«You have 20 minutes to deposit the money into the account.» All about buying an apartment in Dubai, even if you only have $30,000
Until recently, owning real estate in Dubai was considered a luxury, part of the elite life of rich heirs. However, the city is growing and developing, there are more interesting and unusual projects where apartments are not much more expensive than housing in European capitals. The owner of the real estate agency «Address Property» in Dubai, Alexei Slauta, spoke about the situation in the Dubai real estate market and everything you need to know if you are an inexperienced (or even an experienced) investor.
«Construction never stops in Dubai, day or night»
Dubai is one of the UAE’s largest financial, transportation and tourism hubs. It has an extremely favorable tax policy, which attracts more and more international investors to Dubai. One of the most popular ways to invest has always been to buy real estate. However, how can an inexperienced investor figure out what to buy and who to turn to for help? The owner of the real estate agency «Adress Property» in Dubai, and one of the top 5 specialists of Russia in the field of foreign real estate, Alexei Slauta, told a Realting.com journalist the latest news of the real estate market in Dubai and explained why only the fastest buyer wins there.
— Lately, we have been hearing more and more about how profitable it is to buy real estate in Dubai, this has become a trend of recent times. Why do you think?
— Real estate in Dubai began to be in great demand at the end of 2021, and this option, itself, was conditionally «discovered» by Russians and Europeans in 2020. The main reason for buyers’ interest are the more favorable living conditions during the pandemic and a dynamically growing market, which is changing literally before their eyes. As a result, as soon as this became possible, Americans, Canadians, Chinese, Russians and Europeans began to actively travel to Dubai, and almost immediately began to look at the purchase of real estate. By the mid-2021, we saw a «boom» in the sales of apartments in both the primary and secondary markets. At the same time, more new projects keep appearing in Dubai, which are «better», «more modern», «more technological» than their predecessors. This also stimulates even more customer activity.
According to statistics, in February 2022, about 3,000 new properties with a total value of $2 billion appeared on the primary market. More than half of the commissioned facilities are townhouses, while only 36.8% of the total number of new buildings are apartments.
— At some point, the acquisition of investment property in Dubai becomes almost a mandatory purchase for all investors. By the end of 2021, even though construction in Dubai never stops, day or night, demand began to outstrip supply and we see a situation that in our professional language is called a «seller’s market».
This year has only added «fire» to the Dubai real estate market. For example, Russians have practically no cities and countries left where they can legally buy real estate or open a correspondent account to save their earnings. We can see how the assets and real estate of Russians are actively frozen in Europe and America, while everything is calm in Dubai. At the same time, my company can still open a correspondent account to Russians in one of the largest banks in Dubai (even remotely). In this case, they will be able to save their money after selling their real estate in Europe, for example, or if they just need to withdraw money urgently. However, one of the most reliable ways to preserve and increase capital for Russians remains the purchase of real estate in Dubai, and therefore everyone who has this opportunity invests their money in the «concrete gold» of this country.
Certainly, demand for real estate in Dubai is high not only among Russians, Europeans are also quite active. The main reason is the same — it is almost the only opportunity to keep your capital. Just last year, the European Central Bank took measures to stimulate investment among the population, which, in short, means that you can keep up to €100,000 in your account without issues. Deposits in Europe are fundamentally unprofitable due to negative rates. In Germany, for example, if an ordinary citizen has more than €100,000 in his or her account, the government can use this money at any time to help the economy ( the amount that surpasses €100,000).
As a result, the TOP5 of countries whose residents invest in Dubai look like this: Great Britain, Italy, Germany, Russia and India. Sweden and the Netherlands are actively catching up with this list.
Read also: How to get a mortgage in Dubai as a foreigner. A full checklist and some non-obvious expenses
The Department of Lands of Dubai, in its annual report, called 2021 a record year in terms of the number of real estate transactions (this applies not only to the previous year, 2020, but also earlier years). For comparison, in the 2nd quarter of 2021 there were 21,300 transactions, while in the same period of 2020 there were 7,741 transactions. At the same time, according to statistics, 2022 is even more busy: in February, more than 6,000 real estate transactions were already registered in Dubai (in February 2021, about 3,800 transactions had been registered). Almost half of the registered transactions are new buildings.
