Your Ultimate Guide to Buying Property in Dubai: Legal Steps, Market Overview, and Tips for Settling in

For a seasoned property investor or a first-time buyer, three major points are ever the pivot to deciding whether to invest in a property or not. 

Buying property in Dubai is no different. But there are some facts about any property that you ought to know firsthand before booking a seat at the bargaining table;

• How is the infrastructure around the property?
• Does the government of the land have favorable policies for property investors?
• How is the economy of the resident country?

Dubai ticks all these three questions with positive answers that welcome you to the bargaining table.

Just to mention a few welcoming reasons to buying property in Dubai;

1. Dubai is a tax-free (income, property, or capital gains) environment making it appealing to investors.
2. Booming tourist industry – there was an 89% increase in number of visitors from 2021 to 2022. This creates a high demand for rental properties and translates directly to an excellent investment opportunity.
3. Competitive property prices – Compared to other developed cities worldwide, Dubai’s real estate offers relatively low prices.
4. Strong ROI – All the above-mentioned reasons lead to a high return on investment.
5. You will get a golden visa – this applies for buyers of property in freehold zones. They get the visa for 2 or 20 years which come with its own benefits like opening bank account for international transactions, and they won’t be required to live in the country permanently.

In this extensive guide to buying property in Dubai, I’m going to bring you to speed on all it takes to purchase property in Dubai.

We will look at the laws and legal procedures of acquiring property, the requirements, we will then compare off-plan and secondary market properties, and finally help you settle well in the community once you are a happy owner.

At the end of this article, you should be confident enough to start the process of purchasing property in Dubai, armed with factual data on where to get the best value for your money.

Let us break this whole concept down, shall we?

Property market in Dubai

According to a “Dubai Property Market Forecast For 2023” report, the Dubai property market is poised to witness the biggest price growth in the world.

A 75% increase in sale from 2021(AED 149 billion) to 2022(AED 261 billion) just reflects how dynamic the market is.

AI-powered research by Dubai-based proptech Realiste predicts that high-end, luxury homes prices will shoot by 6.75 to 20.3 percent whereas its equivalent in London will only witness a 3.5 % increase.

The competitive advantages of:

• Zero property taxes,
• High yields,
• And affordable prices

Are the driving force for the sustained growth.

The study by Realiste acknowledges the significant growth in prime neighborhoods like Palm Jumeirah, Port de la Mer, and Safa Park.

Let us look at the prime neighborhoods in Dubai.

Prime neighborhoods in Dubai

Some residential areas in Dubai offer a magnificent skyline, modern amenities, and ease-of-access to social facilities.

They include:

1. Downtown Dubai

This had to be the first because it is the most popular neighborhoods in Dubai. It is home to:

• The world famous Burj Khalifa
• The Dubai Mall
• The Dubai Opera

This is a perfect fit for those who love to be in the center of the action. With a stable increase in property prices in the recent years, this is a great opportunity for property investors.

2. Palm Jumeirah

Located on one of the artificial islands off the coast of Dubai, and considered to be the city’s most luxurious neighborhood, Palm Jumeirah offers private beaches, swimming pools, and a wide range of amenities.

Properties for sale here include luxury villas, townhouses, and apartments. It is an ideal opportunity for high-end clients seeking for luxurious living.

The average price per m² here is approximately $7,887, while the average price of property is $830,452.

3. Business Bay

Home to major multinational corporations and top business figures makes it a prime location to own property.

With an exclusive view across Burj Khalifa Lake Park, this neighborhood is a dream of many. It is a rapidly developing neighborhood and becoming a popular choice for investors.

The average price per m² here is approximately $5,536, while the average price of property is $354,685.

4. Emirates Hills

Surrounded with lush green landscapes, and some of the top golf courses, this neighborhood is ideal for individuals seeking exclusive lifestyle.

5. Al Furjan

This is a neighborhood comprising of villas and its proximity to Al Maktoum International Airport offers great accessibility to other parts of Dubai.

The average price per m² here is approximately $3,095, while the average price of property is $232,614.

6. Arabian Ranches

This is a gated community found in the heart of Dubai. 

It is known for luxurious properties and high-end amenities, making it a popular investor destination.

