How to Buy an Apartment in Dubai

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( — February 22, 2022) — Real estate in the United Arab Emirates is in demand among foreign citizens. The leading demand positions are occupied by the country’s largest metropolis – Dubai. There are more than 60 locations in the city where the real estate sector is available for purchase by foreigners, which allows them to buy a property in Dubai Marina, Business Bay, or in any other popular area of the metropolis. 

What real estate in Dubai is available for foreigners to buy

Expats and foreign investors can own property in so-called freehold zones. You can buy a house not only in Dubai but also in the UAE capital Abu Dhabi and other emirates. In areas where the sale of the property to foreigners is prohibited, long-term rental of housing for up to 99 years is possible. However, the format of leasehold zones is less popular, especially since the choice of freehold zones in the UAE is quite wide. Restrictions are not imposed only on citizens of the Persian Gulf countries and citizens of the UAE.

Rights and obligations of property owners

The owner of an apartment in Dubai has the right to own and dispose of the property at his discretion: sell, bequeath, give, lease. When buying a home worth more than AED 1,000,000, the owner can issue a residence permit. The higher the cost of housing, the longer the duration of the visa: when buying in the amount of AED 5,000,000, its term is five years, and when investing in the amount of more than AED 10,000,000, it is 10 years. The sale of real estate during the validity period of the visa entails its automatic cancellation, except in situations where the owner owns several properties. 

There is no taxation in the UAE, so buying a home does not incur obligations to the state. However, owners should be prepared for the fact that in addition to paying for utilities, they will have to pay an annual contribution for the maintenance of a residential area. The rate is calculated individually depending on the location and area of the property.

How the deal is concluded

Registration of the purchase of a real estate for sale in Dubai takes place in several stages:

  1. To sign the preliminary agreement. It can be written in Arabic or English. Notarization is not mandatory. The document reflects information about the project, its location, cost, liability of the parties, as well as payment terms.
  2. To sign the sale agreement. Its form is available on the portal of the Land Department. The procedure is accompanied by advance payment. The deposit is returned to the buyer at the conclusion of the transaction, in case of refusal, the funds remain with the seller. If the latter changes his decision on the sale, he must return the advance to the buyer in double the amount.
  3. To register the certificate of no objections. It confirms the absence of debt obligations from the seller to the developer. 
  4. The direct transfer of ownership. A receipt for payment is issued by the Land Department. The cost of the property is paid on the same day. For real estate under construction, there is no certificate and a sale agreement, a primary sale agreement is sufficient. Registration of the transaction is carried out in the temporary register. 

On average, the whole procedure takes about a month. The transaction can be carried out in real-time or remotely. Such a format is legally permitted, it is enough to use the services of a real estate agency, which will act as an official representative of the buyer. The power of attorney is notarized, legalized at the embassy, translated into Arabic. However, most foreign investors prefer to visit the country in person in order to visually familiarize themselves with the purchased real estate. 

Is it possible to buy an apartment in installments?

Mortgages for foreigners in the UAE are allowed. Average interest rates range from 5.5 to 6% per annum and depend on a particular bank. The future owner must confirm his creditworthiness, as well as have the funds to pay the initial payment. Usually, it is from 20 to 40% of the cost of the apartment, the exact conditions are set by the bank. Installments are established for objects under construction. It allows you to pay the full value of the property within a few years from the date of commissioning of the property. This format is practiced by many, but not all developers. The installment plan is given for several years. This is a favorable condition for attracting foreign investors.

Additional expenses when buying an apartment for sale in Dubai

When buying a home, you should take into account the need for additional expenses, which include:

  • Payment for the services of an agent. It may be a percentage of the transaction amount or a fixed amount specified in the contract.
  • Registration fee of 4% paid to the Land Department. Unplanned development projects in Dubai may be more profitable, as often a part of the registration fee is taken by the developer or initially lays it in the cost of real estate.
  • Administrative fee, which is paid upon receipt of the ownership document.
  • If the property is purchased with a mortgage, the buyer is charged a registration fee of a quarter of a percent of the loan value and an additional USD 79.

These costs are borne by buyers of new buildings and real estate for sale off-plan in Dubai. For secondary properties, a transaction registration fee of USD 85 and a fee for issuing a certificate of no objection (NOC) are also paid. 

Professional assistance in buying real estate in Dubai

AX Capital specializes in residential and commercial funds of the UAE. In the real estate agency’s catalog, you can find apartments, flats, villas for sale in Dubai. Agents are ready to answer any questions, help with the selection and execution of the transaction.