes in Dubai, but British investors/purchasers favoured villas and apartments. This can either be single or two-storey and are located in secure complexes with top-notch leisure facilities such as swimming pools, tennis courts and gyms. However are you looking for an investment or to live in, is yield more important than growth? It’s essential to determine what you really want from your home before contacting a real estate company. My suggestion is always to use an ABR (accredited buyers representative) as they have formal training and will help in identifying your needs and locating the property. They do not have a conflict of interest if that is all they do, they will source the correct property, they will determine the fair price, and they will help negotiate better pricing.
3. Understanding the property ownership rules and purchase procedure in Dubai – In 2002, property ownership was only restricted to citizens of the UAE and other nationals of the Arab Gulf Cooperation Council. Although this law was already reversed, there’s still no federal law that recognised freehold tenure. This only means that the value of Dubai freehold will depend on the country’s international trading credentials rather than an enforceable law.
But in 2006, a new law was passed by the Dubai government allowing foreign freehold ownership of property in the city. However, it is only restricted to areas that were designated by the ruler. Property owners can now derive benefit from their own respective properties. Generally, freehold under this law will allow property owners to have absolute rights over their properties in Dubai. You need to be aware that some developers are still selling leasehold titles. These titles will only be valid for the period which is stipulated in the lease agreement. Always check if you’re buying a lease hold or freehold title.
4. Knowing about the property purchase process – Since the property market in Dubai is still in its infancy, there’s still no formal purchase process. The only paperwork you can expect is a straightforward sales agreement. It would be advisable to consult a local lawyer before signing any document. Always remember once you signed a document, it becomes legally binding.
5. Financing your purchase – When you’re looking for a way to finance your purchase, you need to consider all the options. But if you can pay in cash, then it’s recommended that you do so, but you may not want to release a relatively large amount of money this way. There are other options that you can consider like arranging a mortgage for your Dubai property via local or UK-based lender.
For the easiest solution, you should settle for remortgaging. In fact, releasing equity in a UK home can give you the means to purchase your second home in Dubai in cash, and you don’t need another mortgage for it. However, this can only be feasible for people who own their first home outright.
6. Getting a mortgage in Dubai – Getting a mortgage in Dubai is not that simple, you need to find a mortgage company that can give you the best deals in the market. There are various options that you can choose from. You can either go for a mortgage advisor or a mortgage broker. Although the mortgage brokers are regulated by the Government of Dubai and they can provide you with a wider range of products suitable to your current financial situation. I strongly suggest that you do an in-depth research and choose the best mortgage broker in Dubai that can help you all throughout the process.
7. Learn the rules about taxation in Dubai – The Government of Dubai no longer needs to raise income via direct taxation, because they already get it through massive oil revenues. This only means that taxes in the emirate are almost non-existent, so you can expect that there’s no capital or withholding taxes. In addition, Dubai does not charge Capital Gains Tax nor does it levy tax on income derived from letting property within the emirate. Most importantly, all the goods purchased there are “free of tax,” and this has been the city’s most significant attraction.
8. Be aware of the rules about taxation in Dubai. Dubai’s massive oil revenues make it unnecessary for the government to raise income through direct taxation. As a result, taxes are almost non-existent, and Dubai is categorised a ‘no tax’ emirate. There are no withholding or capital taxes. Accordingly, Dubai does not levy tax on income, including that derived from letting property owned there, nor does it charge Capital Gains Tax. Goods are purchased free of tax, which is part of the city’s attraction for shoppers from all over the world.