How to Buy Property in Dubai, UAE: Prices and Purchase Procedure

Purchasing property in the Emirates is a profitable and forward-thinking investment. The local market is gradually recovering from the pandemic and the rise in oil prices, offering a wide selection of residential properties for both personal use and investment. The most significant activity is observed in the real estate market of Dubai, UAE. In recent years, the emirate has seen four times more housing transactions than the country’s capital, with foreign buyers predominantly seeking comfortable housing options for profitable investments. This article explores how non-residents can acquire property in the Emirates, the expenses involved in the transaction, and how to obtain residency through investment.

Who Can Buy Property in the Emirates

Foreigners are allowed to purchase real estate with full ownership rights only in specially designated areas known as Freehold zones. This type of ownership grants the perpetual right to own both the building and the land it stands on. By acquiring full ownership, non-residents can also apply for a residency visa.

When considering whether foreigners can buy property in Dubai and other regions of the country, it’s important to note the most popular Freehold zones. These areas typically include the most sought-after neighborhoods where real estate is frequently purchased. Abu Dhabi has nine Freehold zones, including Reem, Saadiyat, and Yas Islands. Dubai boasts around 50 such areas, including:

• Dubai Marina
• Dubai Studio City
• The Greens
• Business Bay
• DIFC
• Downtown Dubai
• JBR
• Liwan
• Remraam
• Al Furjan
• DAMAC Hills
• International City, among others

Citizens of any country can buy property in the Emirates. However, residents of GCC countries enjoy certain privileges, granting them almost the same rights as UAE citizens. For instance, in Dubai, they are not subject to territorial restrictions, allowing full ownership not only in Freehold zones but throughout the entire city.

Non-residents can purchase apartments, townhouses, villas, and plots of land. Ownership rules vary slightly across different emirates, but the general conditions of transactions are similar nationwide. In addition to full ownership, real estate can be acquired under leasehold terms, which come in three forms:

• Musataha: Leasing for up to 50 years, allowing for property modifications.
• Usufruct: Granted for 99 years, without the ability to alter the property.
• Leasehold: Also available for 99 years, offering almost the same privileges as full ownership.

When buying property under leasehold, the non-resident owns the house but not the land it stands on, similar to property ownership structures in the UK.

Real Estate Market Overview

The housing market in the UAE is characterized by rapid growth and constant development, evidenced by the steadily increasing number of transactions in recent years. As mentioned earlier, Dubai’s real estate market is particularly active. In 2023 alone, over 128,000 transactions were completed in the city, which is approximately four times the figures for 2020.

Looking at the trends in Dubai’s housing market for 2024, by early May, the number of real estate transactions in the metropolis had exceeded 52,000. The majority of sales involve apartments. According to statistical data, as of May 2024, apartments accounted for 89% of the market, while villas made up only 11%.

Expenses and Residency by Investment

Expenses Involved in Property Transactions: When buying property in the UAE, several costs must be considered. These include:

• Purchase Price: The actual cost of the property.
• Registration Fees: Typically around 4% of the property value.
• Agent Fees: Usually 2% of the property price.
• Miscellaneous Costs: Including legal fees, property valuation fees, and administrative charges.

Residency by Investment: Investing in property in the UAE can qualify non-residents for a residency visa. The minimum investment required to obtain a residency visa varies but generally starts from AED 1 million. The visa allows for multiple renewals and grants the investor the right to reside in the UAE with their immediate family.

Purchasing property in the UAE is a sound investment with potential long-term benefits. Whether you are looking for a home or an investment opportunity, the market offers a diverse range of options to suit various needs and preferences.

Real Estate Prices in the UAE

The cost of housing in the Emirates primarily depends on the type and size of the property. Buyers can choose from apartments and flats, mostly located in central city areas, as well as spacious houses, mansions, and cottages situated closer to the outskirts. Another sought-after type of housing is luxury villas, which are built along the shores of the Persian Gulf, offering residents magnificent sea views.

Let’s examine the cost per square meter of real estate in various emirates:

• Dubai: €3,622 in the center and €2,395 in the suburbs.
• Abu Dhabi: €3,163 in central areas and €2,548 in more remote locations.
• Ajman: €1,319 in the city center and €3,505 in the suburbs.
• Sharjah: €1,959 in the center and €1,212 in outlying areas.

