A Complete Guide to Buying Property in Dubai as a Foreigner

The past decade has been exceptional for Dubai’s real estate market. Rising rents and a sound property market have made buying residential and commercial property an increasingly attractive option for foreigners. Until 2022, non-residents did not have the privilege to own a property in Dubai.  However, after introducing certain laws, foreigners were allowed to buy and fully own a property in Dubai. As a result, the real estate sector witnessed a price and demand hike. Buying a property here requires a good grasp of Dubai’s real estate market, so here is the complete guide to successfully navigating this venture.

Types of Property Ownerships in Dubai

Foreigners can choose between leasehold and freehold properties, as explained below:

Leasehold Properties

Leasehold properties allow buyers to benefit from the property for up to 99 years. In such a property type, the buyer leases the unit from its legal owner and cannot remodel or change the property without the owner's consent.

Freehold Properties

In a freehold property, the buyer has full ownership and is free to rent or invest. The Dubai Land Department (DLD) updates freehold areas every year, and some of the best areas to own a freehold property are:

Dubai Marina

Palm Jumeirah

Al Barsha

Business Bay

Jumeirah Beach Residence (JBR)

Downtown Dubai

Off-plan vs Ready Properties

Off-plan properties are still under development, whereas ready properties, as the name suggests, are already built and ready for occupancy. The table below illustrates the different advantages and disadvantages of buying each type of property:

Off-plan

Ready

Buying an off-plan property to live in yourself differs from buying it as an investment to sell later or rent out. The reason behind your purchase will determine the property type you should consider. If you are buying for investment purposes, you will ultimately be renting the property, so you need to look for the residential or commercial property with the highest rental yield. For instance, one-bedroom apartments offer higher yields than large villas, so while the lure of owning a villa in Dubai may be tempting, purchasing an apartment would make more business sense.

Factors to Consider

Foreigners must consider various factors before selecting a property.

Property Type: Decide between apartments, villas, townhouses, and penthouses depending on your budget and lifestyle. Also, consider the size and layout of the property and search for the unit accordingly.

Location: Finding the perfect location matters the most as it will bring ease and comfort to your daily routine. Look for neighbourhoods with easy access to amenities, schools, workplaces, and public transport. Investigate the future development plans of the neighbourhood and analyse its overall atmosphere.

Developer Research: The reputation of the developer is something that can provide peace of mind during finalising the property. Research the completed projects of different property developers and take help from customer reviews for a deep insight into their reliability.

Accessibility: Check the local infrastructure and ensure it is easy to access major roads and public transportation from the area.

Resale Value: Consider how much the property might be worth if you sell it later. Look at market trends to understand its investment potential.

Requirements to Buy a Property in Dubai as a Foreigner

There are no age restrictions for buying a property in Dubai. You must only provide a valid passport and Emirates ID or driving licence. If you are not living in the UAE, you must provide your original passport and national ID card. Some other documents that may be required are:

• Proof of income
• Bank statements
• NOC from the developer or previous owner

If purchasing from a private seller, the buyer and seller agree on a Memorandum of Understanding (MOU), a document that outlines the terms and conditions of the agreement. The MOU also details the date of the final funds transfer from the buyer to the seller and is not binding. The buyer then pays a deposit, usually 10% of the property price or what has been negotiated. This amount is often non-refundable. Once finance is obtained, the formal transfer of deeds takes place.

Fees Associated with Buying a Property

Foreigners buying a property in Dubai must register it with DLD and pay the fees. They are as follows:

DLD fee - 4% of the purchase price

Administrative fee for apartments and offices - AED 580 

Administrative fee for off-plan projects - AED 40

Administrative fee for land - AED 430

Fee for properties below AED 500,000 - AED 2000 + 5% VAT

Fee for properties above AED 500,000 - AED 4000 + 5% VAT

Mortgage registration fee - 0.25% of the loan amount + AED 290

Benefits of Buying a Property in Dubai

Here are some benefits foreigners can enjoy when buying a property in Dubai.

• Dubai offers some of the best rental returns in the world, with average yields up to 8% and even higher for short-term rentals.
• There are no annual property or capital gains taxes, just a one-time transfer fee of 4% when you buy.
• With over 15 million visitors annually and big plans to increase that number, demand for rentals is strong.
• You can get a 2-year visa for properties worth AED 750,000 or a 10-year Golden visa for properties above AED 2,000,000.
• Dubai's property prices are rising, especially in prime areas, and there's room for further growth.

Conclusion

Now is the ideal time to buy a property in Dubai, especially if you want to gain a good return on your investment. Foreigners can take advantage of investor-friendly laws and the liberty to fully own the property, which was not the case before. If you need help acquiring a mortgage in Dubai for your property purchase, check out our blog on Getting a Mortgage: 5 tips for ex-pats in Dubai.