Have you already decided to buy property in Dubai? Are you wondering, what are some of the things that you must know before you make that property purchase in Dubai?
To be honest, there are a lot of things to be considered when buying real estate in Dubai. Today, we are going to discuss 10 such factors which you cannot neglect when you are buying a property in Dubai.
There is a famous saying that there are only three things which define the price of a property and those
three things are location, location and location. Now, when it comes to finding the right location of the
property in Dubai, there are many things to be considered.
So, the question that you should be asking yourself is, “What is your purpose of buying a property in Dubai”? Once you have a clear answer to that question, trust me, the search will become a lot easier. Not only for you but for your realtor who has been working tirelessly, trying to find you exactly what you need.
- New Locations in Dubai
- Developed Locations in Dubai
- Affordable Locations In Dubai
If you are looking for something that is cheap right now and grow in value in future, try looking into communities like Dubai South. The population of Dubai is ever increasing and there is going to be huge housing demand in many new areas of Dubai five to ten years down the line.
If your purpose of investing in Dubai is to get some decent and steady rental income, I would suggest you buy in already developed areas. Some of the options that you can consider include; Dubai Marina, Jumeirah Lake Towers (JLT), Jumeirah Beach Residence (JBR), Palm Jumeirah etc.
If you want to go for more affordable areas, there are plenty of options in that category as well. You could go for Dubai International City, Discovery Gardens, Jumeirah Village Circle, Jumeirah Village Triangle, Dubai Sports City and Media Production City etc. In short, your choice of location to buy property in Dubai is directly linked with the outcome that you want to achieve.
To understand how a community works and how well maintained it is, you must look at the track record of the master developer.
- Commonly Known Master Developers in Dubai
There are a few names which are very familiar master developer e.g. Nakheel (Palm Jumeirah, Jumeirah
Village Circle, Jumeirah Village Triangle and so on), Emaar (Dubai Marina, Downtown Dubai, Dubai Creek &
Harbor and so on), Damac Properties (Damac Hills, Akoya Oxygen and so on).
The value of your house in Dubai, in the long run, depends on the master developer. If the master developer has a good reputation and the community is well maintained, it will ultimately bring more interest of people.
As a landlord, you will have more tenants willing to rent your property and as a seller, you will have more buyers interested in buying your apartment in Dubai.
So, before you go ahead and decide, we would highly suggest taking some time and research about these master developers.
Unlike, many countries around the world, the development in Dubai is done by a developer. There are certain
locations, where you can buy a piece of land and construct a house with your own taste (this only applies to
villas of course).
A developer is a company who constructs a project like a residential/ commercial building or cluster of villas/ townhouses.
Once you have chosen the location and verified which master developer is best, it is time to choose the project. While master developer is responsible for construction and maintenance of the community, it is the project developer who is responsible for construction and maintenance of the building.
Once the building is ready, the maintenance company takes over which is chosen by developer for the first year and afterwards by Owners Association. However, if the quality of delivered project is not good, any maintenance company is going to be less effective.
Speak with your realtor in detail about which developers have a good reputation in the market and which to avoid. Buying property in Dubai from a bad developer will ultimately result in loss of revenue for you and there is a huge possibility that you may not be able to sell it at an appreciated price in the future.
In certain cases, and I have seen this happening many times that you buy property in Dubai in a good
community, from a good developer but the maintenance company is not doing justice with that architectural
This ultimately results in destroying the reputation of the building and it does not enjoy the company of highly maintained, in demand buildings as it once did.
If the maintenance company is not doing its job properly, the owners association has the power to terminate its contract and hire a new company. However, for that to happen, there needs to be unity among owners. In most of the Owner Association meetings, majority of owners are not available as there is a huge number of overseas investors in Dubai.
So, before you go ahead and decide to buy that apartment in Dubai. You must verify the reputation of the maintenance/ management company in charge of the building. Your realtor can be the best source of information in this case, for sure.
Either way, when you visit the building, you can get an idea about how well it is maintained. If you realize that the maintenance of the building is not up to the mark, it is better to stay away from investing in that building in Dubai.