«The average cost of an apartment in Dubai is $280,000»
— What is the average price per square meter for housing in Dubai now? Is it possible to apply the concept of «average» here?
— To begin with, I would clearly divide real estate properties into investment and self-use. Buyers come to Dubai most often, of course, for investment properties in the hope of increasing their capital. Such apartments are usually located in popular areas of the city, where the infrastructure is well developed and there is everything necessary for a comfortable stay. These apartments will cost at least $250,000.
If we are talking about real estate for self-use, then, as a rule, it is worth looking towards more remote areas and older residential complexes. Then the cost of a small apartment can start at $100,000. But here you need to understand that to lease such an apartment or to resell it will be much more difficult, than with investment properties.
According to statistics, the cost of apartments in February 2022 increased by 25.5% (compared to the same period last year). The average cost of a square meter in Dubai reached almost $3,000. Already in the second quarter of 2022, the average cost of apartments was $280,000; for villas, it was $1,000,000.
— What do you need to know if you want to buy a property in Dubai?
— To start, you need to decide whether you want to buy ready-made housing or real estate under construction. In the second case, the buyer has a lot of bonuses, including installments, which developers provide not only for the period of construction, but also for the first year or two after its completion.
In order to buy a new building in Dubai, you only need the money for the initial payment and your passport — you can even buy an apartment remotely, you will need to come only to register ownership of the apartment after the completion of construction. All documents are signed online after the execution of the contract, and you can immediately transfer the initial payment (usually 5% of the cost of the property) to the account of the developer.
It is key to understand that 90% of property buyers in Dubai purchase properties for investment purposes. And this means that all subjective parameters such as the view from the window, having good neighbors, the layout, etc. are not so important. As a rule, the buyer turns to a professional who says what housing will be in demand in the future. Therefore, all these costs for the flights, accommodation and selection of the facility are inexpedient. Moreover, not all brokers today will take the time for the buyer to personally drive and show him the properties, everyone is busy to the maximum.
You will need to be personally present to buy an apartment in Dubai in the secondary market. Of course, the signing of the preliminary agreement can occur online, as well as the transfer of the reservation guarantee of the property (about 10% of the cost of the apartment), but you still have to come to sign the main agreement. And the market is very «hot» — sellers expect that after transferring the reservation, the buyer will be on site in three or four days to pay for the property in full.
In general, transactions in Dubai are based on the principle of «If you want it, take it; if you don’t, someone else will take it». And it happens so quickly that the buyer does not have time to think: the broker sends them the layout of the apartment and gives them 20 minutes to transfer the initial payment to the account. If this does not happen, the apartment is bought by someone else. The «hottest» complexes are sold in 2 hours — even layouts aren’t sent for these, only the floor number and the size of the apartment. The principle is the same: «If you want it, take it, if you don’t, another person will take it within 5 minutes.»
— How much money do you need to plan to buy an apartment in Dubai?
— There’s no definite answer here. In my opinion, the minimum threshold for entering the real estate investment market is $200,000. However, given that developers offer very good installments, you can find properties where the down payment is between $15,000 and $30,000, which means that the entry threshold is reduced to a minimum. But here you need to accurately calculate your possibilities in order to pay your installments on time.
At the same time, if you buy an apartment that, at the stage of construction, costs from $200,000, you can expect it to increase in cost two or threefold at the end of construction. Of course, provided that it is a really good residential complex in a promising area. As a result, no buyer can do without a good broker and, perhaps, this is the most difficult nuance of buying an apartment in Dubai. If you have found a truly experienced broker who is interested not only in their own benefit, but also in preserving their reputation, then consider that the winnings are secured for you as a buyer. A dishonest broker can knowingly pressure the buyer to buy an illiquid object, which then will simply be impossible to sell.
