There’s no question that Dubai has become an international investment magnet over the years. It has continuously garnered global attention and has sustained it through investment-friendly policies. 

But before diving headfirst into investing in Dubai property, you should first understand the ins and outs of the real estate market. We shall be providing you with a Dubai property investment guide that will help you through the pre-purchase considerations, acquisition process, and the post-purchase options.

Pre-Purchase Considerations

If you are a foreigner looking to invest in Dubai properties, there are some considerations you need to take note of before dipping your toes into purchasing a property. International investors Dubai have more things to grapple with before fully committing, and here are the factors you need to consider. 

Foreign Ownership Regulations in Dubai

Freehold Ownership

For foreigners, Dubai property allows 100% ownership right for you in areas called freehold zones. Additionally, there are several freehold areas in Dubai without any limitations on residency or usage. Whether you want to use it as your new home, rent it out, or sell it, you are free to do it within your rights. Some of the most famous freehold areas in Dubai are Downtown Dubai, Business Bay, Palm Jumeirah, Dubai Marina, Dubailand, Dubai Creek Harbour, and more. 

Leasehold Ownership

If you are interested in other parts of the city, you can opt for long-term leasehold ownership. This will grant the buyers only 99 years of lease period. For instance, the first buyer had used 10 years, then the next buyer would only have 89 years more to render for the lease period. After the lease period, all the ownership rights will return to the freeholder. Dubai Silicon Oasis and Green Community are some of the non-freehold areas in Dubai. 

Designated Zone

There is also another type of area in Dubai called the Designated Zone where only the GCC residents can own properties there. Some designated zones in Dubai are Jebel Ali Free Zone, Dubai Textile City, Dubai Aviation City, Dubai Airport Free Zone, Dubai Cars and Automotive Zone, and more.

Legal Framework for Foreign Buyers

All of the real estate transactions in Dubai follow the legal framework established by the Dubai Land Department. It administers all real estate transactions and monitors property ownership and compliance. For freehold properties, foreigners can acquire 100% ownership even without residency. Moreover, a recent condition was approved by the government in 2022 wherein you can get a 10-year Golden Visa if you start investing in Dubai property amounting to AED 2 million.

Financial Options for Foreign Investments

Another consideration international investors Dubai have to factor in is their financial capacity. These days, banks have become more accessible to international buyers with various mortgage options for non-residents. An important note to remember is that foreigners can only get a loan for 50% to 65% of the property value and the rest will be up to their own finances. 

Additional costs like registration fees, maintenance charges, and agent commissions should be factored into your budget. You can also explore other financing options and other costs to be considered, which will aid you in making a great decision.

Advantageous Tax Benefits

The majority of international investors Dubai are pulled in by the city’s favorable tax environment. The UAE currently does not impose income taxes on individuals, including capital gains or your rental income. This is an attractive option for foreigners investing in Dubai property, as it will allow them to maximize their profits. There are potential costs other than that, such as value-added taxes, property transfer fees, and maintenance fees, which you can take into account. Otherwise, this no income tax policy is highly appealing to investors and helps them optimize their investment returns.

For companies, however, once their income reaches more than AED 375,000, they are entitled to a 9% corporate tax. For big multinational corporations, varying tax rates are implemented. 

Due Diligence and Seeking Professional Guidance

There are several things that you need to research and assess before fully committing to investing in Dubai property. Here are some of those things:

• Market trends
• Potential rental yields 
• Property values
• Mitigating risks
• Legal needs

Evaluating the market trends and potential rental yields are some of the concerns of international investors Dubai. You also need to consider the property value, risks, and legal needs of the property. Understandably, these are some points that may be quite difficult to grasp, especially if you are a first-time property buyer in Dubai. This is where seeking the right professional guidance could have some benefits for you. Not only are you hiring someone with better local knowledge but also a partner that will assess and guide you through the buying and post-buying process. 

The Buying Process for Off-Plan Properties 

If you’re buying an off-plan property, the process is a bit different from purchasing a resale property. Here’s how:

Reservation Form

The first step you need to take is to secure a reservation form. This legal document will contain your personal information, the type of property you chose, amount of downpayment, and the payment plan structure. Both parties have to sign the reservation form to proceed with the next step.

Sales and Purchase Agreement

After all the checks needed for a secure investment in Dubai, the next step is crafting and signing the SPA, or Sales and Purchase Agreement. The investor and the seller have to sign the SPA, and you will need to pay for the agreed downpayment. Usually, this would run an average of 10% of the property price upon purchase.