Advantages of Buying Property in the UAE

Real estate in the Emirates is in high demand among foreigners. Non-residents purchase homes and apartments for both permanent residence and to profit from reselling or renting out their property. The reasons for the popularity of housing in the country among foreign citizens are as follows:

• Residency Visa: Purchasing residential property worth at least $204,000 grants a residency visa for up to 2 years.
• High Rental Demand: It’s easy to find tenants for purchased properties in any emirate, as the country attracts many tourists year-round.
• Favorable Climate: The pleasant climate with year-round warm temperatures allows foreigners to enjoy plenty of beach time.
• Rising Property Values: Property prices in the country consistently rise by about 6-10% annually, ensuring good profits for property owners upon resale.
• High-Quality Healthcare and Education: The UAE is known for its excellent healthcare and education systems. The country boasts first-class clinics, dental offices, and schools, including those offering British education systems.

How to Buy Property in the Emirates

Buying property as a foreign citizen is a responsible process that requires knowledge of the local market specifics and state laws. On average, the procedure takes 4-6 weeks. Apartments or houses can only be purchased in designated areas where property is granted full ownership to non-residents. Here is a step-by-step guide on how to buy an apartment in Dubai:

1. Choosing the Property: You don’t need to travel to the Emirates to select a property. You can choose remotely, considering your goals—whether for residence, rental, or resale in an under-construction building. Viewings can also be done online, but you may visit in person if desired.
2. Document Verification: To avoid issues, ensure the property meets your requirements. It is also important to verify its legality and make sure the seller has all necessary documents.
3. Reservation: At the initial stage of the transaction, sign a reservation agreement with the developer or seller and pay a deposit of 10-20% of the purchase price.
4. Preliminary Agreement: A preliminary agreement is drawn up between the owner and the buyer, detailing the terms of the transaction and the payment schedule.
5. Purchase Agreement: Next, a final purchase agreement is signed, specifying the property location, price, payment terms, and deadlines. The agreement also outlines who will pay the fees. If the house is under construction, the completion date must be included.
6. NOC Certificate: If a mortgage is involved, the buyer must obtain a No Objection Certificate (NOC) from the bank. Additionally, obtain a payment statement from the developer and the housing transfer certificate.
7. Registration of Purchase: The new owner transfers the remaining funds to an escrow account, and the transaction is registered with the emirate’s Land Department. Once ownership is transferred to the buyer, the seller can withdraw the money from the account.

Note that the transaction registration application is submitted online using the REPA (Real Estate Regulatory Agency) application. When contacting the Land Department, a fee of 4% of the property value is paid in Dubai. After concluding the deal, you can take possession of the property and apply for a residency visa.

Additional Costs When Purchasing Property

When buying real estate in the United Arab Emirates, buyers incur several expenses, including various taxes, fees, and intermediary service costs. Taxation for foreign citizens in the country is relatively lenient. Non-residents are not required to pay income tax or annual property tax, resulting in significant savings.

The main taxes and fees required at the time of purchase include:

• VAT: Introduced in 2018, it is calculated at a rate of 5%.
• Transfer Tax: This one-time tax, a percentage of the property price, varies by emirate. In Abu Dhabi, it is 2%, and in Dubai, it is 4%. Usually, the amount is split equally between the seller and the new owner.
• Registration Fee: This fee depends on the property’s price. For properties costing less than 500,000 AED, the fee is 2,000 AED. For those over this amount, it is 4,000 AED.
• Administrative Fee: This varies by property type. For land plots, it is 430 AED; for offices and apartments, it is 580 AED; and for off-plan properties, it is 40 AED.
• Title Deed Fee: 250 AED.
• Realtor Services: By UAE law, realtor services are mandatory in real estate transactions. Their fee is 2% of the property’s purchase price.

If the property is purchased with a mortgage, additional costs apply. A mortgage arrangement fee of 1% of the loan amount is required, and the buyer must pay for the property appraisal, which ranges from 2,500 to 3,500 AED.

Property Insurance in the UAE

Insurance in the UAE protects real estate from risks such as fire, theft, and other incidents. The following types of insurance are available:

• Building Insurance: Covers the structure against accidents, including explosions and natural disasters.
• Contents Insurance: Compensates for damages to household items such as appliances, furniture, and personal belongings.

Additional insurance policies include:

• Liability Insurance: Covers the owner’s liability to third parties, such as damage to a neighbor’s property.
• Loss of Rent Insurance: Compensates for lost rental income if the property becomes uninhabitable due to natural disasters.

