Over 8.4 million expats are living in the UAE, according to recent research. While some of the expats own their own homes in Dubai, some still live in rental properties. Rent is one of the most expensive expenses in Dubai since rental income accounts for almost 40 per cent of the monthly income. If you’re an expat living in Dubai or you’re thinking about shifting to Dubai, follow these tips and guidelines to invest in the Dubai property market in the best way possible.
First, you need to understand the process of buying property in Dubai. In order to buy property in Dubai, you need to be over the age of 21. After you have decided on the property you want to buy, you need to make a verbal offer to the seller. Once the verbal offer has been accepted, a sales contract is made. After this, you pay a certain deposit to the seller. You need to pay 4 per cent of the property value to Dubai Land Department (DLD) – 2 per cent of which is paid by the seller and 2 per cent by the buyer. You also need to pay your estate agent 2 per cent of the property value as commission. You also need to be a certain amount the day the deed is transferred to your name as the insurance fees. You need to pay a registration fee once the property has been registered under your name. If you have taken a loan for this property, you also need to pay a mortgage registration fee to the DLD.
Usually, resale properties are the best investment if you’re looking for a good property in a good area for a good price. A distress sale is the best kind of property for sale in Dubai because you will definitely get a very good deal. If you are buying a resale property, the buyer and the seller need to sign a Memorandum of Understanding – this is basically a document that contains all the details of the sale. This document will also contain the purchase value that was agreed upon, the payment plan and the date that the funds will be transferred from buyer to seller. Usually, the seller asks for a 10 per cent reservation deposit. For an expat to transfer the deed from the sellers name to his or her name, the expat needs to play the full purchase price.
An off-plan purchase is when you’re buying property directly from the developer. In this case, an expat will need to submit a reservation form along with their passport and other details. This reservation form includes the conditions of the sale, the payment plan and the personal details of the buyer. If you’re investing in an off-plan property that is still undergoing construction, the reservation form needs to include a completion date too. Usually, developers ask for a reservation deposit that is anywhere between 5 per cent to 20 per cent of the total purchase value. The formal purchase agreement is drafted only once this reservation deposit has been paid and cleared.
Think of property investment in Dubai as a long-term investment with a very high return on investment. With the upcoming Dubai Expo of 2020, millions and millions of visitors are going to be residing in Dubai for months on end. All these tourists are going to require a place to stay, and instead of booking hotel rooms at exorbitant prices, they will take a place on rent. It is expected that the demand for rental properties will be so high that the overall rates of rent will increase. That way, not only are you going to get a constant return on your investment, but you will actually be able to recover your investment in a shorter time span. If you’re looking to invest in the Dubai property market for profits, then invest in a property that you can let out on rent. Since there is no tax on property in Dubai, you will basically just be making a return on your investment with any additional expenses.
If you are investing in property in Dubai, it is essential that you go through a real estate agent from Dubai. You need to find an agent who you know and trust because the Dubai real estate market is very different from real estate markets around the world. A local estate agent will know the areas that meet your requirements, he or she will be able to negotiate a better deal, your estate agent will also know the market value of that area and most importantly, only your Dubai estate agent will be able to ensure that you are going about the legal framework and administrative paperwork the right way. That is why it is important to hire someone who you can trust blindly.