• Buying Property in Dubai as a Foreigner: The Definitive Guide

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    Dubai has opened up to foreign property buyers since 2002 and the property market has boomed since.

    It previously had almost 25% of all the cranes in the world, during its boom years, which is kind of amazing. Having an economy that relies only 6% on oil exports, Dubai continues to be one of the most sought after places in the Middle East.

    Not to forget, it’s one of the most business friendly countries in the Middle East and grows with a rate of around 4%, which is not bad.

    Yet, before you buy property in Dubai, it’s important that you get your feet wet first and learn about local regulations. In this article, I cover most of the key information when you buy property in Dubai as a foreigner.

    Can foreigners buy property in Dubai?

    Since the Dubai government introduced new ownership regulations in 2002, it’s become remarkably easier to buy and own property as a foreigner.

    Many say that Dubai is the easiest country to do business and to invest in real estate in the MENA region, something that probably doesn’t surprise you.

    In total, you have three different property types available, that I want to present first:

    • Freehold properties (Musataha)
    • Long term leasehold (Usufruct)
    • Strata-titled properties (Commonhold)

    Buying freehold property

    As described in separate articles, a freehold property will give you full ownership in your own name, for an unspecified length of time. In 2002, Dubai’s government introduced the so called Freedom Decree and as stated on the Dubai Land Department’s website: “Freehold ownership is absolute and unrestricted by time and extends to the land and all buildings thereon”.

    This is the most preferred option when buying property overseas, but is usually more expensive as well. Buying a freehold property will give you full rights and no restrictions to lease, rent out or sell the property.

    In many countries, like Indonesia, freehold properties are not available to foreigners, and Malaysia is basically the only country in the Southeast Asian region who allows foreigners to own land on a freehold basis.

    Not a very common practice as you can see. With the introduction of a new 10 year visa for investors, Dubai shows that it’s becoming on-par with Malaysia, in terms of foreign ownership regulations.

    Freehold areas in Dubai

    You can only buy freehold property in dedicated areas, determined by the Ruler of the Emirate in Dubai. These are famously for being the best areas whatsoever.

    Regulations change from time to time, for up to date information, I recommend you to contact the Dubai Land Department (DLD) for more information about the different freehold areas.

    Some of the most notable areas where foreigners can get freehold ownership are:

    • The Palm Jumeirah
    • The World Islands
    • Downtown Dubai
    • Old Town
    • Burj Khalifa
    • Business Bay
    • Dubai Marina
    • Emirates Hills
    • Jumeirah Lakes Towers (JLT)
    • Jumeirah Beach Residence (JBR)
    • Discovery Gardens
    • Arabian Ranches
    • Midriff (specified plots)
    • Dubai Investment Park (DIP)
    • Falcon City
    • Dubai Sports City
    • Dubai Motor City
    • International City
    • Jumeirah Islands & Jumeirah Village

    Buying leasehold property

    I prefer to use the word leasehold instead of usufruct, as this is a more common and understandable term used. A leasehold property gives you the right to lease the property for a time period of up to 99 years. However, this is the maximum lease terms and the lease terms normally stretches between 30-99 years, when the term expires, the ownership goes back to the landlord.

    Commonly, the price appreciation is not as high the closer you get to the expiry date of the lease, while the price accelerates faster when the lease is renewed. Another thing worth mentioning is that you can do practically everything with this kind of property, except for destroying it.

    Buying commonhold property

    Commonhold properties have many similarities with strata-title properties and condominiums where the unit owners pay management fees on a monthly, quarterly or yearly basis to keep the common facilities intact.

    Even if commonhold is popular, freehold is the preferred choice among buyers.

    Process when buying property in Dubai

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    It’s important that you review the buying process, as there might be significant differences compared to your home country’s ditto. Fortunately, the process is fairly straightforward in Dubai, but differs depending on if you buy an established (resale) or off-plan from a developer.

    A preferred choice among foreign investors and expats is to buy off-plan. Locking in the price a couple of years in advance, and moving into a new home is a great feeling. But there are some important things you should pay attention to, before engaging in Dubai’s property market.

    1. Is your developer approved by the Dubai Land Department? (DLD)

    If you buy off-plan, firstly you need to make sure that the developer is approved by the Dubai Land Department. For a complete list over the approved developers, you can visit the DLD’s website. The market opened not long time ago and there are still many companies trying to get a piece of the pie.

    It’s crucial that you check the seriousness of the developer and that the company has finished a number of projects in the past. You can also visit some of the projects in person, if you have the chance.

    2. Is your agent registered with the RERA? (Real Estate Regulatory Agency)

    Regulations change fast in Dubai and it’s important that you work with a credible and reliable agent, who knows the foreign ownership regulations in and out. He or she should preferably be registered with the RERA (Real Estate Regulatory Agency). RERA was founded in 2007 that forms, regulates and authorizes the real estate sector in Dubai.

    Some international agents you can contact include:

    • Knight Frank
    • Sotheby’s
    • Engel & Völkers

    You can also check Bayut.com, which is a big real estate portal in Dubai.