Transfer Payments to an Escrow Account

The developer will provide you with an escrow account after signing the SPA. This will be the account where you will be transferring money to in accordance with your payment plan structure. You can verify this account by visiting the DLD website and after which you can start depositing the money either through credit card or wire transfer.

Brokerage Commission

If you are working with a real estate broker, you have to pay for their fees right after. The amount of charge would be highly dependent on the property value.

Handover Process

Buyers are recommended to follow suit with their investment 7 days before the handover date to inspect and evaluate. They can also hire expert agents to look closely into the property if there’s any issue with the interiors, paint, finishings, materials, etc. This process is very important because you can still ask the developers to fix or change some elements in the property should there be any discrepancies with the actual output.

The Buying Process for Resale Properties

After making a decision of which property you want to invest in, you will most likely go through a set of processes with your consultant to finalize the buying process for a resale property. 

Price Negotiation and Offer

First, you might find yourself negotiating the final price for your chosen property. It is always better to have an expert with you as they are more experienced with negotiating for the best deals considering the property’s value and market conditions. After which, you will have to craft an offer letter to be signed by both parties that will discuss your agreed price and agreement terms.

Title Deed Verification and Property Verification

For ready-to-move-in properties, there needs to be a verification for any debts or disputes that have been tangled with the title deed. This is important in order not to face any legal disputes or liabilities after you acquire the property.

For off-plan properties, agents of the international investors Dubai would thoroughly check or verify the developer or the property’s credentials. That is, if it follows the DLD standards and has the full legal requirements. This will save you from any investment loss in the future. 

Form F by Dubai Land Department

The contract F is the memorandum of understanding (MOU) between buyers and sellers. It is a significant RERA form that ensures transparency between buyer and seller and contains information such as personal details of both parties, agreed price, property type, and financing option. DLD provides a comprehensive guide for brokers on how to obtain such contracts. 

Transfer of Ownership

For a smooth transfer of ownership, international investors Dubai have to secure an NOC from the developer and register the property with the Dubai Land Department. The No Objection Certificate (NOC) acquired from the developer is essentially a legal document that entails that the developer has no objections whatsoever in transferring the ownership of a property to you. After which, you can register the property in the DLD in your name to finalize your ownership responsibilities and rights. Typically, you will need to organize some documents and pay the other feed to transfer the property to your name.

Other fees to consider when buying off-plan properties or resale properties:

Remaining Payments and Handover

After transfering ownership, you should diligently pay for the remaining balance in accordance with your Form F agreement. A full handover with your keys at hand will finalize the handover process for your property, and you can enjoy it as much as you want. 

Post-Purchase Considerations

You may think that acquiring the property is the end. But if you are proactive at making more money through investing in Dubai property, you have two main routes that you can take. It is always preferable to have an exit strategy at hand to keep a steady flow of income. For these instances, you can always benefit from hiring expert property management companies or real estate brokers to maximize your profits.

Renting Out the Properties

Whether you’re targeting short-term rentals or long-term stays, it is always best to have a trusted property management company at hand. Renting out your property would need marketing, tenant screening, routine maintenance, constant tenant communication, dispute management, and more. All of these can be professionally handled by a trusted property management company. 

Resale the Properties

So if you’re aiming to wait it out and resale your properties at a desirable price, this entails constant monitoring. This means you have to monitor the property value and market conditions. Hiring a reliable real estate broker would come in handy for you in these instances, as they are more adept at concluding when is the right time to sell your property and negotiating the best deals. 

Why Should Foreigners Invest in Dubai Real Estate?

We have listed out a lot of significant factors that will help you decide on why you should grab this chance and invest in Dubai real estate as soon as possible. Firstly, Dubai has always been and is projected to continuously be a hotspot for investments, and this is due to several factors. This includes its strategic geographical location, investor-friendly policies, various property types, and its world-class infrastructure. We only see massive improvements and development in the years ahead of Dubai, which will not only boost its appeal but also the property values. By recognizing this high time to invest in Dubai, you can maximize your long-term profits and gains.

Conclusion

For the most part, investing in Dubai property is relatively easy and straightforward compared to other cities in the world. However, there are a lot of pre-purchase considerations, buying process procedures, and post-purchase decisions that might be challenging to foreign investors. This is why partnering with a trusted local real estate company like APIL Properties greatly helps. We have the best consulting services to guide you on which properties are the best investments and considerations you need to take. Our real estate brokers are also some of the top in the industry and will guide you through the legal procedures of the buying process. APIL Properties even has full-service property management solutions if you decide to rent out your properties, and we provide buy and sell services as well. We offer an all-inclusive service with a dynamic expert team to guide you with everything you need.