How to Buy Property in Dubai
Dubai, one of the most energetic places in the world, is also one of the hottest destinations for property investors. You name it and the city will have it. Whether you wish to shop your heart out at some of the largest malls in the world or you simply wish to invest your hard earned money in a good property, Dubai has the answer. Apartments of different sizes and located in different parts of the city are for sale to property investors. Whatever your budget, you will definitely find your ideal apartment in Dubai.
Dubai once had very strict laws that restricted foreign investment, especially in real estate. This was all before 2002. However, the UAE government opened up the property market in 2002. The Freehold law was passed) that allowed foreigners to lease, rent, buy or sell property as easily as an Emirati, changed the entire picture of the real estate market in Dubai. It soon became the hottest destination for real estate investments in the middle east. Today, you can easily buy your desired property in Dubai.
Important Tips for Buying Properties in Dubai
- Buying a property in Dubai is a very simple process when compared to many other countries. Just because it is easy does not mean that it is 100% safe. You still have to take great care. It is always better to gain proper knowledge about the purchasing process in order to reduce your risk of losing your money .
Find Out About The Purchasing Process Of Dubai: In order to buy a good property in Dubai, it is very important for you to try and find out about the purchasing process of the city. You may either opt for an off-plan property from one of the developers or even go for a resale property from one of the many private sellers. If you are an ex-pat and wish to go for an off-plan property, you need to submit a few essential documents such as your passport, coupled with a reservation form, which will contain all the terms and conditions of the property deal. Although it is possible to buy property without a lawyer, using a lawyer is obviously safer.
- Remember the purchase price is not the total amount you will have to pay. Add another 10% to the purchase price to take into account fees, taxes and other payments. The Sales and Purchase Agreement is later made after you pay a reservation fee(deposit) which may vary from 5% to 15% of the entire price. In case of a resale property, a MoU or Memorandum of Understanding is made between you as the buyer and the reseller. This document contains all the terms and conditions of the property deal. Once this deal is made, you need to pay 10% of the property price as deposit. Once your finance is approved, you may go ahead and pay off the balance amount.
- Think About The Reason For Buying Your Property: It is very important for you to ask yourself about why you want a property in Dubai. Are you planning to buy as an investment or do you wish to move to Dubai? The answer to this question can have a big impact on your choice of property. If you wish to invest, then as an ex-pat you will naturally wish to rent it out. To maximise your rental income you should observe the rental market and choose from properties that provide higher rents while keeping an eye on purchase price. Choosing a one or two bedroom apartment will be a lot cheaper than buying a villa and still get decent rent.
- Find Out About The History Of The Seller Or Developer: There are many government approved developers to choose from. The first 5 approved developers from the list being MERAAS ESTATES L.L.C, ZABEEL INVESTMENTS (L.L.C), AL FAJER PROPERTIES (L.L.C), AL MANAL DEVELOPMENT FZCO and K M PROPERTIES L.L.C. The whole list is UAE APPROVED DEVELOPERS. To find out about the reputation of a developer and the quality of their apartments you need to research and ask people who have bought from them before. Also, ask whether the developer usually delivers the properties on time or not. There may be cases when the property you choose to buy from a developer is not ready during the transaction. In such matters, it is very important for you to visit show homes to see what the finished property will look like.
- Survey the Property: If you are planning to buy a resale property from a private reseller then you need to hire a professional surveyor before you sign the deal. It is the responsibility of the owner when it comes to the up-keep of a property. The surveyor will check the property in question thoroughly and tell you about any potential high maintenance costs in the future as well as structural defects. This is especially true for villas which have been empty for a long time.
- Seek Advice From a Lawyer: Although it is not mandatory, it is a good idea to seek proper advice from lawyer to help with the purchase of your property This will help you to get an idea of any future risks concerning the property. You may seek help from a Dubai Land Department registered conveying company. They have their own in-house property lawyers to help you buy a property keeping you informed.
A Step By Step Guide to Buying a Property in Dubai
If you are planning to buy a property in Dubai, you may often think that the entire process from searching for a good property, arranging finace through to transferring the deed is very complicated. The best way to manage the process is to make a checklist of every step. Here is a suggested list of steps to reduce the complexity of the whole buying process.
- Off-Plan or Resale Property: As discussed above, there are 2 types of properties in Dubai, off-plan and resale. There are several factors that determine this choice. Whether you have the necessary capital to buy an off-plan or new property or not, whether you wish to give it on rent or use it yourself, are some of the factors that can help you determine your final choice of property in Dubai.
- Search for The Right Property: Once you determine the type of property you need to buy, the next step is to search for the right property. If you wish to go for an off-plan property then you need to try and find out those properties which can give you a better rental yield and also comes with a low vacancy risk. On the other hand, if you wish to buy a resale property, then you need to seek help of a registered broker who can help you with all the negotiation and paperwork. The broker can also help you verify the ownership of the said property.
- Proper Financing: The third step is to arrange for property finance – usually a mortgage. You will come across several mortgage institutions that can help you get a pre-approved loan. This is can help you commit to the finding a property you need to buy. As the buyer, you need to provide a list of essential documents such as a copy of your passport along with the visa page, a copy of your Emirates ID, a proof of your present address, proof of income, your bank account statements for the past 3 to 6 months, and MoU for the property sale, as well as other documents you mortgage provider asks for.
- Sales Agreement: If you wish to buy a new property, then you have to submit an application form to the concerned developer. This form will contain all the necessary terms and conditions of the agreement. However, if the property is not yet complete, then you need to mention the completion date, as well as the compensation penalties. However, if you wish to buy a resale property, then you need to provide a MoU (sale contract) which should be registered with the DLD. This document will also contain the terms and conditions of the agreement. Always make sure to read the MoU carefully, as it may contain some additional hidden charges.
- Property Valuation and Loan Disbursement: In case of a mortgage purchase, your financier or the bank will carry out a valuation in order to determine the value of the asset, which may not match the purchase price. The exact amount released by the bank will be a percentage of the bank’s valuation or the purchase price.
- Transfer of the Title Deed: When you opt for an off-plan property, you will be issued an Oqood (which just means contract) from the developer’s office. Developers are authorized to submit their procedure requests for the properties they own whether they are under progress or completed. They will search for a property, enter request details and submit it to Dubai Land Dept(DLD) through the Oqood website. The DLD will charge 4% of the sale price which is passed on you, the buyer to pay. But this process is your guarantee that you have become the official owner of the property. The list of documents needed may vary from developer to developer. However, it usually includes your passport, your Emirates ID, and the sale and purchases agreement. If both the parties involved in a property transfer are GCC nationals, the DLD will conduct the transfer. However, in all other matters, it is usually done by the Real Estate Registration Trustee.
If you have all the necessary documents, buying a property in Dubai will seem a very simple task for you. But buying a good property for a good price is not such a simple procedure. You will have to compare prices with locations and features of each property to properly make up your mind. The more time you spend looking at more properties, the better your final purchase will be. It is also a good idea to try and find out as much as possible about properties and the procedure to buy one in a foreign country. It will not just help you decide which property to buy, it will also help you stay safe within the law.