Dubai’s booming real estate market attracts thousands of investors every year, thanks to its tax-free environment, high rental yields, and world-class infrastructure. However, while the advertised property price might seem straightforward, many buyers—especially first-time investors—are surprised by additional costs that arise during the purchase process. To avoid unpleasant surprises, here’s a comprehensive breakdown of the hidden costs of buying property in Dubai that you should be aware of.
- Dubai Land Department (DLD) Fees
One of the most significant upfront costs when purchasing property in Dubai is the Dubai Land Department (DLD) registration fee. This fee is typically 4% of the purchase price and must be paid at the time of registration. Additionally, there is an administrative fee that ranges between AED 2,000 to AED 4,000, depending on the property type and value.
- Real Estate Agent Commission
If you’re purchasing through a real estate agent, expect to pay a commission fee of 2% of the purchase price. While this might seem like an added expense, a skilled agent can help you navigate the market, negotiate better deals, and ensure all legalities are handled smoothly.
- Property Valuation Fees
For buyers seeking financing, banks require a property valuation report, which comes at a cost. Typically, valuation fees range between AED 2,500 to AED 5,000, depending on the bank and property type. This cost is non-refundable, even if the transaction does not proceed.
- Mortgage Fees (For Financed Purchases)
If you’re financing your property purchase with a mortgage, be prepared for additional bank charges:
- Mortgage registration fee: 0.25% of the loan amount + AED 290 administrative fee.
- Processing fee: Typically 0.5% to 1% of the loan amount, depending on the bank.
- Early settlement fee: If you choose to pay off your mortgage early, banks may charge a penalty of up to 1% of the outstanding amount.
- Service Charges and Maintenance Fees
Once you own a property in Dubai, you’ll need to pay annual service charges, which cover maintenance, security, and community amenities. These fees are calculated per square foot and vary based on the development and facilities. On average, they range from AED 10 to AED 30 per square foot annually. For high-end properties in areas like Palm Jumeirah or Downtown Dubai, service fees can be significantly higher.
- Utility Connection and Deposits
Setting up utilities in Dubai requires an initial security deposit:
- Electricity & Water (DEWA): AED 2,000 (apartment) or AED 4,000 (villa)
- Cooling services (if applicable): Varies by provider, often between AED 1,000 and AED 2,000
- Internet & TV: Initial setup costs around AED 500 to AED 1,000, depending on the provider.
- Insurance Costs
While not mandatory, it’s highly recommended to purchase home insurance to protect your investment. Basic home insurance policies in Dubai start from AED 1,000 per year, depending on property size and coverage options.
- Furniture and Interior Design
Many properties in Dubai are sold unfurnished, so buyers often need to budget for furniture, appliances, and décor. Furnishing a one-bedroom apartment can cost anywhere from AED 20,000 to AED 50,000, while larger properties can require significantly more investment.
- Foreign Exchange and Transfer Fees
For international buyers transferring funds from overseas, additional currency exchange fees and bank transfer charges may apply. Exchange rates fluctuate, so it’s advisable to use a reputable foreign exchange service to get the best deal.
- Exit Costs: Selling or Renting the Property
If you plan to sell or rent your property in the future, additional costs will apply:
- Selling: Real estate agent fees (2%), transfer fees, and mortgage settlement costs (if applicable).
- Renting: Ejari registration (AED 220), agency fees (5% of annual rent), and property management fees (if using a service).
Final Thoughts
While Dubai remains an attractive destination for property investment, understanding these hidden costs can help you make an informed decision and budget accordingly. A transparent and well-planned approach will ensure a smoother purchase process without unexpected financial strain.
At Alira Real Estate, we guide clients through every step of the property purchase journey, ensuring complete clarity on all associated costs. If you’re planning to invest in Dubai’s real estate market, reach out to our team today for expert advice and personalized assistance.