Maintenance Costs of Property in the UAE

Foreign buyers of apartments or houses in the UAE incur additional maintenance expenses. These costs vary by emirate, with Dubai being the most expensive in this regard.

Here are the typical expenses associated with owning property:

• Service Charges: These are paid for the maintenance of the building and are determined by the management company. They usually range from 3 to 30 AED per square meter.
• Taxes: Landlords must pay a municipal tax, which is up to 5% of the rental income.
• Utility Bills: These include electricity, gas, and water. A two-person household typically spends between 440 to 550 AED per month. Additionally, internet and television cost around 300 AED.
• Property Insurance: This costs between 0.1% to 0.5% of the property’s value annually.

Obtaining a Residence Permit in the UAE

Buying property in the UAE not only offers the opportunity to own quality real estate but also provides a path to obtaining a residence visa. To qualify for a residence permit, foreign citizens must meet several conditions:

• Minimum Property Value: The property must be worth at least 1 million AED. The residence visa is granted if the buyer has fully paid for the property, and the seller has handed over a ready-to-move-in apartment.
• Visa Duration: The residence visa is issued for 2-3 years with the possibility of renewal, provided the buyer retains ownership of the property.
• Golden Visa: Purchasing property worth more than 5 million AED qualifies the buyer for a Golden Visa, valid for up to 10 years.
• Required Documents: The visa is granted based on documents confirming property ownership, the owner’s clean criminal record, and financial stability.

To obtain the visa, the buyer must apply to the UAE immigration office and submit a residence status application. This can be done via the government portal or through an accredited agency. The application must include a health certificate. Once approved, the foreign citizen receives an immigration card and a corresponding passport stamp. The residence visa can be renewed as long as the foreign citizen retains ownership of the property.

How to Become a Citizen of the UAE

Unlike obtaining a visa through investment, acquiring UAE citizenship is a more complex process. The local authorities are cautious about granting citizenship to foreigners based on real estate investments. However, there are several ways to become a citizen:

• Long-term Residence: Legally residing in the country for over 30 years.
• Marriage: Marrying a UAE citizen (applicable only to women).
• Descent: Citizenship by descent if the parents are UAE citizens, regardless of the child’s birthplace.

There are two other options with specific conditions:

1. Significant Investments: Making substantial investments and residing in the country for a specified period.
2. Exceptional Merit: Citizenship granted for outstanding contributions in fields such as science, medicine, or culture.

Conclusion

Purchasing real estate in the UAE is an excellent way to settle in a highly developed and comfortable country, offering numerous investment opportunities. Here’s a summary of key points:

• Freehold Zones: Foreign citizens can buy property only in freehold zones. There are nine such zones in Abu Dhabi and over 50 in Dubai.
• Popularity: Dubai is the most popular among non-residents. The city records over 100,000 transactions annually, and property prices have increased by about 1.5 times in the last decade.
• Apartment Preference: Apartments are much more popular than villas, with an average ratio of 5:1 due to their higher profitability. The rental yield for apartments in Dubai is 5-8% per year.
• Price Factors: The cost of property varies based on location, size, amenities, and the number of rooms. In Dubai, the average price per square meter is $3,175. The most expensive options are on the Palm Islands.
• Popular Locations: The most sought-after areas in Dubai are Palm Jumeirah, Dubai Marina, Downtown Dubai, and Business Bay.
• Maintenance Costs: Annual maintenance of an 85 sqm apartment costs from $3,200.
• Transfer Tax: A transfer tax of 2-4% of the purchase price, depending on the emirate, is required.
• Villas: Seafront villas in Dubai are only available on the secondary market. To buy a new villa, one must travel 15 minutes from the beaches.
• Residence Visa: A residence visa is granted for real estate purchases. A 10-year residence status is available for investments in property worth over 5 million AED. The visa also covers the buyer’s children and spouse.

By understanding these aspects, foreign buyers can make informed decisions and navigate the property market in the UAE effectively.

If you are planning to purchase property in the UAE, seek qualified assistance from Alira agency. Our specialists will help you choose a suitable home or apartment and provide detailed guidance on buying property in Dubai or other cities in the country. To schedule a consultation, please email us at info@alirarealestate.com or contact our staff at +971 (588) 337 903,+7 (986) 927-73-77.