Dubai has become an international real estate mecca, with major architectural developments and ambitious projects springing up seemingly overnight. With a market still young and demand outstripping supply, now is the time for foreigners to invest in this vibrant and captivating city.
In March 2006, the Freehold Law was passed allowing foreigners either on a 99-year lease or to own freehold land in designated areas. Full ownership or lease allows the foreign investor many advantages. Owners can sell or rent their property in Dubai if they wish. Investment potential is high, with strong demand for short-term rentals and yields of around 10%. Dubai does not levy taxes on income, including income from the rental of property. In addition, there is no capital gains tax. With Dubai’s population expected to double over the next five years, leading to an increase in rental demand, a property purchased for rental purposes can be considered a long-term income-generating asset. Owners are not required to live in the UAE and there are several local and international property management companies including Colliers International, Cluttons, Asteco and JG Property Management who can look after the property when the owners are away. Properties can also be inherited if specific procedures are followed.
Some of Dubai’s most popular property developments (many of which offer gated, family-friendly communities with access to swimming pools and other residential amenities) are:
- The Springs: offering 3 to 5 bedroom villas, located off Sheikh Zayed Road.
- The Meadows: located near Dubai Media City, consisting of 3 to 7 bedroom villas on two floors.
- Emirates Hills: an upscale, world-class development of freehold villas located near Dubai Media City and the Emirates Golf Club.
- Arabian Ranches: A community of freehold villas and townhouses just minutes from Dubai and Jebel Ali, but located in the desert, offering access to the Dubai Polo Club and equestrian center.
- Dubai Marina: offers luxury apartments and villas with waterfront views.
- The Greens: Located near the Emirates Golf Course and offering modern low rise freehold apartments available as studios, 1, 2 or 3 bedrooms.
- Other booming areas include: Business Bay, Palm Jumeirah, Jumeira Islands, Jumeira Park, Al Fujan and Dubai Land.
Investing in the dynamic and rapidly changing Dubai market is quite simple. The only document required is a relatively simple sales contract. If necessary, foreigners can apply for funding. The two main lenders in Dubai, specializing in real estate mortgages, are Tamweel and Amlak. When buying a property, it is advisable to hire a lawyer and ensure that a formal contract is signed, especially if you are buying on the secondary market. It is possible and quite common to buy directly from the developer (like Emaar or Nakheel) who may charge a transfer fee of between 1-3%. It is typical to be required to provide a down payment, plus installments, with the final installment due on completion or handover of the property. Upon completion, the property must be registered with the Dubai Land Department. There is a land registration fee equal to 1.5% of the purchase price of the property. Landlords should also expect to pay an annual property maintenance fee that covers things like any necessary plumbing or electrical repairs, site cleanliness, and security.
Buying a house abroad is an important decision. It is essential to research all aspects of a potential investment and only deal with reputable estate agents as there is no formal structured buying process in Dubai. Well-known real estate agents with a good reputation in Dubai include Better Homes, GoWealthy, Re-Max and Landmark Properties. The Dubai property market is expected to continue to boom for the foreseeable future. Dubai is a thriving international destination offering a high standard of living, a tax-free lifestyle and a safe and secure cosmopolitan community, making it the perfect place to invest.