Buying property in Dubai: A guide for investors
Dubai is a city that attracts many property https://sites.google.com/view/realestateuae/estate investors because of its strong rental yields and absence of property taxes.
Dubai also has a constantly increasing population, is extremely popular with tourists, and has consistent new development opportunities. Many areas of Dubai are rapidly developing, with new innovative technology and interesting structures becoming a big part of the area.
1. What are the requirements to buy a property in Dubai?
United Arab Emirates (UAE) or Gulf Cooperation Council (GCC) citizens are able to purchase property anywhere in Dubai, while foreign investors can purchase property only in designated foreign ownership areas, determined by the Ruler of the Emirate of Dubai. These areas are:
- The Palm Jumeirah
- The World Islands
- Downtown Dubai
- Old Town
- Burj Khalifa
- Business Bay
- Dubai Marina
- Emirates Hills
- Jumeirah Lakes Towers (JLT)
- Jumeirah Beach Residence (JBR)
- Discovery Gardens
- Arabian Ranches
- Midriff (specified plots)
- Dubai Investment Park (DIP)
- Falcon City
- Dubai Sports City
- Dubai Motor City
- Dubai South
- International City
- Jumeirah Islands & Jumeirah Village
You don’t need a visa to purchase property in Dubai as a foreign investor, in fact, buying property often means you are eligible to apply for a residency visa.
2. How much tax do I pay when buying a property in Dubai?
There is no income tax or inheritance tax payable on property in Dubai, although foreign investors may be subject to income tax from their country of residence if they don’t live in Dubai. However, there is a 4% transfer fee payable to the Dubai Land Department when a property is transferred to them. In addition to this, a ‘housing fee’ is payable monthly, equivalent to 5% of the average rental value of the area.
As a result of the low taxation, buying property in Dubai is a very attractive option for foreign investors. Combined with the good rental returns, there is a potential to make a great income from Dubai investment properties.
3. How to find a property in Dubai?
There are a number of websites that are great for finding investment properties in Dubai, including but not limited to Find Properties, Rightmove, Bayut and PropertyFinder. In addition to this, foreign investors can go direct to Dubai real estate agents to find investment properties.
When looking for properties in Dubai, investors should consider the eligibility (i.e., if the property is in a designated area for foreign ownership), the rental yield, and the rental demand of the area. GuestReady can advise investors of areas with the best return on investment, and guide you through the process of buying property in Dubai.
4. Where to buy property in Dubai?
Palm Jumeirah
The Palm Jumeirah, built between 2001 and 2006, is a series of man-made islands in the Persian Gulf. With a mixture of commercial and residential units, the area is popular amongst investors and tourists. The average sale price of an apartment on the Palm Jumeirah is 3.4 million AED, or approximately $926,000 USD or £789,000, making it the most expensive region in Dubai. The average sale price of a garden home is 18.5 million AED, which is $5 million USD or £4.3 million.
The average gross rental yield for an apartment is 5.33% for apartments and 3.39% for garden homes. The touristic nature of the Palm Jumeirah makes it a fantastic place to invest in short-term rental opportunities.
CityWalk Dubai
CityWalk Dubai is in the Jumeirah district and is the second most expensive region of Dubai. The average sale price of an apartment is approximately 3.2 million AED, which is roughly $872,000 USD or £740,000. The area is primarily an urban district, with shopping, entertainment and restaurant facilities for residents and tourists. The average gross rental yield for investment apartments in CityWalk is 5.25%.
Jumeirah Beach Residence
Jumeirah Beach Residence is another one of Dubai’s most desirable and expensive regions, with an average apartment sale price of roughly 2.4 million AE, or $650,000 USD. This is equivalent to approximately £550,000.
This stretch of waterfront is on the Persian Gulf coastline, lifekun.com and was completed in 2010. The average gross rental yield sits at 4.76%, making it an attractive opportunity for foreign investors looking to invest in short-term rental properties.
Dubai Marina
The average gross rental yield in the Dubai Marina region of Dubai is 6.3% for apartments, and the average sale price is approximately 1.6 million AED, which is $436,000 USD or £370,000. This artificial canal city is not yet completed but is expected to provide homes for roughly 120,000 people.
Arabian Ranches
Arabian Ranches is a gated villa community in Dubai, which was launched in 2004. There are three phases to the development, the third one of which is not yet completed. There are almost 6000 homes in the region to date, along with shopping centres, a golf club and an equestrian centre.