7. Dubai Marina

A well-connected investment location known for modern sky-scrapers, prime location, luxurious properties, and a vibrant night-life.

Here you will get penthouses, villas, and luxury apartments.

These are just but a few of the prime neighborhoods offering high potential for property buyers in Dubai.

Once you are decided on your target neighborhood, you should be aware of the laws of the land pertaining buying property.

This is to ensure that you are in good books with the government and to avoid any legal tussles.

Let us now look at the existent laws about property acquisition in Dubai.

Laws pertaining buying property in Dubai 

There exists a law concerning property registration in the Emirate of Dubai called Law No. 7 of 2006.

This law provides for directions concerning buying property for nationals and foreigners and directs as follows:

• Article 4: The right to own real property is restricted to UAE and GCC nationals, companies owned in full by them, and to public joint stock companies.
• Non-nationals can be granted right to freehold ownership without time restrictions or leasehold rights for a period not exceeding 99 years.

Freehold ownership means the owner will enjoy free ownership forever and is free to use the property for any purposes in accordance with the local regulations.

While leasehold rights mean you hold the rights to use and occupy the property for a specific period of time, after which you can renew, extend, or return the property.

In simple terms, leasehold rights give the buyer a right to own the physical property for a duration of time; between 50-99 years, but not the land the property is built on.

In Dubai, a foreigner can own property on freehold in areas designated as freehold. The foreigner can also choose to buy leasehold property for a duration of 99 years.

There are 9 freehold zones in Abu Dhabi and 50 in Dubai.

With the laws out of the way, lets now see the legal steps to go through when purchasing property in Dubai.

Legal steps to buying property in Dubai

Now that we are aware of the laws about buying and owning property in Dubai as a local and a foreigner, it is time to familiarize ourselves with the legal steps that you must follow to purchase property.

Kindly note that we have not listed preliminary steps e.g., looking for property, researching about the developer, etc. That’s why New Developments is here for you. To bring your dream of owning property in Dubai to a reality. 

The legal steps to buying property are the mandatory steps that will help incase of a conflict with the developer.

The legal steps are:

1. With The Assistance of a Professional, Formulate A Contract Between the Buyer and The Seller

After all the hustle of finding the perfect-fit property for your lifestyle and pocket, now comes the other important part – paper work.

For this you MUST be guided by a professional to avoid any costly mistakes that can occur later. This also rules out the inclusion of ambiguities in the contract to be signed.

The contract must include;

• Agreed sale price, 
• Seller’s and buyer’s information, 
• Mode of payment,
• Security deposit details, 
• And specific property details like completion date, conflict resolution etc.

This helps make the purchase and transfer of the property smooth by placing the buyer and seller on the same page.

2. Sign The Formulated Agreement of Sale

The agreement, also known as Form F in the RERA Real Estate Forms or MOU will be prepared by the real estate agent who will also act as the witness during the signing.

The form is signed by both the buyer, seller, and the witness. The buyer will be required to pay 10% security deposit to the Registration Trustee and the deposit will be refunded on property handover.

3. Apply For a No Objection Certificate (NOC)

A No Objection Certificate (NOC) is a permission statement given to a person or a company to proceed with the purchase or construction of a property. It is an official document required to complete a real estate transaction.

This is a necessary document before the property ownership is transferred to the buyer.

A meeting between the buyer, seller, real estate agent, and the developer in the latter’s office will happen. Application and payment of NOC will proceed if there are no outstanding service charge on the property.

4. Effect Ownership Transfer with Dubai Land Department (DLD)

This is the last step of becoming the legal owner of the property you’ve purchased.

The buyer and the seller will go to the Dubai Land Department, and present the documents listed bellow for the property ownership transfer to be effective:

• Original identification documents for both buyer and seller.
• Original NOC issued by the developer.
• Signed MOU
• A cheque for the property payable to the seller.

Once all these have been verified, you become a legal owner and a title deed in your name will be issued.

Congratulations on being the newest owner of property in Dubai.

Let us now look at the requirements needed for one to buy property in Dubai.

Factors to consider before buying property in Dubai

There are a number of considerations to have in mind before making the purchase. They include;

Affordability – You have to factor in the total cost of the property plus the maintenance, administrative, and tax costs that apply to your property. 