    3. Getting a mortgage (if needed)

    Get a pre-approved home loan application from a local bank, or a bank located elsewhere. It’s important that you get a pre-approved home loan, sometimes referred to as In-Principle-Agreements earliest possible, to secure your financing.

    It can be a good choice to hire a local broker, to find better loan packages, even if this might add on some extra costs.

    4. Agree on the terms with the seller and sign a Memorandum of Understanding (MOU) and pay the deposit

    At this stage, you need to agree on the terms with the seller and sign a property sales contract, referred to as form F. You can find a link to the online version here.

    You also need to prepare a deposit equal to 10% of the purchase price.

    5. Meet at the office of the developer and apply for a No Objection Certificate (‘NOC’) to sell the property

    The document will show that the developer agree to the sale the property and that the seller has paid any outstanding fees, or that the seller does so. Simply put, the NOC is a document which gives you and the seller free hands to transfer the ownership from one to another. The process to apply for an NOC usually take a week and costs around USD 200-2000, it’s usually paid by the seller.

    6. Register the property in your name at the Dubai Land Department

    When the developer has issued the NOC, you’re ready to pay a visit to the Dubai Land Department to transfer the property in your name. A new title will be issued in your name.

    Property taxes and fees

    Below I’ve included the taxes and fees to be paid when buying property in Dubai.

    Dubai Land Department transfer fee

    • 4% plus AED 540 administrative fee

    Registration fees

    • AED 2,000 for property below AED 500,000
    • AED 4,000 for property above AED 500,000

    Mortgage registration fee

    • 0.25% of loan + AED 10 fee

    Mortgage processing fee

    • Up to 1% of the loan amount

    Estate agency fee

    • 2% of the purchase fee

    Conveyancing fees (where appropriate)

    • AED 6,000 – 10,000

    Valuation fee

    • AED 2,500 – 3,500

    Oqood fee, for off-plan properties

    • 4% of purchase price

    Downpayment

    • 25% or more of the property cost

    VAT

    • As of January 2018, the Dubai government has added a VAT of 5%

    Can I get a residence visa if I buy property in Dubai?

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    Dubai is one of a few countries that offers long term visas to foreigners who buy property. The following two visas should be of interest.

    The Property Investor Visa

    The property investor visa is a two year renewable visa offered to foreigners by the Dubai Land Department. A number of benefits follow if you manage to get this visa, for example, you can receive an Emirates ID, local driving license and bring your family over. This visa is only valid for property investments.

    You’re only able to receive a property investor visa in case the property value is AED 1 million (around USD 270,000) and it needs to be a residential property. If you apply jointly with your spouse, the property value needs to be more than AED 1 million, and the property value included in the title.

    Cost for the property investor visa

    The total cost to apply for this visa is around AED 13000 – 15000 (around USD 3500 – 4000).

    The Six Months Residency Visa

    The Immigration authority is responsible to issue the six months residency visa, which is a six months multi entry-visa. One of the benefits with this visa is that it’s cheaper compared to the property investor visa, and you can buy property in all seven Emirates to get access to Dubai.

    The investment value requirement is the same as for the property investor visa.

    Cost for the six month residency visa

    The total cost to apply for this visa is around AED 2300 (around USD 620).

    FAQ

    Below I’ve included some frequently asked questions among foreign real estate buyers.

    Can expats buy property in Dubai?

    Yes, expats can buy properties on a freehold basis in designated areas (more about these areas later in this article).

    Buying leasehold property is even simpler and more available.

    Can a US citizen buy property in Dubai?

    Yes, US citizens have no particular issues to buy property in designated freehold areas or property on a leasehold basis in Dubai.

    Can British buy property in Dubai?

    Yes, UK citizens have no particular issues to buy property in designated freehold areas or property on a leasehold basis in Dubai.

    Can non-residents buy property in Dubai?

    Yes, Dubai allows non-resident foreigners to buy property. This is a common practice in other Asian countries as well.

    Be careful if you plan to buy in Indonesia or Australia, where restrictions apply to non-residents.

    Can Indians buy property in Dubai?

    Yes, Indians have no restrictions to buy property in Dubai and can also buy property in selected areas in Abu Dhabi.

    A big part of Dubai’s inhabitants are Indians, Shahrukh khan is one Indian that has bought a house on Palm Jumeirah.

    Conclusion

    It’s said that only 15% of the population in Dubai are Emirates, the remaining 85% are foreigners. This makes Dubai into a diverse and affluent business hub that continues to attract increasingly more foreign buyers. The airport is the busiest in the world.

    The economy relies less on oil, in fact, only 6% of the economy is tied to the oil sector. A lot of activity can be seen in real estate, tourism, manufacturing and more. This makes Dubai unique compared to many neighbouring nations, and many foreigners fall in love with this place.

    Buying property has become easier since the government introduced new regulations in 2002, you’re allowed to buy freehold property, as long as you meet the residency requirements.

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