Dubai has become an international property hotspot, with great architectural developments and ambitious projects rising up seemingly overnight. With the market still young and demand exceeding supply, the time is ripe for foreigners to invest in this vibrant, captivating city.
In March 2006 the Freehold Law was passed allowing foreigners either 99 year leasehold or freehold ownership of land in designated areas. Freehold or leasehold allows the foreign investor many advantages. Owners are able to sell or rent out the property if they so desire. Investment potential is high, with a great demand for short-term rentals and yields around 10 percent. Dubai does not levy taxes on income, including that obtained from renting property. In addition there is no Capital Gains Tax. With Dubai's population expected to double within the next five years causing the rental demand to increase, a property purchased for the purpose of leasing can be seen as a long term income-generating asset. Owners are not required to live in the UAE, but must visit the country briefly once every six months. 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 passed on as inheritance if specific procedures are followed. Ownership of freehold property also entitles the first named owner to a 3 year renewable residence visa. (This visa does not permit the holder to take up work in the country.) The most popular Dubai property developments are the Springs, Dubai Marina, Emirates Hills, the Meadows, and Arabian Ranches. Other up and coming areas include Business Bay, the Palms (Palm Jumeirah, Palm Deira, Palm Jebel Ali), and Jumeirah Beach Residence.
Investing in Dubai's dynamic and fast moving market is quite simple. The only paper required is a relatively straightforward sales agreement. If necessary, foreigners can apply for financing. The two main lenders in Dubai, specializing in real estate mortgages, are Tamweel and Amlak. When buying property, it is advisable to use a lawyer and make sure a formal contract is signed, especially if purchasing on the secondary market. It is possible and quite common to purchase directly from the developer (such as Emaar or Nakheel) who may charge a transfer fee of between 1-3%. It is typical to have to provide a down payment, plus installments, with the final installment due upon completion or handover of the property. Upon completion, the property should be registered with the Dubai Lands Department. There is a land registry fee equal to 1.5% of the purchase price of the property. Owners should also expect to pay a yearly property maintenance fee which covers such things as any necessary plumbing or electrical repairs, cleanliness of the site, and security.
Buying a home overseas is a major decision. It is essential to research all aspects of a potential investment and deal only with reputable real estate agents since there is no formal structured purchase process in Dubai. Well-known real estate agents with good reputations in Dubai include Better Homes, GoWealthy, Re-Max, and Landmark Properties. Dubai's property market is likely to continue to flourish 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.
By Ahmed Juma
About the Author:
Ahmed Juma is a local UAE businessman and the owner of Emirates-Ads, a free UAE and Dubai classifieds site with extensive listings for Dubai property, jobs, vehicles, and items for sale in the United Arab Emirates.