How to buy a property in Dubai? Guide for foreigners
Despite the pandemic, the UAE real estate market remains one of the most attractive ones among investors. The largest market share is in Dubai — more than 95% of successful transactions were conducted in the emirate last year. Specialists of the real estate agency Mira Real Estate have told us how to buy real estate in the United Arab Emirates and its capital.
Conditions and stages of real estate purchase for foreign citizens
To purchase a property in the UAE, a foreign citizen must be over 21 years old and have a valid passport. If the aforementioned conditions are met, the first step is to make an offer.
A real estate transaction consists of the following steps:
- drawing up an agreement with the consent of both parties;
- making a deposit;
- receiving a loan, if necessary;
- checking the property for encumbrances;
- the final payment by bank check or in cash at Dubai Land Department;
- transferring the ownership document to the new owner.
When buying a property in the UAE, a foreigner should take into account that they may face unforeseen expenses. In addition to paying for the housing itself, you will also need to pay an administrative fee, mortgage registration, etc.
Options for buying real estate
There are two options for purchasing real estate:
- From an individual — resale;
- From a developer — «Off Plan» purchase.
In the second case, there is an interest-free instalments plan.
If a buyer gets a loan, the seller often requires the expatriate to be «pre-approved» before signing the purchase and sale agreement.
What is a freehold property?
The purchase of a property under the conditions of unconditional ownership means that the property is registered in the name of the owner through a title deed in Real Estate Regulatory Authority.
The owner has the right to sell or lease his property at his own discretion.
Areas for property ownership are marked as places for expatriates. The objects that are not the property of foreigners are legally owned by the citizens of the UAE and the GCC countries.
A two-year residence permit is issued for the purchase of properties worth more than 1,000,000 dirhams (approximately $ 270,000).
Purchase of property in a project under construction in Dubai
The most important step is to make sure that the project is registered with RERA (Real Estate Regulatory Authority). When purchasing an «Off Plan» property, expatriates must provide a completed booking form and a copy of their passport.
The booking form usually specifies the main terms of the sale and purchase agreement (SPA), details of the payment plan, as well as the personal data of the seller and the buyer.
If a foreign citizen purchases real estate in a project under construction, he or she should make sure that the sale and purchase agreement specifies the completion date. In addition, if the property is to be sold with interior decoration, you need to make sure that the details of the furniture package are also attached to the agreement.
To complete the process of buying a property in Dubai, you must submit a full set of documents. You can do it at the developer’s office, or, if the transaction takes place remotely, the documents are sent by courier.
Buying a property on the secondary market in Dubai
If you purchase property from an individual, both parties to the transaction must agree on the terms of the sale and purchase agreement. The document usually features the date of the final transfer of funds from the buyer to the seller.
Then the buyer pays a deposit (as a rule, about 10% of the property value). This deposit is often non-refundable if, for some reason, the seller is no longer able to transfer the property.
You also need to pay a realtor commission. Most often, around 2% of the property value. The sale and purchase agreement is drawn up by the buyer’s agent, 10% is paid in the name of the seller. The SPA features the price, terms of purchase, and broker’s commission.
What is RERA?
RERA is a real estate regulatory agency that is part of the Dubai Land Department. It is a government agency which issues licences to real estate agents, brokers, and developers. It also regulates all real estate transactions made across Dubai.
More than 95% of the market activity is concentrated in the Dubai market. Each emirate has its own legal and judicial systems, land registry departments, rules and regulations on who can buy what and on what grounds.
Before purchasing a home in the United Arab Emirates, you should get professional advice from a real estate agent, financial broker or developer.
Although the UAE has a federal law which underlies real estate transactions, it is currently left to the discretion of the individual emirate, whose authorities decide on the structure and offers of the market.