Dubai is a fairly new city and most of the developments here are not more than 15 years old. Since the city
is growing very fast, there is always some new development coming along.
Due to huge interest from local and international investors, Dubai’s off plan property sector has always been in demand. People usually buy off plan properties in Dubai because such developments are cheaper and come with attractive payment plans.
However, it again comes down to your requirements. If your need is a ready property in Dubai, an off plan property is of no use to you. Let’s assume that you want to buy something which is ready then knowing how old the building is can become very handy.
In Dubai, the developer is liable for any malfunctioning in your residential unit for up to one year from the date of completion. The structural damages are also responsibility of developer for a maximum period of 10 years from the date of completion.
So, if you are buying into a building which is new, you are most probably going to be covered under this warranty. If the building is more than 10 years old, you as owner, will be responsible to carry out any kind of repairing work that may be required inside the apartment.
Dubai is a new city on the horizon and many rules have changed/ improved in last few years. The newer buildings are constructed and passed based on latest safety rules and standards, so it is always a good idea to buy a property in Dubai in a new building.
Not to say that an older development is not worthy of investment, majority of buildings in Dubai have high standards of construction and maintenance. So, whichever option you choose, you are not making a bad decision at all.
In many countries across the world, the seller has to provide an inspection report to the buyer. This
inspection/ snag report makes it easier for new owner to understand the actual condition of the property.
This, however, is not a common practice in Dubai. If, as a buyer, you want to have an inspection done, you will have to do it on your own expense.
Either you can snag the property yourself and analyze its condition, or you can hire a private company to do it for you. Since, it is not a common practice in Dubai, people don’t usually do a detailed snagging of the property they are going to buy.
A detailed property condition report will help you understand what defects there in the property and this information are already can come in very handy while negotiating the price.
Now that we are done with the location, project and building search, let’s get down to the real work.
Understanding how the price evaluation in Dubai’s real estate market works is very important.
As an overseas investor, coming from a very expensive real estate market like Singapore or Hong Kong, you might find the prices in Dubai very cheap but that is not the right criteria of comparison.
Yes, as compared to many international real estate hubs, the prices in Dubai are very affordable and I have written about it before on my blog as well. However, to understand the real worth of the property, you need to have a right person advising you.
You should ask your realtor to help you understand how to evaluate the right price for a particular property in Dubai or you can hire an evaluation firm as well.
If you are taking a mortgage for the purchase (we cover this in below tip), the bank will either way get the property evaluated and you will know whether the price that you have been offered is a good price or not. One way to understand the right value of property is to look at recent sale records of similar properties in the same building/ area.
This information, however, is not available to public in Dubai. If you are working with a good realtor, he will have access to authorized platforms from where he/ she can extract actual sale transaction and give you a more realistic evaluation of the property that you wish to buy in Dubai.
Historically, the real estate market of Dubai has been driven by cash investors however, the scenario is
changing now. More and more end users are buying properties in Dubai and the number of finance buyers has
Most probably, this trend will continue as more and more expatriate workers/ business owners in Dubai are inclining towards buying a property instead of renting one.
As per the guidelines of Central Bank of UAE, there are mainly three categories of home finance products.
- Home Loan For UAE Nationals
- Home Loan For UAE Resident (Expatriate)
- Home Loan For UAE Non-Resident
- Get Pre-Approved
If you are a citizen of UAE (Emirati), you can get up to 85% LTV for your first real estate purchase. This brings your down payment to merely 15%.
If you are a resident (expatriate) in UAE, you can get up to 75% LTV for your first real estate purchase. You will have to come up with 25% down payment in this case.
If you are not a resident of UAE, you can still get a mortgage here. In this case, the banks can offer
you a maximum of 50% LTV. So, as a non-resident, you will have to come up with 50% down payment.
House mortgage is an evolving product in UAE just like the country itself and I am sure that moving forward in future, we will see more flexibility and options in terms of home finance products.
One such example is a new home finance product issued by a local finance company. If you already own a property in Dubai, you can use its rental income to pay for your second mortgage. This is a fresh initiate as banks in UAE never considered rental income while giving mortgage approval to the clients.