As a norm in the real estate realm, you should always have a few extra cash remaining after your purchase for any unintended eventualities, an extra 10% of the whole property cost.

Rental yields – The rental income expected should comfortably pay your mortgage and maintenance expenses. 

Trends and Market conditions – This is a prerequisite if you want the best value for your money. With many properties coming up, prices may decline or better properties might be built. Finding out about these trends will help you make an informed decision.

Location – Depending on your taste and preference, amenities and infrastructure around the property will be a decision factor. 

Developer – the reputation of the developer and their previous projects will also guide your trust towards their project. You’ll want to invest in a developer who has previous successful projects

Deposit and Tax for buying property in Dubai

The following taxes and fees are applicable upon buying a property in Dubai:

1. Transfer tax – This varies depending on the location of the property. For example, it costs 4% in Dubai and 2% in Abu Dhabi. The transfer tax is paid in a 50/50 arrangement from both buyer and seller.
2. Registration fee – This is a one off, standard fee depending on the value of the deal. There’s a cut off where if the value is below $137,000, the fee is $545, but if it exceeds $137,000, the n the registration fee to be paid is $1,090.
3. Administration fee – a one-off payment of $147
4. Certificate of Ownership administration fee of $68.

If the property in question is a commercial one, then the buyer will pay an additional 5% VAT.

NOTE:

• No annual tax is charged for owning property.
• If your property is a rental, your rental income is not subject to taxation.
• Seller and buyer pay the transfer tax half-half.
• The average costs of basic utilities for an 85m² apartment are $163 per month.
• The internet costs around $100 per month.

Off-plan or secondary market?

In any property market globally, primary (off-plan) and secondary (re-sale) products are a subject of contention.

The existence of both in any specific location is a positive indicator for investors. Even though they are driven by different factors; increased urbanization, supply and demand, economic trends, etc., there should be a minimal price gap difference between the two.

For the past three years, the property market in Dubai has been favorable for off-plan properties signifying a booming economy and an increased population.

For you to decide on whether to invest in an off-plan or secondary property, consider these:

For Off-plan Property;

• The low upfront costs make off-plan properties cheaper than their secondary counterparts. The payment breakdown offered makes it cheaper in the long run. The deposit and subsequent installments are lower than the one-off payment needed for the secondary market. 
• Due to a staggered payment plan, capital appreciation will result in a higher return on equity. 
• The primary market is full of offers making it a much easier and affordable option for investors.

For Secondary Property;

• The component of existent rental yields equates to an instant return on investment. Rental yields in Dubai are equivalent or exceed mortgage rates.
• The risks of cancellation and delays as with off-plan properties is non-existent for the secondary market.
• Great deals from sellers in a haste to dispose their properties give investors an advantage.

How to settle well in Dubai?

Dubai has already established itself as a number one travel destination as the world’s leading trade and economic hub.

The directive of the government to lower barriers of foreigners doing business has made it an excellent place to invest and live.

Availability of modern and state-of-the-art amenities and infrastructure just add to the reasons why Dubai is becoming an ideal place to settle with the family.

As a non GCC national, you’ll require a UAE residency visa in order to reside in Dubai.

Types of residence visas in Dubai

1. Work permit visa – This is provided by employers and range from one to three years.
2. Green Visas – This is a self-sponsored visa for a period of 5 years.
3. Medium to Long-term investor visas – For investors who’ve bought property worth AED 2 million or more. 
4. Golden visas for special professions – A ten-year visa for specialized professionals such as doctors, engineers, scientists, and researchers.
5. Retiree Visas – Expats over the age of 55 are eligible for the renewable 5-year visa upon meeting a set criterion.

The benefits of having either of these range from;

• Permission to open a bank account for global transactions
• Permission to buy property, get a driving license, and to operate freely in the leading economy hub.
• Access to social amenities and modern infrastructure
• Residency in UAE.

That’s a wrap! You are now a resident of Dubai. Remember to stick to the legal steps when buying property to safeguard your investment from any eventualities.

At New Developments, we will walk with you through all the steps of property purchase. Ensuring that you comply with the local law and getting the most value for your property.

Do you have any concerns you want addressed? Comment below and we will definitely make everything clear.