The average rental yield in Arabian Ranches is 4.9%, and the average price of a villa is approximately 6.2 million AED, which is roughly $1.7 million USD or £1.4 million. The most affordable properties in Arabian Ranches are in Al Reem, while the most expensive villas are in Polo Homes.
Dubai Downtown
Dubai Downtown is home to some of Dubai’s most popular landmarks, and so attracts a great number of tourists each year. Short-term rental accommodation is sought by a large number of people in this area, bikefixstore.com making it a very popular option for foreign investors, who value the strong rental demand.
The average sale price of an apartment is just over 2.1 million AED, which is $572,000 USD, or £485,000. The average gross rental yield is 5.43%, making it a good opportunity for investors, compared to many other popular regions in Dubai
5. How to avoid problems when buying property in Dubai?
Some of the problems that foreign real estate investors can run into when they buy property in Dubai include:
- Scams
- Buying a property in the wrong neighbourhood
- Buying fake properties, or properties that are being sold without the legal right to do so
- Buying properties for too high a price
- Incorrect or absent paperwork
The best way to avoid problems when buying property in Dubai is to carry out checks on the real estate agents to make sure they have the correct registrations. Before you begin the process of buying a property, you need to make sure that the real estate agent or property developer is registered with the Real Estate Regulatory Authority (RERA).
In addition to this, foreign investors need to ensure that their real estate agent has completed the correct paperwork for a property purchase, including a Memorandum of Understanding (MOU) and a No Objection Certificate (NOC).
Foreign investors must ensure that they have done their own due diligence checks on the neighbourhood in which they are buying, and comparable property prices and rents in the area. This is to avoid paying too high a price for a property, and making a bad investment decision as a result. GuestReady advises foreign investors on rental rates and property prices, in addition to calculating rental yields and advising every step of the way.
6. Why buy property in Dubai?
Many foreign investors choose to purchase property in Dubai because of the strong rental yields, absence of property taxes, increasing population, consistent development opportunities, visa qualifications and lower property costs.
Firstly, the rental returns in Dubai are some of the best in the world. This means that the annual income generated from investment properties, particularly short-term rental properties, is generally a good percentage of the property’s purchase price, representing a good return on investment.
Once a property has been purchased and the transfer fee has been paid to the Dubai Land Department, there are no property taxes for foreign investors to pay on investment properties. This helps to increase the profits generated by investment properties. Bear in mind that if you are not resident in Dubai, you may be subject to income tax in the country in which you live.
Dubai has a constantly increasing population, is extremely popular with tourists, and has consistent new development opportunities. Many areas of Dubai are rapidly developing, with new innovative technology and interesting structures becoming a big part of the area.
Foreign investors who purchase property in Dubai worth over a certain amount are eligible for residency visas. The length of these residency visas is roughly proportional to the value of the property price, meaning that higher-value property owners can expect to get longer residency visas.
Lastly, many of the properties in Dubai are cheaper than elsewhere in the world with similar rental yields. This makes them accessible for a wide range of property investors from all over the globe. If you’re new to the short-term rental market, GuestReady has a range of tools available to help you calculate the daily rental rate of your property and assist with making decisions.
7. Is now a good time to buy property in Dubai?
Now is a great time to buy property in Dubai, since property prices and rental figures are increasing. Since the coronavirus pandemic, tourism has opened up in Dubai and short-term rental properties are now more popular than ever amongst tourists and investors alike.
8. Can foreigners buy property in Dubai?
Yes, foreigners can buy property in designated areas for foreign property ownership in Dubai. These areas are determined by the Ruler of the Emirate of Dubai, and include regions such as Palm Jumeirah, Downtown Dubai, Dubai Marina, Arabian Ranches and Jumeirah Beach Residence.
It is recommended that foreign investors buy property in Dubai through regulated real estate agents to mitigate the risk of scams and fake properties.
9. Is buying a property in Dubai a good investment?
Yes, Dubai’s lack of property taxes and increasing population make it a great place to invest. The visa program makes it an attractive investment opportunity, as do the strong rental yields and relatively low property prices.
Therefore, buying property in Dubai is a good investment because of the strong rental returns, absence of property taxes, consistent development opportunities, visa qualifications and lower property costs.