If you are thinking how much interest is charged by banks in UAE for home loan, it is normally from 3% to 5%.
When you get pre-approval from a bank, you already know how much the bank is willing to lend to you.
This way, when you know your spending limit, you can really refine your property search in Dubai. It not only saves time and makes the process easier for you as a home buyer but also for your realtor as well.
It might surprise you to know that the transfer of property can happen within an hour.
- Validate Title Deed
- Sign The MOU
- Visiting Trustee/ Transfer Office
- Issuance of Title Deed
The first thing that you (actually, your realtor will do it for you) must do is validate the Title Deed of the property. Get a copy of the title deed from the seller and validate it by visiting official website of Dubai land Department.
Once you have validated the title deed, agreed upon the selling price and rest of the things between you
and the seller, it is time to sign a Memorandum of Understanding (MOU).
Your realtor will prepare the MOU, consult with you and the seller to decide what additional clauses should be added in the agreement and then get it signed by both of you.
This MOU is automatically registered with the government. You and the seller will give a 10% security cheque to the realtor as a guarantee and then decide on a date when the transfer should happen.
On the mutually decided date, you and seller will meet along with your realtor in the transfer/ trustee
office. The officer will collect the documents from both of you to verify identities and terms of the
You, as a buyer will make the payment (in the form of Manager’s cheque) to the seller. This payment will be verified by the officer. You will also make a Manager’s cheque in the name of Dubai Land Department for 4% of total sales value (this is the transfer fee).
For more details about how this procedure works, you can read my article about process of buying property in Dubai.
Once the trustee officer is satisfied and all legalities have been completed, he/ she will initiate the request for ownership change to Dubai Land Department. You will sit and wait in the trustee office for almost 30 minutes, enjoy some free snacks and Arabic tea while your new title deed will be printed and handed over to you.
Let’s figure out what other costs can be associated with the purchase of property in Dubai.
- Purchase Price
- Registration Fee
- Valuation Fee
- Loan Processing Fee
- Mortgage Registration Fee
- Trustee Fee
- Brokerage/ Realtor Fee
- Service/ Maintenance Fee
- DEWA Registration
- District Cooling
- Property Management Fee
The first cost which you have to bear is the purchase price of the property. Either you will pay it full in the form of manager’s cheque or get a finance from the bank. In the case of mortgage, part payment will be made by bank and a bank’s representative will be present at the time of title transfer.
The second cost associated with property purchase in Dubai is the registration/ transfer fee. This fee is payable to Dubai Land Department. It is fixed at 4% of agreed sale price.
If you are taking a mortgage from bank. There will be a valuation fee of AED 3,000 charged to you. There can be variation in this fee from bank to bank.
Apart from the valuation fee that you will pay to the bank, there will be 1% processing fee charged by bank on the amount of loan that you are taking.
The third cost will be 0.25% of the purchase price. This will be applicable if you are getting a mortgage. Dubai Land Department charges, 0.25% for the mortgage registration.
The fourth cost will be trustee fee. This fee is AED 2,000+VAT if the sale price is equal or below AED 500,000 and AED 4,000+VAT if the sale price is above AED 500,000.
The fifth cost will be the brokerage fee. The standard practice in Dubai is to 2% of the sale value. As
per Dubai Land Department, the brokerage commission depends on the mutual understanding between client
Once you get the tile deed issued in your name, there are some additional costs which you will have to bear.
The first thing that you will do is to pay the annual service fee.This company takes care of the maintenance and management of the building common areas.
In the next step, you will get your registration done with Dubai Water and Electric Authority (DEWA).
For an apartment, there will be a cost of approximately AED 2,400 (of which AED 2,000 is refundable
If you have bought a villa in Dubai, your DEWA registration cost will be approximately AED 4,500 (of which AED 4,000 is refundable security deposit).
If there is a district cooling company providing cold water and A/C services in the building, you will have to register with them as well. This can cost you anywhere between AED 2,000 to AED 4,000.
If you are not living in Dubai and want to have someone who can manage your property in your absence, there are property management companies that you can hire. The fee for such management companies start from 5% of annual rental income.